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Executives' Comments  Press Conferences Chairman Nakanishi's Statements and Comments
at His Press Conference

December 9, 2019

Challenge Zero

To seize the moment afforded by the 2019 UN Climate Change Conference (COP25) now under way in Madrid, today we announced our "Challenge Zero" initiative ("Challenge Net-Zero Carbon Innovations"), an all-out drive to curb greenhouse gas emissions. We will begin with intensive publicity efforts at home and abroad to promote the innovations companies are pursuing to aid the transition to a carbon-free society. These efforts come amid a global increase in the incidence of abnormal weather events and a growing sense of alarm over climate change. Participating companies will formally announce the innovations they are aiming for, and detail the actions they are taking to achieve their goals. The scope of innovation will be limitless and encompass choices ranging from hydrogen power to renewable energy to energy conservation. This drive will demand not only the development of new technologies, but also the implementation of pioneering, business-based solutions. Financial backing for efforts in innovation will also crucial. We will join hands with the Japanese government to promote private-led innovations at the COP25 conference as well.

Spring Labor-Management Negotiations

Developing workplace environments more conducive to improved employee engagement and sustaining the momentum behind wage increases will be key issues in focus during the upcoming labor-management negotiations next spring. With regard to the former, we have already embarked on "Phase II" of our push for work-style reforms and are also engaged in discussions of potential revisions to a set of traditional Japanese employment practices, including the concerted, seasonal corporate recruitment of new university graduates, lifelong employment, and the seniority system. However, it is not because the traditional Japanese approach to employment has itself become dysfunctional, but rather because we want to see it revamped to incorporate the strengths available with a variety of employment formats and create an environment that better enables employees to hone their skills and pursue their careers with a heightened sense of job security. On the latter subject of wages, it is widely recognized that many companies have held back from increasing employee pay due to pressures from the protracted period of slow business growth Japan has endured for some 20 years now. To address this situation, many corporate executives are seriously interested in rewarding their employees for their service, and raising wages is of course one option they can bring to the negotiating table.

The Japanese Economy: Current Conditions and Future Outlook

The government's second bulletin (released December 9) on GDP growth for the third quarter (July to September) of 2019 incorporated sharp upward revisions to the targets cited in the first bulletin. Capital expenditures have been brisk and investments in digital technologies are expanding. However, while the international economy still faces uncertainties and the general outlook cannot be described as particularly sanguine, the Japanese economy itself appears to be on a firming track. As I see it, the impact from the recent hike in the consumption tax has been marginal. It is not easy to predict when we will see an end to the reactionary dip in spending that followed the surge in demand just ahead of that tax hike. The industrial sector and the government will need to pool their wisdom to come up with fresh stimulus measures that help sustain and boost consumer spending. More and more Japanese companies are drawing on their respective strengths to focus on core markets, where they work to diversify their offerings. This pattern is becoming the mainstream and if it persists, we can expect the Japanese economy to bolster its underlying strength going forward.

Open Innovation Tax System

Investments in venture startups are a matter of basic business policy. The adoption of a tax system that facilitates open innovation will arguably be a favorable message of support for the promotion of venture investments.

Retained Earnings

Retained earnings accumulate as a company's earned surplus, or, in other words, the profits it has amassed from past business. They differ entirely from cash reserves. However, from an objective perspective, the growth in corporate cash reserves is clearly a fact. Business executives need to actively tap into new areas for investment and harness them as drivers of fresh growth not only for their own companies but ultimately for the Japanese economy as a whole.

Doctoral Degree Recipients

The number of scholars awarded doctoral degrees in Japan has continued to decline year after year. This is an issue that needs to be addressed from two angles. One is that many Japanese companies actually are unable to effectively harness the strengths offered by doctoral degree recipients, and the other is that most universities in Japan do not offer doctoral degree programs with content that is useful within the corporate setting.

Stakeholder Capitalism

Stakeholder capitalism will be one of the themes on the agenda for the World Economic Forum next year (the Davos meeting). Many of the issues facing global society cannot be solved as long as companies have the interests of only their shareholders in mind, or if politicians think only about their own constituencies. These were among the concerns that prompted Professor Klaus Schwab to create the World Economic Forum in the first place. In its Charter of Corporate Behavior, Keidanren has clearly laid out how companies should approach and work with their stakeholders. The upcoming Davos meeting may afford Japan an opportunity to assume the initiative on this subject within an international setting.

The Cherry Blossom Party

I do not understand why anyone would stubbornly cling to this as an issue. The Chief Cabinet Secretary has already explained it well. It would be better to do whatever possible to avoid criticism of the event as a symbol of arrogance or a waste of taxpayer money, but if you provide any margin for it to be taken up as a compliance issue, you have already given your opponents the upper hand. Don't the opposition parties have any other tactics? I would like to see more energy focused on policy issues.

Executives' Comments