What is SX (Sustainability Transformation)?
What is SX?
SX stands for Sustainability Transformation. It is a management reform proposed by the Ministry of Economy, Trade and Industry of Japan with the aim of continuously increasing corporate value by taking a long-term view of the sustainability of society and companies.
The SDGs are an international goal for a sustainable and better world. An even more specific goal of this major guideline is "net positivity," which aims to achieve a state in which the positive impact of corporate activities on the environment and society exceeds the negative impact. SX can be regarded as a strategy and a means of execution to achieve these goals. These are important issues that companies should address in conjunction with DX, ESG, SDGs, and GX.
Background of SX attracting attention
The concept of SX became widely known through the "Ito Report ," which is the result of a study group by the Ministry of Economy, Trade and Industry that has had a significant impact on the management policies of Japan's business community and companies. The Ito Report explains the importance of dialogue between companies and investors and analyzes and makes recommendations for management on how to increase corporate value from a long-term perspective without being constrained by short-term profits.
Background
- The 2014 edition sounded the alarm about the low profitability of Japanese companies under the protracted deflationary economy marked the report’s first publication
- The 2020 edition is known as the "Human Resources Edition Ito Report 2.0". Significantly impact human capital management efforts
- The 2022 edition is commonly known as the "SX version of Ito Report 3.0". In the midst of increasing social uncertainty such as climate change, human rights issues, and geopolitical risks, he emphasizes the importance of companies contributing to social sustainability
The need for companies to work on SX
The Ito report states, "SX refers to the 'synchronization' between social sustainability and corporate sustainability, as well as the management and business transformations necessary to achieve this." He continued, "Synchronizing social sustainability with corporate sustainability means that companies will improve social sustainability by providing long-term value that contributes to social sustainability, and will lead to the improvement of their ability to generate long-term growth resources (earning power) and further value creation."
The need for companies to engage in SX is not only for the sake of society achieving international goals, but also for corporate growth, which should be promoted in conjunction with their own management and business strategies.
Key Impacts
- "Financing" based on ESG investment that emphasizes non-financial information
- "Risk management" for unprecedented disasters and supply chains
- "Creation of new businesses" to respond to social and environmental issues
- "Acquisition and retention of excellent human resources" from the resonance of value provision and purpose to society
- "Gaining support from stakeholders" for the company's stance on sustainability
Differences between SX and SDGs/ESG/GX/DX
Here are some terms related to the realization of this concept:
●What is SDGs?
SDGs are the "Sustainable Development Goals" adopted by the United Nations in 2015. This is a common global goal for all developed and developing countries to solve environmental, economic, and social problems and aim for a balanced society. The SDGs emphasize the principle of "leaving no one behind" and consist of 17 goals and 169 targets to create a bright future by 2030.
●What is ESG?
ESG is an acronym for Environment, Social, and Governance, and is one of the three factors that companies and investors should consider for long-term growth. While investment evaluation has traditionally used financial information such as corporate performance and business conditions, ESG investment is based on the balance between the company's response to social issues and corporate value, including non-financial information such as environmental initiatives and employee work-life balance. In the 2010s, companies disclosed sustainability reports that included ESG elements to their stakeholders, and subsequently encouraged the activation of the SDGs.
●What is GX?
GX is an abbreviation for Green Transformation. This is an environment-specific initiative promoted by the Ministry of Economy, Trade and Industry . We aim to achieve a stable supply of energy, economic growth, and emission reduction at the same time in order to transform the entire economic and social system by shifting the fossil fuel-centered economy, society, and industrial structure since the Industrial Revolution to clean energy. Since the United Nations announced the realization of carbon neutrality by 2050, efforts under the same concept have been promoted overseas.
●What is DX?
It stands for Digital Transformation. It is about companies using data and digital technologies to boldly transform products and services, business models, and existing business processes, thereby increasing the competitiveness of enterprises. The difference between SX and DX is that DX is the means and foundation for realizing SX.
What is Fujitsu's SX?
●Management reform to realize net positivity
While sustainability initiatives are being promoted, it is also true that many companies feel that they are forced to choose between balancing corporate profitability (Note 1), and achieving sustainability. This is where the "net positivity" mentioned above becomes important. Net positivity is a concept that aims not only to minimize the negative impact of corporate activities, but also have a positive impact on society and the environment.
In an era of complexity, companies have a responsibility to create value with more innovative approaches and contribute to a sustainable future. Based on the purpose of "bringing trust to society through innovation and making the world more sustainable," Fujitsu is working to maximize its positive impact on the environment, society, and the economy through its corporate activities. For Fujitsu, net positivity is defined as "Fujitsu, which exists in society, not only maximizes financial returns, but also works on the materialities of solving global environmental problems, developing a digital society, and improving people's well-being, and has a positive impact on society as a whole through technology and innovation." In terms of climate change measures, we aim to achieve "net positive" by 2030 and "net zero throughout the value chain" by fiscal 2040 to reduce greenhouse gas emissions from corporate activities to virtually zero.
Note 1: Net Positive Index Survey Report
●Key technologies and consulting to realize SX
It is said that SX's success will not be achieved without a significant investment in technology. Helping customers grow their businesses and solve social issues, Uvance's SX focuses on five advanced technologies (Note 2) under development by Fujitsu, ensuring consistency across the sustainability solutions portfolio. It enables you to successfully navigate diverse business challenges across industries.
Fujitsu also works with customers to achieve transformation with Uvance's data and advanced AI-driven decision-making. Through Uvance Wayfinders, a consulting service that supports business and technology transformation, we will solve a variety of social and business issues to realize a sustainable world.
Note 2: "Computing", "Network", "AI", "Data & Security", and "Converging Technology"
Frequently asked questions
Q1. Do you have any specific examples of SX companies' initiatives?
A1. Fujitsu is promoting SX based on its purpose, "Bringing trust to society through innovation and making the world more sustainable." In addition, the Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange recognize and award leading companies that integrate social sustainability issues and needs into their business strategies, thereby promoting long term and sustainable corporate value creation.
Q2. How is AI used in SX?
A2. Fujitsu conducted a survey of 800 executives across 15 countries to understand how AI is being applied to SX and its impact on business and society, and published the findings in the Fujitsu SX Survey Report 2024.
Related Sites
Advancing Net Positive - Driving Profit with Purpose
