Sony boss shows a passion for social purpose

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When the Covid pandemic forced many of his employees to work from home, Sony chief executive Kenichiro Yoshida took every opportunity to speak about the company’s stated “purpose”.

Created in early 2019, this 12-word statement — “fill the world with emotion, through the power of creativity and technology” — was repeated like a mantra via blog posts, Zoom calls and investor presentations.

“Our purpose is the basis of how Sony engages with society,” he said during a government seminar in March. “It is also what drives each of our employees.”

For companies struggling with pandemic disruptions, talk of sustainability initiatives and purpose may feel like luxuries when the priority is to rebuild their business.

However, for some chief executives, last year’s events — the pandemic, the Black Lives Matter protests and a string of natural disasters — have prompted a rethink of employee wellbeing and their companies’ social role. 

In April 2020, Sony announced the rollout of a $100m fund to support those affected by Covid-19. Two months later, Sony Music launched another fund of the same size to support social justice and anti-racist initiatives. While some executives questioned spending money at a time of crisis, rank-and-file employees welcomed the initiatives. 

But when Yoshida took the helm of the Japanese entertainment group in April 2018, few associated the quiet but straight-talking former finance chief with a passion for climate change and sustainability. He won respect from shareholders by helping to end Sony’s long period of losses, selling off weaker businesses, and breaking down the silos that had divided its lucrative entertainment segments, ranging from games to music, films and animation. 

As the company’s financial performance steadied and its shares hit a two-decade high, however, Yoshida turned his focus to the question of purpose. 

In an early sign of his priorities, Yoshida wrote an internal blog post titled “Sony as part of the Earth” a day after he took over as CEO. “Companies such as Sony are able to carry out their economic activities because of a healthy global environment,” he wrote. “Let’s think together how Sony can make ESG [environmental, social and governance] contributions through our growth.” Within nine months, the company’s purpose statement and a set of corporate values had been created.

“There was a period when we struggled operationally but, after Yoshida became CEO, we entered a phase of thinking about how the company can achieve long-term, sustainable growth,” explains Shiro Kambe, Sony’s sustainability officer.

Takashi Nawa, visiting professor at Hitotsubashi University Business School, says Japanese companies’ sustainability efforts are often confined to simply improving their environmental performance. It is still unusual for them to identify areas of their business where they can both lead the market and promote sustainability. 

“Companies must obviously meet environmental standards but the ones like Sony are trying to set a sustainability agenda that will link to their true competitiveness,” Nawa says.

Sony’s green ambitions actually predate Yoshida’s tenure as CEO. In 2010, the group set out its ambition to achieve a “zero environmental footprint” by 2050 and has since announced five-year action plans to reduce carbon dioxide emissions and the use of plastic.

To strengthen accountability, executive pay is now linked with ESG metrics. Sony is also one of the eight founding members of the Responsible Business Alliance, an international consortium of businesses committed to corporate social responsibility in global supply chains. 

But pressure to move faster on sustainability continues to grow. In July 2020, technology giant Apple, Sony’s biggest client in image sensors, called on its manufacturing partners to switch to 100 per cent renewable energy by 2030. While Sony’s sites in Europe and China already run entirely on renewables, its biggest challenge is in its home country, where most of its image sensor manufacturing is based and electricity generation is heavily dependent on fossil fuels.

The largest part of Sony’s carbon footprint, however, comes not from its factories but from its products and services when they are in use by customers. In its 2019-20 fiscal year, annual energy consumption per product was 52 per cent lower than in 2013-14, but executives say more technological innovation is needed to make further reductions. 

While Sony’s engineers were urged to cut costs during the lossmaking era, Kimio Maki, head of the group’s electronics and medical businesses, says the mindset on spending has changed. Managers now recognise that the short-term costs incurred in creating environmentally friendly products can translate into longer-term value, as consumers worry more about sustainability. 

To take one example, Sony last month began selling noise-cancelling earbuds that are packaged in a material made from bamboo and sugarcane fibre. “Creating products that are friendly to the environment is an added value and that requires a cost,” Maki says. “But products that do not take the environment into consideration will be ignored by the customers we are targeting.”