Independent Review / Public Evaluation

Independent Review

Kanji Tanimoto, Professor,
Hitotsubashi University
Graduate School of Commercial Science

The main feature of Nomura Group's CSR-related initiatives over the past year was the formulation of the "Mission Statement" and "Principles of Conduct (for executive officers)" as presented at the beginning of the Report. Ten years after the determination to embark on what was tantamount to a re-founding of the company, following the second scandal, the company has made available to the public a Mission Statement that clearly spells out in common language the Basic Principles and Code of Conduct of the Group. Granted there are shades of differences in the comprehension and degrees of commitment to CSR among business lines, B&D activities are in their second stage, and serious efforts at sharing common values, providing support to female employees and improving environmental performance (e.g. reduction of the use of paper) are in full swing. There is greater recognition of the social contribution the company makes through its core financial business, namely providing education in finance and economics.

In last year's report, I pointed out the need for the company to identify how CSR is positioned in its management vision and business activities. This time, a full-scale review was made of how business is conducted, including what had previously been taken for granted. In other words, no stone was left unturned in compiling the Mission Statement for public release.
As business grows and diversifies, questions are rightly raised as to how compliance and governance systems are built into all areas of the business. Nomura Group understands this as an important factor in ensuring corporate competitiveness. As was made abundantly clear in the CEO's message, it is necessary to constantly verify to what extent these systems penetrate throughout the company. That said, one does understand the difficulty of effectively implementing this system, as is evident from recent scandals involving financial institutions. Many of these institutions were pioneers in putting in place compliance systems, establishing CSR departments and publishing CSR reports. How much of this commitment at the top was penetrating down to the operational level is the big question. Systems and rules are easy to establish, but it is easier said than done when it comes to having them put into practice throughout an organization. This is simply because this touches on the delicate issue of effective communication and the decision-making process, both of which have much to do with the organizational culture.

As the Group's companies expand domestically and overseas and becomes increasingly diverse (absorbing transferees, temporary workers and persons of different nationalities), Nomura will be faced with having to find ways of retaining a common purpose, as the tacit understanding that existed in the past ceases to exist.
The Group must continually ask itself why it is here, what its mission is, and even what principles it has to respect. There has to be a clear message for the people to work together toward the common goal. It does not mean that it is enough to write something down on paper. There is a constant need, inspired by the commitment of those at the top, for all people in the Group to return to the Mission Statement and Principles of Conduct, and to hold each other to them. The financial industry in particular requires the trust of the market and this must be taken very seriously.
I am looking forward to the Principles of Conduct for employees to be formulated before the year-end and become firmly established in the organizational culture soon after. It pleases me to hear that during the past year CSR has become an entrenched aspect of the everyday business routine. The next step will be for it to become integral to management in every department. In the last report I referred also to the need for every department to be able to clearly state its annual CSR-related objectives, what strategic initiatives have been taken, and what results had been achieved. Where corporate governance and CSR management are concerned, drawing a system chart of the allocation of responsibilities is not enough; how they are functioning and what challenges they face must be clearly stated. The broad objectives of CSR initiatives for the upcoming fiscal year have been noted. They must now be incorporated in medium- and long-term management plans, and in the Group's companies and each departments' management systems.

Public Evaluation

Nomura Group's CSR initiatives have been highly commended, and Nomura Holdings, Inc. stock is part of the Dow Jones Sustainability Indexes, FTSE4Good Index, and MS-SRI (Morning Star Social Responsible Investment) as of September 2006. Also it was selected to be included in the Global 100 in January 2007.

Dow Jones Sustainability Indexes

The Index is the world's first sustainability equity index for which companies are jointly selected by Dow Jones & Company and Sustainable Asset Management (SAM), Switzerland.

FTSE4Good Index

A socially responsible investment index set up by FTSE owned by the Financial Times and the London Stock Exchange.

MS-SRI

The first domestic socially responsible investment stock index developed by Morningstar Japan K.K., indexing stock prices of the 150 most socially responsible companies listed in Japan.

Global 100

The world's most sustainable corporations selected by Innovest Strategic Value Advisors Inc., SRI's research company in the U.S. and Corporate Nights Inc., the publisher of a Canadian CSR magazine.