Circulation of Capital and Materiality Management
Circulation of Capital
The capital needed to execute business operations usually consists of cash, equipment, and other tangible assets that appear on financial statements, as well as intangible assets that do not convert so easily into money, like human resources, know-how, and networks. We must inject both financial and non-financial capital into our businesses and establish a mechanism through which our launching pad for growth is enhanced in a sustained manner by the (1) circulation of capital within our businesses, for example, the generation of profits and development of human resources through business execution, as well as client base expansion, and the (2) circulation of capital outside of our businesses whereby benefits that extend beyond the Group come back to the Group in the long term owing to the internalization of the external economy. The SuMi TRUST Group's value creation process— presented in line with the International Integrated Reporting Framework—is a mechanism that facilitates the circulation of capital through our social problem-solving businesses.
|Capital||Three areas of value||SuMi TRUST Group definitions and metrics|
Total training hours: 5,705; training costs: ¥540mn*
|Social and relationship||
Common social capital is shared by all kinds of people and organizations and forms the basis for the existence of the Group itself and its stakeholders. The definition of natural capital according to the International Integrated Reporting Framework is "air, water, land, minerals and forests, biodiversity, and eco-system health."
Data as of March 31, 2020 or FY2019
*Asterisk denotes SuMi TRUST Bank only (non-consolidated)
The circulation of capital is like the circulation of blood. If capital is steadily accumulated in the same way blood flows freely around the body, the ability to generate value will continue to increase in a sustained fashion. With this kind of image in mind, the factors that inhibit the circulation of capital and those that promote it were identified and determined by the Board of Directors as priority issues (materiality) that affect the value creation process over the medium to long term. The departments in charge are usually tasked with managing materiality issues and making that process more sophisticated, but we also employ an internal engagement process as a way of incorporating the viewpoints of stakeholders. More specifically, the Sustainability Management Department engages in dialogue with relevant departments with respect to the non-financial materiality topics in the finance sector that ESG investors are most interested in and for which the Group's initiatives may face challenges. By doing so, we aim to further improve our initiatives and enhance the disclosure of information.
In October 2019 we formulated a new materiality list by integrating managed thus far from a financial point of view with the materiality issues managed from a non-financial perspective. Our policy is to make materiality management more sophisticated so that each type of capital tied to materiality circulates smoothly. In doing so, we aim to achieve balanced creation of both social value and economic value and make certain of sustained growth up ahead.
|Main relevant capital||Materiality||Risk||Opportunity||Key measures|
|All types of capital||Corporate governance||Framework for enhancing value over the long term|
|Financial capital||Preserving financial capital||Concerns about creditworthiness, deterioration in stock prices and property market|
|Acquiring sustained earnings||Decline in profits in loan and deposit businesses|
|Stability of financial system||Avoiding systemic risk|
|Risk management and resilience||Identifying and managing risk, fostering a risk culture|
|Manufactured capital||Systems maintenance and combatting cyber attacks||Cyber attacks, system development delays|
|Human capital||Bolstering human resources and developing workplace environments||Human capital, health of employees|
|Intellectual capital||Protecting personal information and client data||Client information management, personal information protection|
|Safety of financial instruments||Management of risks inherent in products|
|Pursuing sustainability-themed business opportunities||Development of social problem-solving products|
|Technological (digital) innovation||Advancing digital technology, preparing for digital disruptions|
|Social and Relationship capital||Compliance||Taking measures against anti-social forces, preventing crime|
|Client-orientated approach / fiduciary duty||Improving customer satisfaction, fair trading practices|
|Considering impacts on society and the business environment of companies to whom we extend investments and loans||Managing negative impacts from investments and loans|
|Financial inclusion||Responding to the financially vulnerable, dementia-related problems|
|Population decline and super-aged society issues||Improving the well-being of the elderly|
|Natural capita||Climate change||Physical and transitional risks, carbon-free society|