Message from an Outside Executive

Companywide independence is building the momentum that will become a second founding

FANCL has recently announced its new Medium-Term Management Plan with a view toward achieving its long-term vision, “VISION2030.” Due to the 2019 retirement of the Company’s founder, Kenji Ikemori, this new plan was formulated in the absence of any charismatic voice that would be an ultimate authority.
It was therefore the case that directors, and on down to each employee, have taken personal “ownership” of FANCL’s future. I believe that much thought and deliberation went into what vision for the future the Company should have, and in what way each individual can themselves contribute. My impression of being witness to a concentration of Companywide power, and the change in stance to chart a course to the future, is that the Company is truly experiencing a second founding.
With a spirit of independence having established itself within the Company, momentum is building in the steady drive into new business domains. As proof of that there has been the establishment of a new brand with a new company in the Cosmetics Business. The move to not rely solely on the FANCL brand is also gaining steam, and in the Health Food Business as well, the Company is aggressively moving forward on the development of products that address needs associated with the declining birthrate and aging population, as well as the rising number of double-income households.
On another front, up and coming issues, I feel, are securing the Company’s presence domestically in Japan and fostering the human talent that will be a launching pad to soar internationally. Of course, this includes future director candidates, on-site people in charge at overseas locations, and others, and to broaden the range of human resources and prepare for surging growth in business and business domains, I believe it essential to create a structure in which the Company can move with agility. In addition, together with giving younger employees chances that enable them to take on ever greater challenges, they should also have proper experiences with failure. We must enhance their ability to come into their own in what will become FANCL’s framework in 10 or 20 years. I have great expectations for FANCL’s policies and measures for personnel growth in the future.

Addressing environmental issues will become a competitive strength

In 2018, with the formulation of FANCL Group’s “Sustainable Declaration,” FANCL clearly expressed its intention to contribute to the environment and work toward achieving Sustainable Development Goals (SDGs). Moreover, in 2020 the Company established its The Promotion Office of SDGs to clarify its commitment toward educational activities for employees, and using enhanced material disclosure, to find solutions to environmental issues. As a specific KPI, the Company is also evaluating the goal of net zero CO2 emissions by FY Mar/2051. Furthermore, last year the Company expressed its support for TCFD*, and has been moving forward on analysis of risks associated with climate change, a global issue of escalating importance.
Now is the time to conserve energy along the entire supply chain, and to utilize an ability to create products with a low environmental footprint, ushering in an era of corporate competitiveness.FANCL is working to instill just such an awareness, and in product planning and development, more and more products are taking the environment into account. Going forward, I think the Company should more than ever be promoting this in its advertising, social media and other promotional fields. Clearly and publicly expressing its intentions will also work to further raise awareness of addressing climate issues within the Company as well, and I expect that will lead to a positive synergistic effect.
Officer compensation is another area the Company is using to make inroads with its environmental efforts. Specifically, it introduced a system which links officer compensation to the degree of achievement of non-financial indicators, namely, CO2 emissions volume, employee engagement and business partner evaluations. This means that raising sales and profit are not the only roles for directors to perform. Also considered is meeting the stakeholder demand of executing management operations that make a real contribution to the environment and society over the medium- and long-term.

*Task Force on Climate-related Financial Disclosures; See page 30.

The qualities expected of top management

The traits that I feel are essential for top management are a positive temperament and mental and physical toughness. This means that they should have a mentality, that in case they fail, they reflect on that and use it as a lesson for next time. People who have such character will never give up, not even in a challenging environment, and are able to push through their plans to break out of whatever kind of situation. I’ve been around quite a few executives in my career, and the best of this type of leader have a way of making employees think that they “want to fight side-byside with this person.” They heighten organizational adhesiveness, and there are numerous cases where they substantially raise corporate value. Together with this, taking a hands-on approach is another important point. Armchair theories are insufficient to execute exceptional management. It’s important to physically be on site, and in tandem with sympathizing with employees’ thoughts and struggles, to face the real issues that arise on the front lines. These are the traits that FANCL’s current top management, President Shimada, is well equipped with. He is, I believe, a truly ideal leader. My hope is that he will also take great efforts in fostering his successor.

In Conclusion

For FANCL, a founding philosophy of eliminating “negatives” is at the root of all its activities.
This is a company that is constantly thinking about what it can do to address the gamut of issues confronting the world. Another point is that there are so many employees who carry out their tasks with diligence and a wide array of expertise, and spare no effort in their hard work to achieve the Company’s vision. The COVID-19 pandemic has been the impetus for enormous change in the business environment, but my belief is that because of this experience it has become a more resilient organization. I would like to see FANCL aim to be a company that makes proper investments as needed to further advance efforts at sustainability, and to find solutions to environmental and societal issues, and to accomplish this, to be able to secure stable and high revenue streams. I firmly believe that FANCL is more than capable of evolving into such a company.And as for myself, I will support management with all my strength as an Outside Audit & Supervisory Board member.