
C-2024-002-1W
1. Introduction
In recent years, Japan has seen growing attention focused on the presence and influence of startups. These companies are expected to approach CSR from perspectives that differ from those of established large corporations, leveraging their capacity for rapid growth and innovation.
However, research on startup CSR is still in its early stages, and in fact, while the Ministry of Economy, Trade and Industry (METI) published a document in September 2024 titled "Accelerating Social Issue Solutions and Economic Growth through the Power of Startups," it primarily highlighted the importance of startups and introduced government support measures without delving deeper into the adoption of CSR perspectives or identifying the challenges involved in contributing to social problem-solving.
In this context, this separate supplement of the CSR White Paper 2024 aims to illuminate the current state and challenges of startup CSR, define its characteristics, and highlight startups as key players in addressing social issues. The following is a discussion of the main points revealed in each section of this supplementary volume.
2. Key Findings from Each Section
Analysis of the 11th corporate CSR survey (Startups)
- Orientation toward CSR Activities through Core Business
Startups tend to address social issues more actively through their products and services rather than through philanthropy, reflecting a strong awareness of solving social challenges via their core business. However, less than 30% of startups incorporate the SDGs into their CSR initiatives.
This may be because while the process of addressing social issues starting from SDGs encompasses social contribution activities, many startups inherently adopt a process to address social issues that begins with leveraging their products' and services' unique features and strengths. Combined with responses about SDG utilization methods, startups tend to view SDGs as business opportunities that can leverage their core operations.
This approach is further evidenced by the fact that, compared to the group of primarily large companies surveyed in the main CSR White Paper 2024 (hereinafter referred to as existing companies), startups particularly emphasize social issues within their business domains, such as "health, welfare, and aging population measures" and "measures against depopulation and regional revitalization."
- Tendency toward Limited CSR Expertise
In many startups, top management leads and fulfills the role of CSR leadership. CSR leaders are particularly highly evaluated in three areas: "extensive knowledge," "balance," and "action capability." Given that most startups lack dedicated CSR departments, their CSR activities heavily depend on top management.
As a result, startups tend to address social issues based on voluntary and intrinsic motivations rather than stakeholder perspectives, according to an analysis of responses regarding ESG awareness. However, some startups either lack ESG awareness or are unable to prioritize it due to reasons such as "insufficient resources," "lack of opportunities," or "business not yet going smoothly." While startups, like existing companies, focus on human capital management, their motivation appears largely voluntary, similar to their approach to ESG. Startups, however tend to seek improved evaluations from investors and investment institutions for their human capital management initiatives.
These points can be interpreted as results stemming from management's recognition and understanding of CSR, reflecting startups' heavy dependence on top management for CSR.
- Limitations Due to Organizational Constraints
The survey revealed that startups frequently encounter resource-related barriers in promoting human capital management, differing significantly from existing companies that primarily cite organizational culture as a barrier. Regarding outcomes from human capital management initiatives, startups show high evaluations in "productivity improvement," "achievement of corporate philosophy and management principles," and "employee motivation."
Additionally, a large proportion of startups acknowledge challenges in setting goals for women's advancement, while many existing companies report achievement in setting such goals. This suggests significant potential benefits from information exchanges between existing companies and startups.
In any case, regarding the recognition of challenges and barriers to implementing human capital management, many startups express concerns about human and economic resources, indicating their limitations in addressing these issues independently.
Corporate Case Study
Cluster, Inc. places its vision of "creating a world where everyone can become their ideal self" through the metaverse at the core of its CSR activities. As a result of clear and proactive messaging from the CEO, the company has established a cyclical CSR activity pattern of eliciting and sincerely responding to external requests, thereby contributing to the company's value creation.
One distinctive feature of Cluster's value creation is its advanced telework approach using the metaverse. By implementing unique telework that actively incorporates avatars and handle names rather than conventional telework, Cluster successfully draws out individuals' internal capabilities rather than focusing on external appearance. Utilizing cutting-edge technology, this business style effectively brings out human capital potential and represents one ideal form of human capital management.
Nevertheless, like other startups, Cluster faces certain resource constraints, whether tangible or intangible, and acknowledges challenges in balancing social contribution activities with profit-making operations.
3. Conclusion
In December 2016, the Japanese government proposed "Society 5.0" as a vision for a future society in its New Economic Policy Package. Society 5.0 claims that "economic development and the resolution of social issues are compatible with each other" and advocates creating a "human-centered society," identifying "innovation" and "new added value" as some of the essential elements for its realization. Considering this alongside the aforementioned METI document, startups emerge as crucial entities in realizing Society 5.0, with their CSR activities playing a vital role in achieving the future vision of Japanese society. While operating under some degree of organizational constraints such as scale, it is presumed that startups face greater pressures than large companies, needing not only to respond accurately to rapidly changing business environments, but also to work on addressing various social issues. Understanding this situation, we still cannot help but maintain high expectations for startup CSR.
As confirmed in the content review above, startups, like the large companies traditionally surveyed by the Tokyo Foundation for Policy Research's CSR Research Project, sincerely engage in CSR activities to address various social issues. This research reveals that startups are positively addressing social issues in different fields and through methods that differ from those of large companies, sometimes even through trial and error, driven by top management's strong social issue awareness, broad insight, and flexible thinking.
In this sense, startup CSR will need to enhance its information store, including by promoting management's understanding of CSR and sharing cases of unique social issue resolution leveraging startups' core businesses. It is hoped that related organizations will support, in addition to current assistance, the construction of frameworks and promotion of activities for solving social issues where startups serve as nodes. Many social issues arise from complex, intertwining factors, and unraveling these and strengthening progress toward solutions should require detailed, mesh-like initiatives that could be called "All-Japan" efforts. Startups possess the ability to develop flexible and swift CSR activities from positions closer to social issues, leveraging their organizational characteristics of outstanding leadership from top management and strong organizational cohesion. Startup CSR will surely be energized by building "collaborative relationships" that mobilize various stakeholders and sincerely address social issues with a shared ambition. In addition to current support primarily for startups' economic activities, supporting startup-led initiatives for solving social issues may yield greater results from startup CSR.
Startups are undoubtedly bringing fresh perspectives to CSR, as well as pure economic activities, in pursuit of Society 5.0. Amid anticipation for distinctive CSR developments aimed at a society in which "economic development and the resolution of social issues are compatible with each other," startups' presence is expected to further increase, regardless of such factors as company size or industry. This simultaneously suggests an increasing possibility that startup CSR will help transition Society 5.0 from a future vision to reality. It would be gratifying if this supplementary volume were to promote new understanding and expectations for startup CSR.