Japan Markets ViewQUICK Holds ESG Seminar to Discuss Information Disclosure

 

[Nikkei QUICK News] QUICK, a financial information provider, and Japan Exchange Group (JPX, 8697) held a seminar on Environmental, Social and Corporate Governance (ESG) in Tokyo on July 5, 2022 under the title “The New Era of ESG Information Disclosure: Actions Required of Companies and Investors.” JPX Group CEO Akira Kiyota stated in his keynote speech that it is “increasingly important to proactively respond to ESG and other sustainability information as a revenue opportunity, not just a risk,” in order to improve corporate value.

 

JPX calls for listed companies to enhance the quality and quantity of their sustainability-related information disclosures to facilitate dialogue between investors and companies. Regarding human resources supporting corporate activities, Mr. Kiyota stated, “We are also asking for (disclosure of) information on how much diversity is secured by appointing women, non-Japanese personnel, mid-career hires, etc., as core personnel such as managers as well as on the board of directors.

 

FSA’s Ikeda: “Corporate Initiatives to Explore Risks and Opportunities”
Satoshi Ikeda, Chief Sustainable Finance Officer of the Financial Services Agency (FSA), who also delivered a keynote speech at the seminar, referred to corporate ESG initiatives as “each company’s initiative to explore its own risks and opportunities.”

 

Sustainability information has multiple disclosure standards lined up. The International Sustainability Standards Board (ISSB), established in 2021 by the IFRS Foundation, is responsible for setting international accounting standards, and aims to create a globally uniform standards. The ISSB plans to finalize climate-related disclosures by the end of 2022. With the U.S. Securities and Exchange Commission (SEC) and the European Union (EU) also drawing up their standards towards the end of 2022, Mr. Ikeda noted, “The second half of 2022 will be an important period (to determine the standards).”

 

“It is important for companies to take on ESG as their own business with a view to increasing their corporate value,” he said. “A disclosure framework to help enhance corporate values will be created.”

 

Hitachi’s Masuda: “Companies Need to Explain Their Value Creation Stories”
Norio Masuda, Senior Manager of Sustainability Promotion Division, Hitachi, participated in the panel discussion titled “Future ESG Initiatives and What is Needed in Information Disclosure: What Lies Beyond Disclosure?” “In disclosing sustainability information, Japanese companies should explain the long-term value creation story of their companies,” said Mr. Masuda.

 

When disclosing sustainability information, companies take the comply-or-explain approach. Pointing out that “Japanese companies tend to choose a ‘comply’ approach, while European companies are more likely to opt for ‘explain’ approach,” said Mr. Masuda. “Japanese companies should set up and explain their long-term value creation story” to gain investors’ understanding.

 

To enhance the quality of ESG information disclosure, he shared his view that “any corporate activity imposes a negative impact/burden on society and the environment, but it is important to disclose the negative impact together with the countermeasures.”

 

Nissay Asset Management’s Iguchi: “Importance of the Link to Corporate Value Enhancement”
George Iguchi, Chief Corporate Governance Officer of Nissay Asset Management, also participated in the panel discussion. Regarding the disclosure of ESG and other non-financial information, he said, “The key is whether the information disclosure is linked to the enhancement of corporate value.”

 

 

 

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