Thank you for joining Recruit Holdings ESG Fireside Chat with Ayano Senaha and Junichi Arai. This call is simultaneous translation of the original call in Japanese. Today, Sena will first give an overview of our progress made during FY 2022 for our ESG goals, which is the third pillar of our medium to long-term corporate strategy. Next, we will begin the Fireside Chat with Junichi Arai, Senior Vice President in charge of Corporate... Participants only. Please use the Google form to submit your questions. Please note that we're recording today's session. Presentation material will be obtained from the website.
Hi, I am Sena, Ayano Senaha, Director of the Board, Executive Vice President, and COO of Recruit Holdings. Thank you for joining us today. Some of you may have already seen the video released as part of the earnings report on May 15th.
I'd like to briefly explain the key points of our progress in 2022 on the ESG commitment, Prosper Together, which we first announced in 2021. Delivering social value has been part of our DNA since the foundation of the company in 1960. In 2021, at the time of the launch of the new management team, we once again discussed our social value as a global leader in HR matching. We felt strongly that we must use our increasing influence and capabilities to achieve a greater social impact, and came to agree that our sustainable growth will become possibly possible by doing so. This is why we added Prosper Together as the third pillar of our management strategy and established five clear, measurable goals in environmental, social, and governance categories with an ambitious timeframe. In our first year, we focused on discussing frameworks and midterm goals.
We're starting to see tangible signs of progress in the second year through the evolution of our products and services. Our first sustainability goal focuses on climate actions. We will achieve our short-term goal as planned by reaching carbon neutrality throughout our business activities in FY 2022. To achieve our long-term goal of reaching carbon neutrality across our entire value chain by FY 2030, we are reducing GHG emissions by setting targets validated by SBTi as a near-term targets to 1.5 degrees in June. Next is our social impact goal. Our target is to shorten the time it takes to get hired by half by FY 2030. We aim to do so through making job matching significantly faster. In FY 2022, we observed several signs we were getting closer to the hire. One of the signs was seen among those using Indeed Assessments.
Indeed Assessments let job seekers proactively take assessments, offering a way to showcase their skills to potential employers. Employers who utilized Indeed Assessments for screening were able to hire 16% faster. There are other examples connected to reducing the time it takes to get hired through the evolution of the product. Refining and updating our products in this way will first and foremost help simplify hiring, and we believe it will also help our financial growth in the long run. However, job seekers from the underrepresented or vulnerable groups face barriers that are difficult to remove through improving matching quality and efficiency alone. This is why we are also committed to helping 30 million job seekers facing barriers get hired by 2030.
Although there are many barriers and biases in the job market, in FY 2022, we decided to focus on and worked to reduce five barriers. For example, education is a common barrier around the world when looking for a job. We believe hiring should be determined by whether a candidate has the skills and abilities to do the job, not by unrelated factors. However, according to a study, 60% of employers said they have rejected candidates because they do not have sufficient education requirements, even though they have adequate skills and abilities. Through making product advancements and partnerships, we are proud to have been able to help 3.9 million job seekers facing barriers get hired in the first two years of our journey. Finally, our goal of achieving gender parity across the company.
Last week, our proposal to appoint Katrina Lake as a new candidate of the board of directors was approved at the annual meeting of shareholders on June 26th. As a result, the percentage of women in the board of directors members increased from 27%-33%. This appointment also broadened the diversity in terms of nationality, age, skills, and experience. Since we set the five ESG goals, we have often been asked how we can achieve such ambitious goals. To be honest, even now, there is no single goal that we are clearly seeing the pathway towards the goal line. Because it's not easy, we believe exceptional ideas and innovations will be born out of it. We are beginning to see tangible signs of progress that we can achieve both social impact and sustainable business growth.
Today, I'd like to share with you those signs of progress, including some information that we will share with you for the first time. Thank you very much.
Thank you very much, Sena. We will move on to the fireside chat with Junichi Arai by answering frequently asked questions, including questions we received in advance from the audience. Jun will take the lead from here.
Hi, this is Jun. Pleased to meet you all. I'm sure there's a lot to share today, let's begin with this. How do you feel about the progress you've made in fiscal year 2022? Well, honestly speaking, some targets progressed well, while others were more difficult and challenging than I imagined. Well, you said that you will be honest, I would like to ask the next question. Which targets do you think are progressing well? There are three: environment, one of our two social impact goals, help 30 million job seekers facing barriers, and achieving gender parity in the boardroom. I believe these three have been progressing relatively well.
On the other hand, which targets do you think did not progress well? It's not like we didn't see a progress. Rather, we faced challenges in two targets: reduce the time it takes to get hired by half, the other social impact goal, and achieve gender parity at all levels of our employees, which is something we promised with our employees. Because we are taking on the challenge that no other company in the world has been able to achieve, we are still in a state of exploration with much trial and error. When it comes to reducing the time it takes to get hired by half, we are the only company that has set such objective.
For today, why don't we start by briefly asking the progress in the three targets you think are on track, then deep dive into the two targets you're facing challenges while covering the points that are anticipated by investors to know. The environmental goal, besides achieving carbon neutrality throughout the business activities, what progress did you make? In terms of environment, we have made progress in reducing Scope 3 emissions by working closely with our supply chain partners. We have also contributed to mitigating climate change through our product called Indeed Hiring Platform. These were the topics of fiscal year 2022. First of all, 95% of our group's GHG emissions are Scope 3 emissions or from our value chain or supply chain. Scope 1 and 2 only accounts for 5%.
In order to reduce these emissions, we need our supply chain partners to take action. There is no shortcut. There is the GHG Protocol. Our environmental team created a manual to assist measuring company's emissions according to the GHG Protocol, a global standard. After measuring is done, we also help partners develop plans to reduce their emissions. I believe you can imagine that many of our partners are in the media, IT, and advertisement sectors. Different from manufacturers, many of them are unable to take action because they do not know how much GHG they are currently emitting. There is a room for further reduction, and the first step in this journey is to help them measure their current emissions, and it was good news that we have been able to make a positive progress. Does Indeed Hiring Platform also contribute to reducing emissions in the supply chain?
No, it's not about the supply chain. This is a new product we launched during the pandemic. Emissions avoided through Indeed Hiring Platform, which allows job interviews to be conducted entirely online, is a contribution outside our supply chain. Therefore, the amount avoided is not counted as the reduced amount of GHG emissions. If our clients use this service, job seekers do not have to travel, and thus GHG emissions from travel can be avoided. This is not counted as the reduced amount of GHG emissions because this is outside our supply chain. This is our product, but it's the clients who use this service. I still think this is a great contribution because of the scale. More than 300 million people visit Indeed every month.
The GHG emissions avoided in 2021 from this product is equivalent to the charging capacity of more than 1.5 billion smartphones per day. Namely, there are 7.5 billion people in the world, that means we can charge the smartphones of one-fifth of the world population. This cannot be included in our emission reduction plan, I believe this represents what we can do with our product. As for the target to help 30 million job seekers facing barriers, I believe the fact that we were able to help 3.9 million job seekers is the major progress, as you mentioned earlier. Do you plan to share the breakdown of these 3.9 million people? Find the five barriers that we focused on and worked to reduce, as shown on the screen. Yes, there are five barriers.
Of these, perhaps the most difficult for you to imagine are criminal record and military service. I was also shocked when I heard about this. There are more than 70 million people who have some type of criminal record in the U.S. This is about one-third of the adult population. There is public research showing that job seekers. Is also especially unique to the U.S. in this context. Approximately 200,000 veterans return to civilian life each year. Many veterans have a hard time explaining their job experience and skills they have acquired in the military, in their resumes and at interviews, and find it difficult to appeal to employers. According to one study, more than 50% of veterans are unemployed for more than four months after leaving the military. You asked, do we plan to share the breakdown of the 3.9 million?
We do not disclose the breakdown because we found that many job seekers are facing more than one barrier. For example, some may face two barriers at the same time, such as educational requirement and criminal record. They may have a disability. Some may face two barriers or more at the same time. Even if they face multiple barriers, we count them as one if it is a one individual. For this reason, we do not currently disclose a breakdown of barriers in order to be fair. I can see that this is complicated. I bet it is not easy to achieve this goal if we focus on users who have difficulties finding a job, compared to when we just focus on those who have great careers and are likely to find a job easily or more specifically, can choose from several offers.
That is exactly why this challenge is meaningful. I believe the audience today, the majority of you graduated university and have white-collar jobs, and are working based on intellectual productivity. In Japan and elsewhere, or for example, in the U.S., the annual income range of job seekers hired through Indeed is about the same as the annual income range of U.S. workforce.
Because this is a service used by so many people, as a company operating a global HR platform with about 300 million visitors each month, we believe that helping job seekers who face barriers to enter or return to the job market is a mission we should take. You're setting a difficult challenge intentionally? We think it is working. Yes, it is challenging, but it's working. Next, move on to the other targets you mentioned that you are struggling with. About the other social impact goals, reduce the time it takes to get hired by half. This bold target, let us talk about that. The contribution from several product updates that were reported in May.
I think what people want to know today is how much of those actually helped shorten the baseline duration of 15 weeks you set last year? I want to know that, too. Can you give us an update? I will start by talking about the challenges we are taking on and the difficulties we are facing, and where we are now. Moving back to the beginning, when we set our goal to reduce the job search duration by half in 2021, there was no data available anywhere in the world on the time it takes to get a job. In other words, no one in the world yet had the answer to this seemingly simple question: When does the job search begin and end?
For this big challenge, we have been collecting data on the Indeed platform over the years on the goal point, the Hired Signal. Now we are able to understand the point. 23 hires per minute was mentioned at the time of the financial results briefing. That is the Hired Signal. And now we're able to understand the point the job seeker was hired with a high degree of accuracy. The starting point is difficult. The endpoint is hiring, so it's clear, but starting point may differ from person to person. For example, in my case, if I want to change a job, I will probably update my resume and look for the possible jobs and apply. My sister, younger sister, she probably spends more time looking at Indeed than I do.
She frequently browses jobs on Indeed when she has free time, and if she finds a good job, she will apply for it. The action that indicate the start of the job search are very diverse from person to person. It's hard to identify the starting point with high accuracy. Now, by the way, this 15 weeks, this baseline duration of 15 weeks, which we want to have, this is done on the questionnaire-based, survey-based. We conducted a survey asking users with Hired Signals flagged about how long it took them to find a job. This is how we derived the basis of this 15 weeks. We also know that the user survey are not perfect. Users themselves do not always remember exactly how long it took.
This digital signal, how this digital signal can be measured, and can this be used for monitoring? We are trying to take a multiple approaches, and as of today, we cannot definitively say we will go with this. Stay tuned. This start and end, along with the measurement of the duration, we say, this much reduction in using particular product, and we've said that in the financial results briefing. This is where we stand. You cannot count... Well, it's too much of for 10 years. Please wait. We're working on this very hard. Thank you. Please stay expected.
Let's move on to the next question, the DEI target, which means to achieve gender parity at all levels of the employees in group by fiscal year 2030.
According to the update in May, it seems like the progress.
in March, in the HR technology subsegment, there was a layoff. Does that have an impact? Currently, these numbers were shared in the earnings call. The percentage of women among the managers is 39% currently. As you can see from the screen, the Staffing SBU has already achieved a 50% women ratio among employees and managers. The only remaining challenge is senior managers. Therefore, the major challenge as group is how to increase the ratio of managers in Matching and Solutions SBU and HR Technology SBU. First is about our HR Technology SBU. Last year, we analyzed the situation at Indeed, a major subsidiary of the HR Technology SBU. To our great surprise, the post-employment promotion and resignation rates were almost equal for men and women. We thought it was most important to achieve diversity at the point of hiring.
Achieving gender parity of inflow, that shall be the biggest driver. The SBU established a new process, Inclusive Interview Rule, for internal and external hiring practices to ensure a diverse slate of candidates throughout the entire interview process. Interview cannot be initiated unless you meet the requirements in the Inclusive Interview Rule. This was extremely effective. We were able to improve numbers in the first year. Because of the hiring freeze and layoffs in response to the current business forecast, we must aim to increase the ratio of women in the absence of new inflows. This is the reason why there is seemingly no progress on a year-over-year basis. This has been the challenge. You have already created a system? Yes. I understand that it is hard to make progress in our overseas locations because of the hiring freeze, what about the progress in Japan?
It is still fresh in our minds that Japan is ranked 125th place out of 145 countries in the recently released Global Gender Gap Index, a record low and disappointing result. This data was published from 2006, and 125th place is a record low for Japan, so the situation is worsening. I believe there is a positive sign in the Matching and Solutions SBU. Let's look at the current status. In 2006, I joined Recruit. The percentage of women first-line managers was around 10% in 2006. After taking initiatives to improve the work environment, today, the number increased almost threefold to 34%. This is higher than the average among Japanese companies, but our goal is parity. Our starting line was after we made certain efforts.
How can we improve even further? There are two things that are going well. First is, SBU worked on clarifying the requirements for managerial positions and set three-year targets by each division, just like creating a business plan. Strengths and capabilities of Recruit are leveraged in this initiative. The other thing that is also showing a positive sign is, clarifying requirements for managerial positions. This was originally high already, but we have been able to make even further progress. What do you mean when you say clarifying the requirements?
It is difficult to imagine what kind of person or individual would make a great manager. There is the unconscious bias tied to past successes. People in the field realized that there is such unconscious bias. For example, is she able to move to a different location? You may think that it's difficult to promote someone if that person cannot move to other regions, or that individual should be reachable at any time in case of an emergency. You may think a person should have the motivation and from scratch. This invites candidates that we were not able to reach before. As a result, in organizations that applied this system, women candidates increased by 1.7x . We've found that men candidates also increased by 1.4x under this new system.
This proved that when we remove such bias, we can expand the list of candidates, both for men and women. These have helped us improve our numbers in Matching and Solutions SBU. Don't you think this is a good progress? I thought I asked a question about your challenge. In HR Technology SBU, we have to wait for the right timing, but we've been able to make a steady progress in Matching and Solutions SBU. Please stay tuned till the next year. We heard many things. Do you have any other news that we can share with those who are joining this live streaming? Any new information. We call this internally Data for Good. Let's set aside this ESG target and initiatives for a moment. How our strength can be used for the benefit of the society.
More than 300 million people use this platform a month, so we have abundance of data collected. For example, there's Hiring Lab, which is the Indeed's Research Institutes. It has been accumulating the labor market data and is providing that data to 15 national central banks around the world at no cost as of today. Something that is closer to ESG. Two months ago, in May, a paper came out on our collaboration with the University of Oxford. On Indeed, users wrote about the well-being. There are also 11 indicators that are drivers of these well-being indicators, and many users taught us this. University of Oxford analyzed this score. For example, the company with high work well-being, companies have clearly higher price, stock price performance than the major benchmark companies.
To align with your interest, if we look at the top 100 companies, their share price is higher and their performance is higher. Well, data is a fact, but if you look at this from a broader perspective, we can think of how this data that we only have, only we have, can be used for the betterment of society. With better data, better talents can be attracted and more powerful work... Where the audience, companies are positioned is interesting.
Okay, one more question. Before we open the floor to questions, I'd like to ask you one last question on governance. Last year, Ms. Keiko Honda, and this year, as Sena-san said at the outset, Ms. Katrina Lake were appointed as new outside Directors two years in a row....
Can you tell us how we recruit, find new candidates, this successfully, this frequently? Just last month, the Japanese government requested companies listed on the Prime Market to achieve at least 30% women representation among the board of directors by 2030. There's no secret sauce. There's nothing that makes it easy for us to find good candidates. What we do is. It's not just about diversity, and it's not about men or women. We look for talents who we think can contribute to the enhancement of corporate value. We attend or speak at conferences, and if we find someone that looks promising, we meet them and persuade them to expand our network. It's nothing special. It's only natural that we do these things in a thorough manner.
If we just sit there, the agents come to us and say, "This is a list of candidates." No, it's not like that. As our management responsibility, we look for people, we talk to people, and you walk around, move around to try to meet people. Right. We go to places where we think good talents exist, and they receive many offers. We explain what we can do and try to persuade them. Yes, those people, our people, I think they are good at persuading people. Nothing is decided at this point for next year. This is not just about gender. It's about the board structure, board composition. This is an agenda in the nomination committee every year.
if we meet good candidates, and if the timings meet, we may be able to find another new candidate, third candidate.
Participants attending via Zoom as well as the online forum. I would like to first take questions from those participating through the Zoom line. The instructions shown on the screen is for Zoom participants only. Please use the Google form to submit your questions. First, Yamamura-san from Citigroup Securities, please go ahead.
This is Yamamura of Citigroup Securities. Can you hear me well?
Yes.
Thank you. Now, one question at a time. I would like to ask my first question. Reducing the time it takes to get hired. For essential workers, I understand that you're trying to improve the efficiency of the process, especially for those with disabilities, and that is a positive development of the society. Among the job seekers, there are people who are feeling uncomfortable in their current workplace because of a personal relationship, or they may be looking for a new job out of a vague sense of insecurity. I believe it should take a lot of time to identify the challenges or barriers faced by job seekers. Is it really possible to reduce the time it takes to get hired? Is the faster, the better? Are those people not the main target users of Indeed? Thank you.
Thank you for a very good question. I appreciate it, Yamamura-san. It's understandable for essential workers, but there are many other barriers, and is faster the better? I agree with your points. According to our data, the time it takes to get hired, responded in the questionnaire, we look at that, and we ask them if. On the other hand, there are people who are not really attracted to the idea of reducing the time it takes to get hired. Just as you asked, if the workplaces matches that person, that is the most important thing for some of them. Still, reducing the time it takes to get hired by half, that is our target, and that includes improving the matching accuracy. That is included in this goal.
For example, when you look at the job information and the time it takes for you to apply or to be interviewed, the entire time it takes to get hired. For job seekers, they need to know if the next workplace is a really good match, good fit for that individual, rather than the time itself. It's also a question of matching accuracy. Our KPI is reducing the time it takes to get hired by half, but we must go through this discussion of quality or matching accuracy if we try to achieve this goal. That is why we continue to pursue the quality or the accuracy of matching as well. Otherwise, we would not be able to achieve this target. Did I answer your question?
Yes. Thank you very much.
BofA Securities, Mr. Nagao, please.
Can you hear me? Thank you. Companies that do not have factories, addressing the CO2 emission reduction, I was thinking, but if this hiring process can be completed online, the energy you use for transportation will be reduced, so I think that's great. My question is: from sustainability perspective, the respective employees' ease of work is one important factor, but another layer is the between subsidiaries or parent and subsidiary of SBU or sub-SBUs. In terms of labor status, there are full-time workers and dispatched workers, and the part-time workers, temporary workers. For each status, the ease of work or the hesitancy may be there. I think it's resolving this will improve the ease of work.
Recruit Group has many big units, companies, so between companies, between business units, you are taking measures to eliminate the barriers. It's not that you are, better or stronger if you are in particular SBU or particular company. Are you intentionally trying to eliminate such barriers? I'm sorry for a long question.
Arai-san, if you have comments, please. Just because you belong to a particular unit, SBU, doesn't mean much, I think. From the management at least, we do not say one SBU is above other SBUs. We don't see it that way. That said, group has different SBUs operated together. If, for example, if a person wants to move from one SBU to another, if he or she requests, then he can move. You're a good example. You moved around a lot.
Yes, I joined Recruit and then went to corporate planning, and then sales and marketing. I volunteered to go to sales, and then the assessing, and then overseas, and then HR Technology SBU. If the condition match, you can move. Between SBUs or parent and its subsidiaries, it's not that the ease of work is that different. That being said, it's not that we make efforts to eliminate these barriers. We want people to do what they want to do. That will unlock their capability, so we try to realize people's wish as much as possible. That is what we focus on. It's not about ESG. This is what we've done all along because people is the source of our value. I think that's our focus. Thank you.
Arai-san, I would like to move on to the questions coming from the Google form.
Okay.
Yes, we talked about this a minute ago. Helping 30 million job seekers facing barriers. There is a question about this target. How is this target connected to enhancement of our corporate value? How can it contribute? I think that is the question. Well, helping 30 million job seekers facing barriers. For example, there is knowledge gained through the partnership, which can be used for product evolution. One example is Skill Connect, which is a new feature we launched recently. For example, in a difficult situation of job seekers. The general resume format, it may be difficult for job seekers to accurately describe their skills and capabilities. We wanted to improve that by changing the format, and the employers will be able to look at that format of resume and screen applications based on job seekers' skills.
In the longer term, we believe increasing the value of platform by improving the quantity and quality of matching, will be able to contribute to enhancement of corporate value.
When you realize carbon neutrality in your business activities, offset, where do you procure carbon credit? Is it from overseas? Very technical. I don't have enough knowledge to understand what this question is about. The offset, the carbon credit we use for offset that we procure is mostly from Central and Latin America. Not 100%, but most from the reforestation, for the reforestation cash. When we purchase carbon credit, there's carbon credit and there's principle, and see if it is internationally certified, because it has to have alignment. I think the gist of the question is: Is it proper method? My short answer is yes, we are doing it properly. It is a credit that is certified by the international organization. That is my answer. Did you learn something? Yes.
Yes, I think we found out we're doing this properly.
The next question is, according to a survey of Indeed and Glassdoor, I believe the result said that many of the younger generation would turn down the offer from a company if they are not supportive for DEI. Do you think there is an increasing awareness among your client companies for Glassdoor's DEI score? How is your HR Technology SBU supporting your client companies for improvement of their score? Do you think this result of the survey is a global trend, and the same can be said for Japan?
Thank you for the question. Many of the younger generation would turn down the offer of companies who are not supportive of DEI. Well, this is a U.S. result, and we don't have any data of Japan.
This is a joint survey by Indeed Hiring Lab and Glassdoor Economic Research. The young generation between 18- 34-year-old group, among them, 70% approximately, said that they will consider leaving the company if they find out that the workplace does not show understanding for DNI. Yes, this is how the world is shifting today. How are we supporting our client companies? As a platformer, we need to think about our influence. We already understand that this is one of the important pillars of job seekers when they search for job. That needs to be ensured. To be more specific, what should client companies do? We could clarify satisfaction rate or difference among different attributes or genders.
We started offering such product, ultimately, what we aim for is in the client touchpoint team, it is important to educate clients to raise their awareness. There is something we can do, because we have this quantity of data through our products, we'll be able to make a contribution, and that will be having the largest influence.
The time is running out, so we would like to ask Arai-san to ask Senaha-san a question. Maybe this is difficult from outside person to ask this question. That kind of question before we close. At the May financial results briefing, say it's difficult, and sales and profit are down, and the full year forecast cannot be disclosed. We said we reduce costs to address the problems. The business environment is tough on us. There are concerns about us keep promoting ESG initiatives in such difficult environment, and maybe should concentrate on our core business. Are we distracted from our core business, or that's not the case? What does it mean to talk about ESG? Well, it is right. We should concentrate on our core business because we think we're doing this as our core business.
We're not doing this on the side of our business, on a small scale. We're doing this right in the middle of our business, facing squarely with the problem to contribute to the society. For example, as I said earlier, shorten the time it takes to get hired by half. This means it will double the matching efficiency. We're working on this as the very core of our business. It means twice as high matching efficiency, which of course means it contributes to our sales and profit in the long run. It's not just about being number one. If we can do that, we can be only one. In terms of diversity, do we say diversity in the current trend, current times?
Under this difficult environment, but we do not produce products, and we don't have patents that will last for decades, but we still have to innovate, which means we need great talents from around the world and create something new and innovative. We need diversity. We need diverse talents, and this is our survival mechanism. In that sense, this is crucial, and that's why we think this is the middle of our core business. In the short term, the ESG rating is now steadily improving, so short-term benefit is being harvested, so that's good, too. If we look at in the longer term ESG, we want ESG to contribute to the business growth, and we want to be able to say that this contributes to our profit, and that is why it is included in our medium to long-term business strategy. Yes. Thank you very much.
With that, we will close today's ESG Fireside Chat. Thank you very much for your attendance. Thank you.