Everyone seems to agree that dialogue is one of the keys to enhancing CSR. But opinions differ as to the precise nature of the dialogue required.

Judging from the results of the 2015 Tokyo Foundation CSR Survey, many Japanese companies are actively involved in some form of stakeholder dialogue. But few companies clearly describe the ways they go about engaging employees, shareholders, community members, and nonprofit organizations, let alone the specific aims and outcomes of such dialogue. In most companies, dialogue is treated as an end in itself, useful primarily as a CSR indicator.

What, then constitutes meaningful dialogue? To help answer that question, I would like to consider two initiatives undertaken by Shiseido.

Shiseido, Japan’s largest cosmetic company, engages in dialogue of various types, but here I would like to focus on two specific cases. The first is a program that skillfully combines the company’s technical and human resources to provide skin, hair, and other personal care services to people afflicted by cancer or other grave illnesses based on attentive dialogue with the patients and survivors themselves. This is an initiative that embodies the company’s commitment to meeting society’s expectations while affirming its own raison d’être.

The second example is the process surrounding Shiseido’s change in policy on animal testing. This began with a proactive effort to identify social issues—cognizant of the diversity of attitudes and perspectives on such issues—advanced through close dialogue with a variety of stakeholders, and led ultimately to a decision that involved a major shift in business strategy.

Beauty Care for Cancer Patients

In the posh Ginza district of Tokyo, where Shiseido first opened shop, stands the Shiseido Life Quality Beauty Center. The facility is staffed by expert cosmetologists who use every technique at their disposal to help people with serious skin problems using the “power of makeup.”

The cosmetic concerns of cancer patients and survivors have surfaced as a growing problem in recent years. Cancer treatment typically involves chemotherapy in conjunction with surgery. Thanks to advances in technology, patients are more likely than ever to experience either remission or a complete cure (that is, remission with no recurrence for five years). But even as they return to normal life, they may continue to suffer from the side effects of chemotherapy, including changes in appearance.

Figure 1. Cosmetic Complaints Linked to Cancer Treatment (% of respondents)

A questionnaire distributed to participants in the center’s seminars identified changes in skin and eyebrows and eyelashes as their biggest concerns. While wigs and other solutions are readily available to those suffering from the loss of scalp hair, other problems can be trickier to address. Some individuals experience overall darkening or dulling of their complexion, while others have patchy discoloration. Some lose their eyebrows entirely, while others experience uneven thinning. Women describe being shocked by the face they see in the mirror. Many are reluctant to reveal their illness to others and fret that their appearance will give their illness away.

To support such patients and survivors, Shiseido Life Quality Beauty Center offers both group seminars and free individual counseling. In both cases, the cosmetologists are at pains to impart makeup know-how and techniques that amateurs can easily apply at home.

The seminars, carried out in cooperation with nonprofit patient support groups and healthcare providers, are an opportunity for people with common issues to gather, exchange information, and provide mutual support and encouragement. Many participants go home with a much more positive outlook.

For those who shy away from the gaze of strangers, the center offers individual cosmetic counseling sessions in a private setting. An employee who has worked with many cancer patients and survivors at the center spoke of the delight she had seen on clients’ faces when they saw their transformation at the end of a session. Women who had previously avoided looking at themselves in the mirror positively beamed as they examined their reflection.

Many cancer patients are reluctant to go out in public, meet with acquaintances, or talk to people because of concerns about their appearance. Using quality products with skill and empathy, the cosmetologists at Shiseido Life Quality Beauty Center are able to alleviate some of these concerns. Studies suggest that such cosmetic counseling can measurably improve quality of life for cancer patients. The staff of the center get to witness this “power of makeup” firsthand.

Figure 2. Cosmetic Counseling and Depression in Breast Cancer Patients

Source: Reprinted (with slight modifications) from Ryoko Hijikata, et al., “Kagaku ryoho no biyojo no fukusayo ni taisuru biyo kea ni yoru nyugan kanja no QOL kaizen koka” (QOL Impact of Beauty Care for Cancer Patients Experiencing Cosmetic Side-Effects of Chemotherapy), Journal of the Japanese Cosmetic Science Society , vol. 37 (2013), no. 3.

The Shiseido Way

Initiatives like these seem to come naturally to Shiseido, which has a long tradition of leveraging the “power of makeup” to contribute to society.

In 1956, with the Japanese economy expanding rapidly, the government declared that the era of postwar reconstruction was over. That same year, Shiseido was finally able to relaunch its beauty business with the opening of a 900-square-meter salon near Shibuya Station in Tokyo. The following year, it reopened its Ginza salon, originally established in the 1920s.

At the same time, the company was pursuing another project, motivated not by commercial but by humanitarian concerns. Notwithstanding the government’s declaration of a new era, many citizens still bore serious scars from the war, particularly burns resulting from the bombing of Japanese cities. Shiseido decided to develop a foundation matching Japanese skin tones that women could easily apply to minimize the appearance of raised, pitted, or discolored scar tissue. It launched that foundation, Spots Cover, in 1956. Setting aside economic considerations, it priced this advanced makeup no differently from its other foundations, even though similar products were being sold for 10 times the price in the United States.

Today Shiseido divides its emphasis between product development and the training of professionals to provide beauty care that brings together the power of their products and the power of human know-how.

For 60 years now, since its launch of a product to help women scarred by the ravages of war, Shiseido has tapped the power of makeup to provide support for people with serious skin concerns, including angiomas, birthmarks, vitiligo, and, most recently, the side-effects of chemotherapy. All of this began with a simple question: “What can we do to help?”

How One Employee Made a Difference

The specific impetus for the establishment of Shiseido Life Quality Beauty Center came from a single employee and her first-hand experience of the power of makeup.

Shiseido employs a large number of credentialed beauty professionals, including makeup artists. Ranking high among the settings in which makeup artists apply their skills are fashion shows, where they use masterful techniques to display the models to best advantage. However, once the show is over, those models remove their makeup and go home.

One day, a Shiseido makeup artist was working on a woman with a serious skin condition. After applying the makeup, the woman looked at herself in the mirror and sighed, “Look how it changes me. I wish I never had to remove this makeup.” It was the lament of someone who had no one to turn to for help. Hearing her words, the makeup artist decided it was up to her to do something. She voiced her ideas to a colleague charged with collecting feedback from various work sites, who then conveyed them to the president. The makeup artist’s desire to make a difference galvanized the entire organization. A project was launched, and the result was the establishment of the Shiseido Life Quality Beauty Center in the heart of Ginza.

It took two full years before the center opened its doors to cancer patients and survivors. Much of that time was spent listening carefully to patients and survivors and implementing improvements on the basis of their comments. One woman’s observation that the chairs at the center were painful to sit on precipitated a total change in attitude. The staff began asking others, and soon they realized that patients who had lost weight during their bout with cancer often found it difficult to sit for long periods on hard seats. Cushions made all the difference.

Similar inquiries led to other changes. Finding that some people were easily chilled, the staff began offering lap blankets and started offering a choice of cold, hot, and room-temperature drinks. They also decided to inform clients that they could cancel on the same day of the appointment if they were not feeling well. They realized that there were any number of ways in which they could alleviate the suffering or discomfort of cancer patients simply by listening attentively and making adjustments accordingly.

One patient put it like this. “We can confide things here that we can’t tell anyone else, and the staff always listens carefully and responds thoughtfully. This helps to nurture trust. That’s why it’s always such a treat for me to meet with Shiseido’s cosmetologists.”

The Shiseido employees who are helping cancer survivors through the power of makeup teach us that dialogue is something that can and should take place in all settings, not just around a conference table.

Initiative on Abolishing Animal Testing

The other example of meaningful dialogue at Shiseido pertains to the company’s policy on animal testing in the development of cosmetics.

In March 2010, Shiseido announced its intent to “phase out the use of animal testing for cosmetics.” Eventually, having developed a safety assurance system based on alternative methods, the company officially abolished animal testing at in-house and external facilities alike for the development of any cosmetic or quasi-drug product undertaken on or after April 1, 2013. The adoption of this policy entailed not only extensive in-house deliberations but also wide-ranging dialogue with external stakeholders—most notably, the roundtable on ending animal testing of cosmetic ingredients, launched in June 2010.

Since there has been some misunderstanding on this point, let us be clear: the decision to stop animal testing was a business decision taken by the management of Shiseido. The roundtable was not mere window dressing designed to impart a veneer of objectivity to that decision, nor was it established in a bid to shift part of the responsibility for the company’s own policy.

Animal testing is a contentious issue for those closely involved, and a relatively obscure issue to the average consumer. By providing an opportunity for various stakeholders to sit down at the same table, exchange ideas, and listen to one another’s viewpoints, the company hoped to accomplish several things: to raise public awareness of the issue; to clarify points of contention; to build a consensus, bridging “pro or con” polarities, on the basic direction in which society should be heading; and to chart next steps for each stakeholder group.

As I stated, Shiseido is the party responsible for the company policy of ending animal testing and the steps taken to implement that policy. The roundtable dialogues provided an opportunity for other stakeholders—not just people in the company—to take ownership of this social issue in their own way. This approach deserves special attention as one process by which a company can engage with society and address social issues.

Developing Alternative Methods

Animal testing in the development of Japanese cosmetics began after outbreaks of pigmented contact dermatitis traced to ingredients in certain cosmetics triggered a major controversy in the late 1970s. With consumers suing manufacturers over their condition, the companies were under intense pressure to adopt rigorous testing processes comparable to those used in the pharmaceutical industry to ensure consumer safety. In the 1980s, animal testing became the norm in the cosmetics industry. But the 1980s also witnessed the rise of a movement to ban animal testing.

Many different ingredients go into a typical cosmetic formulation, including chemical and plant-based substances. When developing such a product, a manufacturer must investigate those ingredients carefully to determine their potential side effects as well as cosmetic and other benefits, with human safety as the first and foremost consideration.

Shiseido has long stressed safety and quality as its top priorities and has implemented rigorous safety assurance protocols consistent with its commitment to sell no product that might be deemed unsafe. These are divided into three basic phases. The first is “ingredient safety assurance” by means of rigorous screening and refining of individual ingredients. The second is “product safety assurance” via safety-first product design, trial production, and product testing. And the third is “post-market safety monitoring,” which involves gathering and following up on customer feedback of all kinds to track any problems that may arise as a result of individual intolerances or the use of the product in ways or amounts the manufacturer did not envision.

Animal testing has long been a standby in the first area—ingredient safety. In the case of quasi-drugs in particular, manufacturers may be required to submit animal testing data in order to secure regulatory approval to market a new product.

The chart below illustrates the safety assurance system for new ingredients that Shiseido instituted in the wake of its decision to eliminate animal testing. Under the new system, toxicological data and alternative testing methods take the place of animal testing. The important thing to note in this regard is that development of an ingredient is suspended if its safety cannot be guaranteed by these alternative methods. The substance will not proceed to the phase of human testing and, needless to say, it will not reach the market.

Figure 3. Shiseido Safety Assurance System

A number of alternatives to animal testing are under consideration, including computer simulations and in vitro testing on tissue cells. To speed the standardization and acceptance of such methods, Shiseido has released to the public its own patented technologies and test data on alternative methods and is actively collaborating with various companies and agencies in Japan and around the world.

Beginning in August 2012, Shiseido also brought together specialists from several universities and research institutions to meet for the purpose of identifying and deliberating the issues surrounding alternative methods from a scientific standpoint. The first six sessions were open only to Shiseido personnel, but since the seventh meeting (November 2014), other companies have been encouraged to participate, and the initiative has helped spur industrywide movement on the issue.

Stakeholder Dialogue Begins

The foregoing is a brief overview of the developments leading up to the phasing out of animal-testing in 2013. Now let us back up and take a closer look at Shiseido’s stakeholder dialogue on ending animal testing of cosmetic ingredients, including its launch, evolution, and outcomes. ^[1]

The first session of the roundtable was held in June 2010, three months after the company’s initial announcement regarding its intent to eliminate animal testing for cosmetics. Below is a list of the names and positions of the in-house and outside participants at the time of the first meeting.

External Stakeholders
Akiko Asano	Attorney, Takagi Kunio Law Offices
Hiromi Kamekura	Director, Japan Anti-Vivisection Association (JAVA)
Noriho Tanaka	Former president, Japanese Society for Alternatives to Animal Experiments
Eiko Nakano	Producer, Nikkei BP Consulting
Chizuko Yamaguchi	Veterinary inspector, Japan Animal Welfare Society
Keiko Yamazaki	Executive Board member, Japanese Coalition for Animal Welfare
Takemi Yoshida	President, Japanese Society of Toxicology
Hideto Kawakita, moderator	CEO, International Organization for Human, Organization, and the Earth
Shiseido Personnel
Tsunehiko Iwai	Director in charge of technical planning and quality management
Hiroshi Itagaki	Senior researcher, Quality Assessment Center
Yasuko Takayama	General manager, Corporate Social Responsibility Department

The opinions presented by the external stakeholders were quite varied. The synopses provided below highlight their unique concerns and provide a baseline from which to assess the progress of the dialogue.

AKIKO ASANO From the standpoint of protecting the vulnerable members of society, laboratory animals are in need of protection, too, and in this sense we want to see progress toward the elimination of testing. However, from a safety assurance standpoint, we don’t think that animal testing in the broadest sense is likely to disappear. With this in mind, instead of just debating whether to stop or continue testing, it seems to me that we need to address the nature of the experiments and the adoption of workable protocols. We’ll also need statutory changes at the national level, and as the industry leader, it seems to me Shiseido’s role is to ensure that the laws effectively address real concerns.

HIROMI KAMEKURA Our organization launched its campaign against Shiseido’s animal testing at the beginning of 2009. We’ve been urging action by individual consumers to convey their opposition to Shiseido, and we sent an open letter to the company with about 46,000 signatures. Shiseido is Japan’s biggest cosmetics manufacturer, and if takes the lead in the total elimination of animal testing, it will win kudos from the international community, and other companies are sure to follow its example.

NORIHO TANAKA Animal testing is often equated with cruelty, but in fact not all testing is brutal. Since its establishment in 1989, the Japanese Society for Alternatives to Animal Experiments has been pursuing a variety of initiatives to promote the 3 Rs [replacement, reduction, refinement]. We’re looking to Shiseido, an industry leader, to promote and support further study on alternative methods.

EIKO NAKANO If the safety of a chemical substance can be verified by alternative methods, then those methods should be used, but if animal testing is the only way to demonstrate the safety of a substance, then it’s unavoidable. Not all consumers see things the same way. Some are looking for products whose safety has been scientifically established. It seems to me that the important thing is the ability of consumers to choose products that accord with their own judgment and beliefs. There are also concerns about the impact that the elimination of animal testing could have on the business’s ability to compete internationally and develop new products.

CHIZUKO YAMAGUCHI Even if it’s impossible to stop animal testing immediately, we mustn’t ignore the suffering that animals endure for the sake of human beings. There’ve been some improvements over the past thirty years in the conditions under which animals are kept, but the situation is still not acceptable. There’s an urgent need to improve animal welfare in Japan. The cosmetics industry has already put considerable effort into the development of alternative testing methods. Now it’s time for government to step in with financial and regulatory support, and we’re ready to back up Shiseido’s initiatives where we can.

KEIKO YAMAZAKI Human beings are the cause of suffering by countless animals. To change this reality, we need to look at things from a broad perspective without emotionalizing and soberly chart a path to reduce the number of laboratory animals and minimize their suffering. . . . We would be glad to know of ways that citizens like us can help to put an end to animal testing and enhance animal welfare.

TAKEMI YOSHIDA There are still many unknowns when it comes to determining the safety or toxicity of chemical substances on the cellular level. At present there are about 30 million chemicals in existence, and somewhere around 100,000 that are actually in use. It’s true that animal testing is not the answer to all safety concerns, but if safety is our first consideration, then for now, we have little choice but to continue animal testing in cases where there’s no reliable alternative method. . . . We need to foster a more relative perspective regarding chemicals, instead of an all-or-nothing attitude.

As these statements make clear, there were stark differences among the participants on the subject of animal testing, even with an eventual phase-out as the basic premise.

We should also note that the regulatory climate surrounding animal testing differs substantially from country to country. In Europe, which frowns on such testing, the regulatory framework is moving in the direction of a complete ban. In Japan, regulators currently almost never accept data from alternative methods. In China, meanwhile, regulators require animal testing of all final products as a safety precaution.

The most important outcome of the first roundtable was a shared recognition among the participants that addressing the issue of animal testing would require understanding and action by a wide range of stakeholders and that all of them—not just Shiseido—had important roles to play. Thanks to the meeting, these stakeholders were able to come together, affirm the existence of animal testing as an issue, and gain a better understanding of differing perspectives. This was possible because Shiseido approached the roundtable with a genuine desire to understand the background and rationale of each stakeholder’s views and to learn from them by listening carefully and openly, without prejudice or preconceptions.

Progressive Deepening

The roundtable continued to evolve after the first session, and the level of dialogue progressively deepened. A consistent format also took shape.

Early on in the second session, held in November 2010, the participants were able to agree on four basic tasks: (1) developing viable alternative testing methods, (2) getting other companies to take similar action, (3) lobbying the government, and (4) educating consumers. The discussion then moved to such issues as how to build a coalition among stakeholders representing a variety of interests and what kinds of action would be most effective in accelerating the process. While expressing high expectations of Shiseido, the participants also made clear their desire to take appropriate steps on their own. In this way, the conference became a springboard for concrete action.

To repeat, the issue of animal testing is a complex and contentious one. In addition to diametrically opposing views on basic questions, there are a wide range of opinions on the best way to move forward. There is also a lack of awareness within our society as a whole. As with other social issues, such as economic inequality, there is insufficient recognition of the problem owing to a shortage of information.

In such cases, the first and foremost task is to raise society’s awareness of the issue. It is also essential to bridge the gap between different positions and foster a general willingness to find common ground and use it as the basis for action. In this sense, the roundtable managed to get everyone more or less on the same page by the second session. This may be a necessary condition for a deeper and more productive dialogue.

A Shift in Course

At the third roundtable session, held six months later in June 2011, representatives from Shiseido announced that the company had stopped all in-house animal testing as of March 30. They also unveiled a new strategy for product development.

The new strategy emphasized a more holistic approach to value creation through product development, going beyond “functional value”—as embodied in the whitening, anti-aging, anti-wrinkle, oil-control, and moisturizing agents for which Shiseido is known—to embrace “sensation value” (the pleasant feeling and satisfaction customers get from using a product) and even “emotional value” deriving from a product’s appeal to customers’ sensibilities and discerning tastes. This was management’s answer to lingering concerns that Shiseido might fall behind other companies with regard to functional value if it suspended development of new ingredients whose safety could not be verified by alternative methods. It bespoke a commitment not to allow the new policy to lessen the appeal of Shiseido products or undermine the company’s competitiveness.

The implication is that the focus of competition will shift away from functional value, in which Shiseido has been the industry leader, and this constitutes a major change in business strategy. From the standpoint of R&D personnel, it could mean the suspension of product-research projects that they had been pursuing for years. For a researcher, this could amount to abandoning one’s ideals.

Needless to say, the decision to embark on such a shift in course could not be made solely on the basis of dialogue with external stakeholders. Paralleling the roundtable conferences were internal meetings at various levels in each division, where the fundamentals of business strategy were debated, including the source of Shiseido’s competitive strength, changing consumer perceptions, the nature of cosmetics, and the way forward.

One factor driving this may have been Shiseido’s own concerns about the company’s future. Thanks to its superior R&D program, Shiseido had long dominated the competition in terms of product functionality, most notably through the use of such whitening agents as arbutin and transexamic acid. But in recent years, this superiority had not translated into growth in market share. Each division was grappling with the same basic questions: What do our customers really want? What must Shiseido do in a particular region or market to achieve a competitive advantage? In the midst of this reevaluation, the animal testing issue played a significant role as an impetus for the adoption of a competitive strategy stressing value as something more than functional superiority.

A company’s relationship to society bears directly on its raison d’être and its source of competitive strength. Confronted with calls from society for the elimination of animal testing, Shiseido made the decision to treat its response as a central issue of business strategy. In a sense, this epitomizes the integration of social responsibility into business management. In pursuing dialogue both internally and externally and firmly linking the two processes, Shiseido was fulfilling an important condition for genuine integration of CSR into corporate activity.

What Is Dialogue?

The sixth and last roundtable session was held in March 2014. By that time, Shiseido had reached the decision to do away with animal testing, at in-house and outside facilities alike, in the development of any cosmetic or quasi-drug product undertaken on or after April 1, 2013.

The content of the discussions conducted over the course of these six meetings impresses on one the importance of establishing common ground as a basis from which stakeholders can consider the problem and devise next steps for addressing it. Simply asserting one’s own opinion without responding to what others are saying tends to accentuate differences and make it all the more difficult to bridge the gap between divergent views. If that is all that is going to happen, then there is not much point in bringing people together.

There is a tendency in Japan to avoid a stalemate by steering participants toward a predetermined compromise. Shiseido contends that it had no such blueprint, despite the fact that a number of company executives had voiced reservations about holding such open-ended discussions. Considering the matter closely, one realizes how difficult it would be to predetermine a conclusion on such a complex issue as animal testing. In holding a roundtable on such a theme, the company may have been taking a leap into the unknown. But those involved did not flinch from taking such a risk. They recognized that this was an issue that had to be met head-on and that Shiseido, having already broken new ground on the question, had a responsibility to see it through.

I do not mean to imply that Shiseido’s decision was heroic or that there was never any second guessing. They experienced all the frustrations that attend any effort to tackle a serious social issue. As one of them told me, “There was no satisfying sense of accomplishment when it was over. Maybe the decision will work out well for the company, maybe not. But in any case, if society is asking something of us, responding to those demands is our raison d’être.”

People often talk about “resolving social problems,” but the reality is that social problems are not so easy to solve. In its roundtable on animal testing, as in its work supporting cancer patients and survivors, Shiseido has announced its intention to confront social issues head-on and to do so in partnership with the stakeholders concerned. As one of the executives at Shiseido put it, “Controversial social issues are going to keep arising. We have to keep our eyes open for emerging issues and ask ourselves what we can do in response to society’s demands. That’s the mission of a social trailblazer.”

These words, no doubt, capture the very essence of CSR.

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^[1] For more information on the content of the discussions, see Hideto Kawakita’s essay, “Lessons from Shiseido’s Roundtable on Abolishing Animal Testing.”