Japanese companies operating in the EU become subject to sustainability reporting rules from next year. Many are using their CVC units to help meet targets.

Yajima of Fujitsu Ventures

Hideaki Yajima, president and CEO of Fujitsu Ventures

It is not just oil and gas or mobility companies under pressure to mitigate their climate impact — electronics manufacturers are increasingly being asked to rethink their use of metals and rare earth elements and to address the mounting problem of electronic waste.

Japanese computer and electronics company Fujitsu has become the latest Japanese company to address this challenge by adding impact investing to the mandate of its investment unit. Fujitsu Ventures, which as originally created in 2021 to help the Japanese computer and electronics company digitalise its business, last month made impact investing a core focus for the team.

“We decided to expand the investment targets of Fujitsu Ventures to include impact investing as another means of realising our purpose,” says Fujitsu Ventures president and CEO Hideaki Yajima. “We aim to create synergies that amplify the social impact of our investments,”

The unit is among the latest Japanese CVC units to add impact investing to its programme. Real estate developer Mitsubishi Estate’s Bricks Fund Tokyo and carmaker Suzuki’s Next Bharat Ventures also announced similar measures last month.

Others like Sony Ventures, part of diversified electronics conglomerate Sony, had already launched a sustainability fund, dubbed Sony Innovation Fund: Environment back in 2020.

Japanese companies are responding to the fact that from 2025, if they have subsidiaries in the European Union, they will have to comply with European Sustainability Reporting Standards issued last year. Large or listed companies in the EU already need to comply with this, but from next year non-EU corporations with subsidiaries in the member states will also be required to make disclosures on how they impact people and the environment.

The pivot to impact investing

Fujitsu Ventures, which was founded with ¥10bn ($65m today or $90m at the time), already had several ESG-minded companies in its portfolio – AI-based fleet optimisation platform Autofleet Systems, manufacturing industry’s human resources management tool provider Skillnote and Metron, which helps companies reduce energy consumption. However, impact investing was not a well-defined strategy until now.

The CVC team will concentrate on solving global environmental issues, developing digital societies and improving people’s well-being.

“Fujitsu’s materiality is identified based on the principles of ‘double materiality’ – the mutual impacts of corporations and the environment and society,” explains Yajima.

In May this year, Fujitsu Ventures made its first formal impact investment in Gojo & Company, a microfinance service catering to underbanked and low-income households in developing countries like Sri Lanka, Myanmar, Cambodia, India and Tajikistan.

“Our engagement strategy includes co-investment opportunities and the exchange of best practices,” according to Yajima, who adds his team will actively partner with global impact ecosystem builders such as social enterprises, non-profit organisations, government bodies and impact-focused investors.

The parent company Fujitsu, which was founded in 1935, had already made a shift in its business focus in May 2023 to emphasise sustainability transformation. But the aim is for the CVC unit to amplify and speed up this transition.

Financial and strategic success both essential

Yajima says that Fujitsu Ventures will measure its impact investments through both quantitative and qualitative analyses.

“The process begins with the identification and measurement of impact indicators, which are tailored to each target company through close consultation,” explains Yajima. “These indicators are designed to be the minimum necessary to effectively gauge the social impact being generated.”

The impact investments will also be expected to perform financially in the same way as other investments. Yajima emphasises that the CVC team is focused on helping portfolio companies succeed in their business operations.

Yajima says that Fujitsu Ventures will invest directly in the impact startup and is not considering LP fund investments at present. It is looking for startups globally.

“Our primary aim is to identify and invest in companies that align with our purpose and have the potential to generate significant social impact, regardless of their location,” Yajima says.

When evaluating impact investment opportunities, it prioritises startups based on the social issue they aim to address, the expected scale of social impact and the degree of alignment with Fujitsu’s materiality.

“By collaborating with partners who share our vision, we can collectively work towards innovative solutions to pressing social issues,” says Yajima.

Edison Fu

Edison Fu is a reporter and Asia liaison at Global Corporate Venturing.