KENGO
SAKURADA
Group CEO
Sompo Holdings, Inc.SPONSORÕS WELCOME LETTERAs well as profi ts, measuring a company’s value
must include its worth to societyTransforming Capitalism for Sustainability
The world continues to battle a global pandemic,
but I am confi dent that with our determination
and capacity for innovation, we will ultimately
prevail. What COVID-19 has made clear, however,
is that we cannot build a sustainable future unless
we resolve global challenges: inequality, human
rights, and climate change. Many have come to
realize that the current form of capitalism is at the
heart of these challenges. While a global discussion
on redesigning capitalism has begun, a new and
more suitable model has yet to be found.
One of the critical points that a new model of
capitalism should be able to address is how to
measure the value of a company. For a sustainable
future, we need to make the most of
companies’ innovations and growth
potential. Traditionally, the value of a
company has been judged primarily
by its market capitalization: the
profi t generated is the basis of the
valuation. Companies must indeed
achieve profi ts to ensure their own
sustainability. Still, companies exist
to provide social value, such as by
creating and delivering products
or services people need or desire.
In doing so, they contribute to
improving people’s lives, increasing
people’s happiness, and solving
social issues. If companies optimize
only their shareholders’ value and not
the value of their multi-stakeholders,
society cannot be sustainable.
LLLast year, the sumLast year, the sum of the m of the market arket
capitalization of the fi ve U.S. tech capitalization of the fi ve U.S. tech
giants exceeded that of all the
2,170 companies on the First
Section of the Tokyo Stock
Exchange combined. However,
I do not believe that those fi ve
companies provide more value to
society than the 2,170. For example,
SOMPO’s nursing care business
serves 80,000 senior citizens. If
our nursing care business, which
replaces part of the public health care
system, generates no profi t, can it be
said that this business has no value?
Determining the value of a company
should include a metric of the worth
it provides to society, not
just its fi nancial profi t.To develop a new measure of corporate
value, companies, governments, and
citizens need to collaborate to set
shared goals for the common good
of society. How can we optimize
people’s happiness, and how do we
balance it across various measures,
such as money and quality of life?
Multi-stakeholders should discuss and
decide this together.Then, each of us must play a role
in realizing our agreed-upon goals.
Businesses must return to what is
truly important. Companies need to
achieve organizational ambidexterity;
committing to creating social value
in the long term based on their purpose while
generating profi ts in the short term.I recently wrote a book entitled “Bushido
Capitalism.” It draws on the moral code of Japan’s
Samurai. I believe the “Bushido” framework could
help us think about the future of capitalism and
that critical point – a new measure of corporate
value. Bushido is based on the belief that a
person cannot live without society. It prioritizes
the common good over personal interests. It
emphasizes a balance between self-interest and
altruism, total optimization and harmony. Bushido
is not a religion or an abstract philosophy, but
practical wisdom for the sustainability of society
and a code of conduct for people and companies
that should be truly respected. Bushido leads to
the “Golden Mean,” which emphasizes a balanced
middle path between extremes, and “Sanpo-yoshi,”
which translates as three-way satisfaction through
business transaction: good for the seller, good for
the buyer and good for society. The focus is on
multi-stakeholders.mmulti-stakeholders.ulti-stakeholders.TheThe themtheme for the World Economic Forum in 2022e for the World Economic Forum in 2022
is “working together, restoring trust.” I believe the is “working together, restoring trust.” I believe the is “working together, restoring trust.” I believe the ss“working together, restoring trust.” I believe the
Bushido framushido framework can serve as a compass toework can serve as a compass to
guide world leaders to work together based on trust guide world leaders to work together based on trust uideuideworld leaders to work together based on trust
and tackle global challenges.and tackle global challenges.ndndtackle global challenges.I do not believe that those fi ve
companies provide more value to
society than the 2,170. For example,
SOMPO’s nursing care business
serves 80,000 senior citizens. If
our nursing care business, which
replaces part of the public health care
system, generates no profi t, can it be
said that this business has no value?
Determining the value of a company
should include a metric of the worth
it provides to society, notDetermining
the value of
a company
should include
a metric of
the worth it
provides to
society,
not just its
fi nancial profi t.