Discussing the Future of "Decarbonization" Business with IBM Japan "Decarbonization: From Cost to Investment" Co-creation with IBM Japan

The Dentsu Group has fully launched businesses and services supporting client companies and organizations in their efforts to achieve carbon neutrality.

As part of this initiative, the dentsu carbon neutral solutions Business Development Unit hosted the SX Business Conference "IBM Consulting: Decarbonization – From Cost to Investment" on Monday, September 11, 2023. This article provides a digest report of the event.

*Affiliations and titles mentioned in this article are as of September 2023.

 

Why is the Dentsu Group committed to the 'Decarbonization' business?

As environmentally conscious initiatives advance globally, in October 2020, the Japanese government declared its goal of achieving carbon neutrality—reducing greenhouse gas emissions to net zero by 2050.

Themes like decarbonization and carbon neutrality have become critical management issues requiring urgent attention for companies.

However, many companies have set goals but have yet to take concrete steps toward achieving them. A key reason for this is that within the decarbonization value chain of domestic companies, internal organizations and solution partners are often fragmented by process, making consistent decision-making and implementation difficult.

Furthermore, this is an area where corporate efforts alone are insufficient for realization. Collaboration with external companies is necessary to drive awareness reform and behavioral change among all stakeholders.

Given this situation, the carbon neutrality domain has been expanding within consulting firms in recent years. For the Dentsu Group, committing to solving client companies' decarbonization challenges has become an urgent priority.

The 'dentsu carbon neutral solutions Business Development Unit,' which drives carbon neutrality and decarbonization business initiatives across the group, is a project launched with the goal of comprehensively producing client companies' carbon neutrality efforts. This is achieved by leveraging the solutions held by Dentsu Group companies and collaborating with partner companies.

Leveraging the Dentsu Group's core strength in communication, the unit provides end-to-end support across all processes—from planning and consideration to execution. Through "co-creation" with client and partner companies, it delivers diverse services aimed at achieving carbon neutrality.

For this conference, we collaborated with the dentsu carbon neutral solutions Business Development Unit to invite Ms. Yasuko Otsuka and Mr. Hideyuki Suehiro from IBM Japan, who are driving sustainability in the technology field. They introduced the current global landscape surrounding sustainability and discussed the potential for case studies that could be created through the collaboration between IBM Japan and Dentsu Inc.

Thinking Business with the New Value of QCD+S

First, Ms. Otsuka, Strategy Consulting Partner (Sustainability Strategy Lead) at IBM Consulting, Japan, took the stage to introduce global trends and future outlooks in sustainability.

According to the " CEO Study " conducted by IBM's think tank, the IBM Institute for Business Value, surveying CEOs from 40 countries worldwide, approximately 50% of global CEOs believe sustainability will be the most significant challenge for companies in the next two to three years. However, the study also revealed that many executives feel challenged in implementing sustainability, citing issues such as "unclear return on investment or economic benefits..." and "insufficient use of technology like data."

However, Mr. Otsuka stated that in this unpredictable "VUCA" era, the one thing certain to happen is "the entire world uniting to pursue carbon neutrality." Therefore, keeping up with management strategies related to sustainability and carbon neutrality, along with the accompanying laws and regulations, becomes a critically important theme for corporate growth.

Mr. Otsuka particularly highlighted "shifting values" as a major point.

Whereas corporate economic value previously focused on QCD—Quality, Cost, and Delivery—we are now entering an era demanding a new value system: QCD+S (Sustainability). Consequently, some companies are shifting to suppliers that emit fewer greenhouse gases (GHG), even if it means slightly higher costs. Mr. Otsuka stated that the addition of this new value necessitates steering management from a different perspective than before, making thorough communication with all stakeholders—including employees, the supply chain, and consumers—crucial.

Furthermore, leveraging technology is indispensable for achieving sustainability, and IBM is actively developing and providing various solutions.

Among these, reporting on GHG emissions is crucial for carbon neutrality efforts, often leaving sustainability department staff overwhelmed by organizing and aggregating vast amounts of data. IBM's management system, "Envizi," enables automatic aggregation by linking target data systems, allowing immediate access to metrics like CO2 emissions.

"By leveraging this technology to visualize data, personnel can focus on core tasks—such as strategizing decarbonization based on aggregated data—rather than being bogged down by document organization and aggregation," stated Mr. Otsuka. He presented insights from multiple perspectives on how technology can significantly contribute to achieving sustainability and carbon neutrality.

IBM Japan × Dentsu Inc. Co-creation: Decarbonization as the Key to Corporate Growth!

Next, IBM Japan's Mr. Otsuka and Mr. Suehiro, alongside Dentsu Inc.'s Mr. Takashi Kagami, Mr. Tomoyuki Ueda, and Mr. Yasutoshi Sumida took the stage for a discussion centered on the co-creation between IBM Japan and Dentsu Inc.

The discussion began with the question: Why is Dentsu Inc., an advertising agency, involved in decarbonization business? The background and strengths of the Dentsu Group were highlighted. According to Creative Director Ueda, while Dentsu Inc.'s creative teams traditionally focused on producing commercials and creating brand designs, their scope now extends to encompass the entire business value chain, from upstream to downstream.

Particularly in large-scale projects involving multiple companies, challenges often arise in sharing direction and goals. This is precisely where Dentsu Inc.'s creative team excels as leaders, presenting visuals and copy that share a unified image and worldview, enabling "visualization" and "verbalization." This allows all companies to advance the project toward a common goal. Mr. Ueda states that another strength of the Dentsu Group is its ability to use creative power to enhance the sense of participation among companies and members involved in a project, as well as to provide clear direction.

"Particularly in areas like sustainability and carbon neutrality, achieving these goals requires all stakeholders surrounding the company—including the supply chain—to share the same awareness and practice it. The Dentsu Group can approach building such mechanisms and communication frameworks," says Ueda.

Mr. Suehiro also expressed his expectation for these strengths of the Dentsu Group in the co-creation between IBM Japan and Dentsu Inc. "IBM is a company with a very rational corporate culture, and it has broadly pursued technology development and other initiatives based on that mindset. However, to advance sustainability and carbon neutrality, we need customer companies, supply chains, and consumers to make irrational choices. Irrationality here doesn't carry a negative connotation; it refers to emotional or belief-based factors. That's an area where IBM struggles. Conversely, I believe Dentsu Inc. excels at creating such irrational contexts. Combining that with IBM's rationality could lead to something truly interesting," he stated.

Sumida responded, "By irrational, I believe you're referring to economic rationality. People might hesitate to spend 20 yen but freely spend 200,000 yen – it's not governed by clear logic. Yet, actions are always influenced by something, which is why I believe Dentsu Inc. can contribute in the realm of communication."

The discussion also touched on "comfortable consumption," a topic that arose during the five speakers' meeting.

Mr. Kagami noted that while corporate executives have traditionally prioritized cost in business decisions, if a "comfortable consumption" movement could be established in society, consumers might be inclined to purchase products from companies engaged in environmentally conscious initiatives, even if they are slightly more expensive. "This could transform sustainability and carbon neutrality—previously seen as costs—into potential profit drivers. Creating such movements is Dentsu Inc.'s strength. With IBM supporting the technology and logic aspects, we might jointly create a one-stop solution," he said, outlining new possibilities.

Mr. Suehiro added, "By having Dentsu Inc. build this context, we want to create examples where sustainability and carbon neutrality initiatives contribute to corporate growth."

Finally, when asked about future prospects for co-creation between IBM Japan and Dentsu Inc., Mr. Otsuka stated, "Let's just try various things together. I'd be delighted if we could advance step by step, exchanging requests like 'Can we do this?' along the way."

Mr. Ueda also expressed his expectations, concluding the discussion: "I hope we can have more back-and-forth conversations between our two companies, combining ideas and technology to connect not only to decarbonization business but also to other solutions."