Cap uses multiple factors to develop sustainability

For a sustainable future, we need to make the most of companies’ innovations and growth potential. Traditionally, the value of a company has been judged primarily by its market capitalization: the profit generated is the basis of the valuation. Companies must indeed achieve profits to ensure their own sustainability. Still, companies exist to provide social value, such as by creating and delivering products or services people need or desire. In doing so, they contribute to improving people’s lives, increasing people’s happiness, and solving social issues. If companies optimize only their shareholders’ value and not the value of their multi-stakeholders, society cannot be sustainable. Last year, the sum of the market capitalization of the five U.S. tech giants exceeded that of all the 2,170 companies on the First Section of the Tokyo Stock Exchange combined. However, I do not believe that those five companies provide more value than the 2,170. For example, SOMPO’s nursing care business serves 80,000 senior citizens. If our nursing care business, which replaces part of the public health care system, generates no profit, can it be said that this business has no value? Determining the value of a company should include a metric of the worth it provides to society, not just its financial profit. To develop a new measure of corporate value, companies, governments, and citizens need to collaborate to set shared goals for the common good of society. How can we optimize people’s happiness, and how do we balance it across various measures, such as money and quality of life? Multi-stakeholders should discuss and decide this together. Then, each of us must play a role in realizing our agreed-upon goals. Businesses must return to what is truly important. Companies need to achieve organizational ambidexterity; committing to creating social value in the long term based on their purpose while generating profits in the short term.