Environmental Policy
On the Release of the ESG Working Group Report
With the recent developments in ESG (Environment, Social and Governance) in our country, the Ministry of the Environment established a "Working Group on Incorporating Issues Regarding Sustainability into Investment" (ESG Working Group) in October 2015. Following discussion and debate over two fiscal years, the Ministry is pleased to announce that it has produced the attached Guidebook aiming to improve fundamental understanding of ESG investment, with a particular focus on "E".
1. Background
In Japan, as part of the growth strategy under the Japan Revitalization Strategy, Japan's Stewardship Code and Japan's Corporate Governance Code were released in February 2014 and June 2015 respectively. The principles in the Codes should be applied in a manner suited to each individual investor or company's specific conditions and situations. In Japan's Stewardship Code, relevant factors are set out that may be considered by institutional investors when monitoring a company in order to increase the medium- to long-term value of investee companies, including "risks arising from social and environmental matters" in addition to "governance" at the investee companies.
Against this backdrop, the Government Pension Investment Fund (GPIF), with the largest pension assets in the world, signed the United Nations backed Principles for Responsible Investment (PRI) in September 2015. This has acted in Japan as one catalyst for increased awareness and interest in incorporating information related to the Environment (E), Social (S) and Governance (G) into investment, or so called "ESG investment".
With these recent developments in "ESG" in Japan, and following nine meetings starting in October 2015, the "Working Group on Incorporating Issues Regarding Sustainability into Investment" (ESG Working Group) has produced a Guidebook (ESG Guidebook) aiming to improve fundamental understanding of ESG investment, with a particular focus on "E".
2. Objective
The ESG Guidebook aims to provide an aid to building a basic understanding of ESG investment. By understanding, we mean an understanding of: 1) the "meaning of ESG investment"; 2) "issues in ESG investment in practice"; and 3) "trends in initiatives to address the above issues". Going forward, it is to be hoped that each entity comprising the investment chain may effectively utilize this Guidebook to acquire appropriate knowledge and understanding of ESG, and gain real competency.