Functional Strategies

We consider ESG initiatives vital to generating future financial performance, prioritizing the following areas:

We have established the ESG Committee for the purpose of continuously discussing environmental, social, and governance issues faced by Ricoh at the management level and leading the discussions on the quality enhancement of the entire Group. The committee is a decision-making organization that meets quarterly chaired by the CEO and consists of Group Management Committee* members, including the Internal Executive Director and business unit presidents.

The ESG Committee deliberates on future risks and opportunities for the business in the area of sustainability, identification of material social issues (materiality), and setting of ESG targets. Important matters are decided on with the approval of the Board of Directors.

We consider it important to embed ESG initiatives into each business unit’s activities to integrate them group-wide. We break down and manage ESG targets at the level of business units, which set their own targets. This aligns all ESG efforts with business growth.

To achieve a sustainable society through the Three Ps Balance—prosperity, people, and the planet—we assess the impacts of environmental and social changes, such as climate change and human rights demands, on our operations. We also evaluate how our business affects the environment and society. From a risk and opportunity perspective, we identified seven material issues and set 16 ESG goals as key performance indicators, which are mid-term management strategy priorities.

After deliberations by the ESG Committee, the Board of Directors approves materialities and ESG targets alongside financial goals, disclosing outcomes annually. Despite some lags in reaching our fiscal 2025 targets, we are generally on track.

We have incorporated the DJSI annual rating tool to assess ESG initiatives in the performance-linked bonus calculation formula for directors and executive officers to incentivize ESG efforts. We tie executive officers’ compensation to ESG targets in their areas of responsibility, reinforcing their commitment to achieving ESG targets across business units and Group headquarters.

From fiscal 2023, when we launched the 21st Mid-Term Management Strategy, we introduced a performance-linked stock compensation program for directors that incorporates ESG goals. The payout rate directly reflects the number of company-wide ESG targets achieved. In fiscal 2024, we extended this program to executive officers.

(Reference) Formula for calculating Directors’ bonuses

(Reference) Formula for performance-linked stock-based compensation for Internal Directors

To more specifically show stakeholders our progress in aligning ESG with business growth, we clarified which businesses help resolve social issues and set sales targets for fiscal 2025.

In fiscal 2023, sales through Creativity from Work increased 19% from a year earlier to ¥926 billion. Other sales gains were 54%, to ¥20 billion, for Community and Social Development, and 102%, to ¥315 billion, for the Zero-Carbon Society and Circular Economy category.

Helping transform the world of work through Scrum series industry and business solutions

Improving productivity is an urgent issue in Japan, where the working population continues to decline. Accelerating digital transformation by using more information and communication technologies is essential. Digital talent and expertise shortages pose a significant challenge, particularly for small and medium-sized enterprises, which still lag in adopting information and communication technologies. Ricoh leverages its understanding of on-site needs, product development expertise, a solid customer base cultivated through its Office Printing business, and a nationwide sales and service network to offer the Scrum series of solution packages that address industry- and business-specific challenges. By helping customers boost productivity and create more time, we simultaneously drive recurring revenue growth in the expanding Office Services sector.

I became Chief Technology Officer in fiscal 2024. I lead the Group’s digital strategy and oversee technology and intellectual property strategies to help generate customer value. Our vision is to leverage our unique technologies to drive innovation with customers. We have identified three key areas of focus to achieve this.

RSI is a cloud-based common platform incorporating the functions needed to develop and deliver digital services, facilitating global business creation. It streamlines product development and cuts costs while offering high scalability and fostering innovation. This enables us to swiftly deliver high-quality, high-value-added services to customers.

In fiscal 2024, we will focus on using data better to integrate data across services and support customer success activities* as a platform linking our global applications and services.

Specifically, we will expand the global deployment of generative AI technologies, enhance the environment for collecting and analyzing customer interaction data, and bolster service delivery systems. One initiative includes upgrading the RICOH kintone plus app store, launched in fiscal 2023, by adding proprietary plug-ins and app templates.

Also, we will develop comprehensive managed services for major corporate customers with advanced communication and collaboration needs. By integrating device management, service connectivity, and internal IT and core systems integration within workplaces, we seek to create work environments that ensure customer success.

In pursuing operational excellence, we are restructuring work processes groupwide by leveraging digital technologies and data to achieve structured and efficient reforms. We developed a framework that covers entire business processes, not just parts of them. This framework drives our process digitalization initiatives. We have also established training programs to equip employees with the necessary skills to digitalize processes, enabling them to take the initiative and use these systems to boost their productivity and motivation.

Since fiscal 2022, we have drawn on our internal process digitalization record to offer services that collaboratively resolve customer challenges. This approach has already delivered significant results.

In our framework for digitalizing business processes, we balance in-house development using low-code tools with software as a service (SaaS) solutions integration. While optimally aligning our processes with standard SaaS processes, we also develop our own solutions for processes that require differentiation or need to adapt to ongoing changes. This approach enables us to act quickly and flexibly to future changes.

We are simultaneously establishing a data integration platform and using data effectively. This ensures that we can tap massive data volumes that we accumulate through SaaS solutions and internal IT systems to execute swift and accurate decisions, business growth, and process reforms.

To maximize synergies between processes, IT, and data and more swiftly attain operational excellence, we consolidated these functions into a single unified organization in April 2024.

We have developed a range of technologies to create digital services for the office arena. These include such AI technologies as our proprietary large language model supporting Japanese and a digital human*¹that assists users through voice interactions. The excellent customer reception of these offerings has generated numerous inquiries about using AI to improve business processes.

As part of our generative AI endeavors, we unveiled a highly accurate 13-billion-parameter Japanese large language model in January 2024. We plan to launch models providing enhanced instruction comprehension capabilities to support the construction of private models for the manufacturing, finance, and other sectors with stringent security and transaction requirements. We are also developing such solutions as the RICOH Digital Buddy, a retrieval-augmented generation solution that integrates external information retrieval with large language models. Other creations include AI agents employing proprietary voice recognition technology to easily automate customer workflows.

Moreover, we are developing AI for classification and analysis. By incorporating no-code development tools in RSI, we enable customers to independently classify and analyze their data so they can streamline their digital transformations.

We have developed AI technologies for domestic sales subsidiary Ricoh Japan to support its growth. These tools assist sales by analyzing vast amounts of data, including daily reports. We confirmed the effectiveness of these technologies through proof-of-concept activities and started rolling them out operationally from August 2024.

We are expanding the use of generative AI in business processes to deliver operational excellence. For example, we have reviewed internal procedures for IT infrastructure inquiries by integrating generative AI and chatbots. This approach has streamlined operations by greatly reducing workloads.

We envision digital clones*² and AI agents*³playing significant roles in office environments. To that end, we are developing systems that enable multiple AI technologies to collaborate, creating multi-AI agents that can handle various situations.

We will develop technologies that help customers digitalize business processes with AI by integrating our proprietary large language model training technology with the information and communication technology and cloud expertise that we have honed through office services development.

Intellectual property is a key outcome of our technology development efforts, which we align strategically with our companywide technology initiatives to reinforce our focus on the digital domain. We collaborate with technology experts in companywide technology management meetings to ensure that our intellectual property strategy supports broader technological goals. This approach enables us to generate intellectual property from short-term technology development while stepping up efforts to create intellectual assets that align with our long-term technology strategy.

On the design front, we will focus on workers and elevate the service experience so users find our offerings indispensable. We seek to drive workplace innovation by seamlessly connecting products and services to provide more holistic value experiences and continually enhance quality. Also, we are ramping up our patent filings relating to user interfaces and experiences, building an intellectual property portfolio matching our position as a digital services company.

We look for digital services–related patent applications to account for more than 60% of our patent filings by fiscal 2025, reflecting our sales ratio target for those services. This is also part of our overall ESG goals, with a companywide emphasis on digital services. At the same time, we will draw on our unique technological strengths to build a robust patent portfolio in the digital domain, thus driving business growth.