Understanding the ELSI Awareness of Consumers and Data Business Professionals

ELSI refers to challenges that extend beyond technical issues arising during the research, development, and societal implementation of new technologies. It is an acronym for Ethical, Legal, and Social Issues, and is gaining attention both domestically and internationally as an unavoidable challenge for companies engaging in new business areas, including data business.

Since 2019, Dentsu Inc. has collaborated with the newly established Osaka University Center for Co-creation of Social Technologies (ELSI Center) on an industry-academia co-creation project. Beyond supporting companies and industry groups in developing guidelines for data business domains, Dentsu Inc. conducted Japan's first-of-its-kind* "ELSI Awareness Survey for Data Business" in 2021.

In this article, Professor Mitsuo Kishimoto, Director of the Osaka University ELSI Center and an expert in risk studies; Professor Yusuke Nagato, a special assistant professor at the same center and an ethicist; and Professor Xuzhi Zhu from Dentsu Inc. Solution Design Bureau, who serves as a visiting faculty member at the center, discuss the challenges and opportunities for ELSI implementation in Japan while interpreting the survey results.

*Survey by Dentsu Inc. and Osaka University ELSI Center

 

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No ELSI Response, No Data Business?! What is the Much-Discussed ELSI?
 

As data business accelerates, corporate demand for ELSI compliance surges

Shu: Over the past few years, awareness of the term "ELSI" has rapidly grown in Japan, and it is now becoming established as an essential element for business. We covered the background behind ELSI's growing attention in detail during our 2020 interview with Professor Kishimoto. Since then, the integration of physical and digital spaces has accelerated further. As businesses increasingly leverage data, I feel corporate demand for ELSI compliance is growing ever stronger.

Kishimoto: You're absolutely right. Awareness of ELSI is higher than ever before. When explaining it to those hearing the term for the first time, I get the sense that they immediately grasp its importance.

Shu: That's right. In our joint project, we've seen an increase in consultations from companies. We've supported initiatives like developing common guidelines for the location-based services industry group LBMA Japan, assisting Recruit in establishing their Privacy Center, and helping the Osaka Metro Group formulate data ethics aligned with their corporate philosophy and designing ELSI talent development training. Professor Nagato, looking back on these projects, what are your thoughts?

Nagato: I often sense that while corporate representatives already possess strong awareness of ethical, legal, and social issues, they struggle with how to connect this to their own work and how the organization should respond, including collaboration with other departments. I believe a key achievement is that by providing the new ELSI framework, we've created fertile ground for more active discussion within these organizations. Another significant takeaway was realizing that companies can find driving force for ELSI engagement by revisiting their corporate philosophy and company creed, thereby reaffirming their identity and purpose.

Shu: Precisely because we're tackling this new frontier of data business, revisiting our founding principles allowed us to craft an ethics guideline using language that truly resonates with us. That was a major revelation for us too.

Only 30% of users review terms of service and privacy policies. The hollowed-out consent model is a challenge.

Shu: Briefly introducing recent ELSI trends in data business, the industrialization of E (Ethical) compliance is advancing, particularly in North America. For example, some companies, including certain mega-platform players, are clearly positioning themselves as rule-makers and promoting data ethics as one of their competitive advantages.

At the 2022 summit hosted by the IAPP (International Association of Privacy Professionals), a non-profit organization of privacy experts, it was stated that the top priority for future data businesses is achieving "trust." While compliance with L (Legal) requirements is a fundamental obligation, "privacy and ethical/social responsibility" are crucial elements for differentiation strategies. In North America, the data ethics and privacy tech market is projected to reach $25.82 billion (approximately ¥3 trillion, an 11-fold increase from 2022) by 2029.

Compared to these international trends, Japan inevitably has an aspect of following overseas movements. However, based on our daily interactions with companies, our gut feeling is that interest in ELSI is indeed growing significantly, as mentioned earlier.

Therefore, to gauge the level of understanding and interest in ELSI among general consumers (hereinafter referred to as "consumers") and data business practitioners, we conducted the "ELSI Awareness Survey in Data Business" at the end of 2021.

Moving forward, we will analyze the findings from this survey to interpret the current state, challenges, and future potential of ELSI responses in Japan.

Shu: First, I'd like to introduce the awareness level of the term "ELSI." The results showed approximately 20% of consumers and about 43% of data business professionals were familiar with it. This 20% figure is roughly on par with the awareness levels of keywords like "ethical consumption" or "ESG investment." What are your initial, candid thoughts on this number?

Kishimoto: I thought it was higher than expected. It's interesting that consumers recognize ELSI on par with trendy terms like ESG investing. And for data business professionals, it's around 40%. Since the data business field frequently discusses issues like privacy violations and information leaks, people involved in that sector likely encounter ELSI more often.

Nagato: While I find the high awareness of ELSI itself encouraging, I also want to understand how people perceive and interpret the term. For instance, how they relate it to established concepts like "compliance" is a key point.

Shu: Yes, we found some interesting results regarding understanding of the term, which I'll touch on in more detail later. Next, let's look at the rate of reviewing terms of service and privacy policies. The reality is that about 65% of consumers "do not review" them, and about 6% don't even know what they are.

Kishimoto: Honestly, reflecting on myself, even though I work deeply in this field, I often agree without checking. So, I was actually surprised that over 30% do check.

Nagato: I only review them when I feel curious, so the finding that over 30% do review them was unexpected. However, even among those who review them, I doubt many read every single word. I became very interested in understanding the perspective they use when reviewing and what specific words they focus on.

Shu: The finding that the "always verify" group is under 10% aligns with trends seen in prior surveys across countries. Consequently, especially in Europe and the US, there's active discussion on designing a "post-consent model" driven by the awareness that current privacy policies and consent acquisition methods are effectively failing. It's anticipated that Japan will also need to discuss how to establish meaningful consent moving forward.

Resistance to data utilization differs significantly between consumers and data business professionals

Shu: This time, we also surveyed the proportion of people involved in data-related businesses. The results show that approximately 23% of consumers are engaged in businesses handling personal data in online environments, and 15% are involved in work handling large volumes of personal data within companies or similar organizations. Looking at the types of data handled by those in data-related businesses, over half handle "personal information." Among "personal-related information," the proportion handling data related to purchases and payments is particularly high (18.7%).

Kishimoto: Recently, even small shops are introducing payment services, and personal information is sometimes collected during processes like issuing point cards. So, it seems inevitable that more people will handle personal information in their work.

Shu: Cases involving the handling of personal information and personal-related information online are expanding across all industries. Considering this, it's necessary for many people to discuss the proper way to engage with data and its risks, not just as consumers but as parties handling data themselves.

Next, regarding resistance to data utilization by purpose, excluding information provision during accidents or disasters, a majority of consumers tend to express resistance regardless of the purpose. Resistance is particularly high for recommendations based on social media follows/followers.

Furthermore, we found a significant gap in resistance to data utilization based on whether individuals work in the data business. Those employed in data-related fields show relatively lower resistance. This is likely because they witness firsthand how companies and organizations handle data with great care through their work and understand the significance of data utilization.

Kishimoto: Thinking about it that way, one challenge is that the transparency and significance of data utilization haven't been communicated effectively to the general public. Conversely, this could be seen as presenting a major opportunity for businesses aiming to earn consumer trust.

Shu: Precisely. One reason the privacy tech market is gaining attention in North America is because it's seen as offering a competitive edge in ensuring transparency and improving communication with consumers.

Is ethics a goal? Or an obligation?

Shu: So, what do data business practitioners actually prioritize when handling data? Looking at the survey results, the most emphasized aspect is L (Legal) issues, followed by E (Ethical) issues. Notably, there's a strong tendency for respondents to prioritize ethical considerations.

Shu: On the other hand, when asked about future challenges, E (Ethical) ranked highest, followed by S (Social) and then L (Legal). This shows that the legal issues currently prioritized are not strongly anticipated as future challenges. How do you interpret this?

Kishimoto: My sense is that traditional Japanese companies tend to view laws and regulations as something imposed from outside. In Europe and the US, companies often openly engage with governments and administrations to influence legislation. In Japan, however, except for a few companies, we haven't seen much proactive advocacy from the business side. Therefore, while they focus intensely on complying with current laws, these compliance efforts may not readily translate into a sense of future challenges.

Nagato: I think there's a certain level of established know-how for legal compliance, but many companies are still figuring out how to approach ethical issues. And when ethical perspectives are recognized as a challenge, I wonder what exactly "ethics" means in that context.

Shu: Precisely, while many recognize ethics as a future challenge, when asked whether ethics represent "something to strive for as much as possible" or "something that must be strictly adhered to," the responses were almost evenly split. In Western trends regarding E (Ethical) compliance, the understanding that it is "something that must be strictly adhered to" has become standard. However, rather than debating which is correct, I think we should focus on the fact that interpretations of the term "ethics" are so divided.

Shu: Incidentally, when asked what the word "ethics" represents, the most common answer was "something a working adult should adhere to." Other responses included "rules established by companies or organizations," "fundamental principles for humanity," and "obligations," clearly showing diverse interpretations.

Nagato: Exactly. Particularly in the West, ethics is commonly understood in the context of obligations—things that must be adhered to absolutely. These aren't externally imposed duties like laws, but obligations we impose upon ourselves. Of course, the idea of "aiming for them as much as possible" isn't inherently wrong. However, given how many different interpretations coexist, I felt it necessary as an ethicist to clarify and lecture on this.

Kishimoto: Indeed, for example, when looking at Japanese companies' AI ethics principles, it's not uncommon to find phrasing closer to aspirational goals like "aim for XX" or "strive to do XX as much as possible." My personal impression is that overseas companies' AI ethics principles often explicitly state obligations to "not do XX," clearly defining what must be adhered to and imposing them on their own companies.

Shu: Considering that ethics are valued as a key differentiator in overseas markets, this gap in how Japanese and foreign companies perceive ethics could potentially become a barrier for Japanese firms expanding their data businesses internationally.

Nagato: That risk certainly exists. However, precisely because "E" (Ethical) carries such strong weight overseas as an obligation to be upheld, we see the problem of "ethics washing" – where companies create convenient ethical principles and justify themselves with superficial ELSI compliance. This makes it difficult to simply say that viewing ethics as an obligation is sufficient.

Efforts to enhance psychological safety are also part of ELSI compliance

Shu: As this survey also revealed, while there's a certain shared understanding that ethical perspectives are crucial for future data businesses, the actual meaning of "ethics" at that moment might actually be different for each individual. It seems important to articulate this gap and then carefully craft the words for what ethical guidelines or policies our organization will uphold.

Nagato: Exactly. Ultimately, how we express ethics within our own context is key to ELSI management. To achieve this, it's beneficial to cultivate the habit of regularly considering when and how we specifically use the term "ethics" in our daily work.

Shu: In doing so, rather than relying on individual efforts within the organization, it will become increasingly important for everyone to understand the risks associated with ELSI. This includes sharing near-miss incidents to prevent risks before they occur, proactively communicating ethical perspectives to build trust with consumers, and fostering relationships with them.

Kishimoto: How to integrate such ELSI responses into business processes is also a major point. For example, even if ethical concerns arise right before a product or service hits the market, halting the project at that stage is often difficult. It's better to incorporate ELSI as early as possible in the process. This is the so-called "by design" approach, where ELSI perspectives are embedded starting from the service design phase.

Nagato: That means building an organization where ELSI considerations don't become a bottleneck. Beyond process improvements, initiatives that enhance psychological safety—like creating an environment where employees feel comfortable raising concerns—should also be seen as part of ELSI management.

Shu: In the coming era, especially in data-driven businesses, highlighting ethical perspectives to enhance competitiveness is becoming a global trend. To ensure Japanese organizations can ride this wave, we intend to actively promote industry-academia collaborative projects moving forward.

(Survey Overview)
・Survey Title: ELSI Awareness Survey in Data Business
・Survey Participants & Sample Size:
[Screening] Men and women aged 20s to 60s nationwide・20,000 respondents
【Main Survey】Individuals involved in data business・1,000 respondents
・Survey Period: December 20–24, 2021
・Survey Conducting Organization: Dentsu Macromill Insight, Inc.