CSR Topics | Financial and Economic Literacy Initiatives Based on Nomura Group's Vision

We invited Professor Takamitsu Sawa, Ritsumeikan University Graduate School of Policy Science (former Director Institute of Economic Research, Kyoto University), supervising editor of the financial/economics textbook "The T-Shirt Shop", and Kazutoshi Inano, Deputy President & Co-COO of Nomura Holdings, Inc. to discuss Nomura Group's financial literacy initiatives and the need for financial and economic knowledge in a market-based, competitive society.

Importance of Correctly Understanding Market Economics and Rules

Kazutoshi Inano, Deputy President & Co-COO of Nomura Holdings, Inc.Inano: We published "The T-Shirt Shop" finance and economics text for middle school students under your editorial leadership. The book has since been distributed to middle schools throughout the country. Thanks to you, the book has been well-received, and there have been many requests for extra copies. More than 70,000 copies have been donated.

Sawa: What I attempted to do with the text was not only to supervise the compilation of already completed material, but to bring together a variety of opinions in the editing stages and create a text that everyone would find credible. I first became keenly aware of the importance of educating children about economics and finance in 1978, when I was teaching at university in the United States. I noticed a picture book in a bookstore, entitled "How To Turn Lemons Into Money", that was designed to teach micro- and macroeconomic principles to children as young as six or seven. Western societies are entirely competitive. Surviving and succeeding in those societies requires knowledge of economics, finance, and investing. Consequently, economics must be learned from a young age.

Takamitsu Sawa, Professor, Ritsumeikan University Graduate School of Policy Science (former Director Institute of Economic Research, Kyoto University)Inano: Prior to publishing "The T-Shirt Shop", we had published and distributed other economics study materials nationwide, such as "Finance for Beginners" (February 2005) for middle school students and "The Secret of Money" for primary school students. We also offer capital markets university seminars taught by Nomura Group employees. In addition, we offer securities education in a number of communities for lifelong learning so that people can enjoy a fulfilling retirement.

I think it would be good to talk about why we have put so much effort into improving the financial literacy of people of all ages. As a leading financial services company, we feel a great sense of purpose in supporting the socio-economic life of Japan through direct financing. This gives us a strong sense of pride in our efforts. Nevertheless, in the eyes of the general public in Japan, the image of the investment and securities business is not necessarily a good one.

Where do such negative images come from? We see it as resulting from a lack of correct understanding and knowledge of the way the economy and the markets actually work, and the way capital markets are actually structured. This being the case, we decided to do what we can about this knowledge deficit. This prompted us to start a wide variety of initiatives.

Sawa: It is true that Japanese people may not be as used to a competitive society or market economy as others. The competitive society is simply a given in places like Europe, the USA, or even China. For people in such a society to compete on even terms in the market arena, it is necessary to have good knowledge of the markets and the rules of market competition. It is a fundamental principle that there is no such thing as high return on low risk. The market environment must be such that there aren't merely winners and losers, but that the losers can continue to challenge the market again.

Inano: As you pointed out, for example, one cannot expect great profits where there is no risk. There is a solid logic to the markets, and there are rules. Were these rules better understood, we would not have had the problems with unlisted share fraud that have sprung up recently.

The phrase "self-responsibility in investing" is seen all over the media these days. As a matter of fact, self-responsibility is a fundamental market principle. Still, full realization of self-responsibility depends upon developed markets and the creation and strict enforcement of rules. Nomura Group believes that it is our responsibility to develop markets and improve financial and economic literacy.

CSR Efforts Are Not a Free Pass

Sawa: Nomura Group's efforts to advance financial literacy make up an important part of the Group's CSR activities. Actually, CSR was talked about a lot in the early 1970's. But we didn't hear much about it following the oil shock. I think the trigger for all interest now is the issue of the environment. The way a company responds to environmental issues nowadays has a great impact on the image of that company, the image of its products, and therefore product sales. The 20th century was marked by technological revolution, and may be called the century of electric power and oil, but it also left us with a serious environmental burden. The 21st century will be known as the century in which we relieve some of that burden by creating a sustainable society.

Inano: Environmental initiatives are important to us at Nomura Group. For example, we use an enormous amount of paper in our business, in particular in the publication of prospectuses. While we recycle, the way we can really make a difference is by fulfilling our corporate social responsibilities in the course of our business. One of the ways we do so is by accurately evaluating environmental venture businesses in the field of energy-efficient technologies, and providing support for the issuance and broking of their stock. There is still much we can do in that regard.
It is important for a company to come to grips with the changing times and to evolve accordingly. Nevertheless, it is even more important that a company establishes a vision and continues to remain true to it. The publication of "The T-Shirt Shop" is at the forefront of our financial and economic literacy initiative, and represents one of our significant CSR efforts. Still, I believe we are capable of doing much more. For example, I would like to see our employees teach at the primary and middle school level.

CSR is by no means a free pass for a company. As you correctly note, Nomura Group must do all we can to help create a sustainable society. I am looking forward to making sure that we do so.