1LIAJ initiatives in FY2022
Working groups on stewardship activities and ESG investment and finance were set up to contribute to equity market reinvigoration and achieving asustainable society. Continued to publish the LIAJ recommendations (this report) and implement collaborative engagement through both working
groups in FY2022.

In addition, LIAJ implemented measures to refine and raise the sophistication of activities at each LIAJ member firm. Measures included holding
joint working group (WG) seminars with Environment (E) and Society (S) themes, such as “Addressing climate change,” “Human capital” and“Human rights.”



LIAJ believes that when companies and shareholders engage in a constructive dialogue and share a mutual awareness of issues, companies will be
encouraged to take steps to increase shareholder value over the medium and long terms. Based on this belief, LIAJ hopes that this report will help toincrease shareholder value over the medium and long terms, leading to reinvigoration of the stock market as a whole.

Equity market reinvigoration/Achieving a sustainable society

2017～

Improvingshareholder
returns

1974～

Improving ESG
disclosure

Improvingclimate change
disclosures

Based on surveys of companies/investors

Upgraded initiatives and approaches of WG participants

Stewardship Activities WG(11 life insurers)

Collaborating

ESG Investment and Finance WG(20 life insurers)

Recommendations for companies, investors and government

2

FY2022 policy recommendations
 The number of companies and investors that now recognize the importance of the need to improve corporate governance andinitiatives for human capital increased in the survey of companies and investors carried out in FY2022.
 Based on the survey results, recommendations on enhancing dialogue and promoting ESG initiatives in FY2022 were partiallyrevised.
Recommendations
Management
goals /
financialstrategies
Improvingcorporate
governance①

Raise shareholder returns over the medium andlong terms (dividend payout ratios of at least 30%)②

Set ROE targets adjusted for cost of capital andtarget higher ROE levels

Recommendations

TargetShareholder
voting⑦ dissent ratio

Companies⑧

Investors

Greater transparency for shareholder voting processes
Provide further disclosure of non-financial information,③

Improve disclosures about expectations of external
directors’ roles and their performance (*)⑨ including ESG, through integrated reports and other means
Companies

Companies

Improve disclosure/dialogue on medium- and longterm investment strategy, including investments in
Revised human capital and intellectual property linked to
management strategy⑩④

Enhancing
dialogue

Provide clearer explanations of proposals with a highTarget⑤

Encourage involvement of top management in
dialogue⑥

Promote dialogue based on in-depth understanding ofcompanies and dialogue from a medium- and longInvestors
term perspective that contributes to the solution ofissues facing companies

Promoting
ESG
initiatives

Formulate medium-term management plans to realize
sustained growth, including ESG initiatives

Enhance disclosure of corporate information related toclimate change impacts and promote the use of⑪ information for investors to evaluate companies, etc.,
Revised and consider formulating greenhouse gas reduction
targets for both companies and investors⑫

Companies
Investors

Take steps to promote ESG initiatives acrossgovernment ministries/agencies
Government⑬ Further enhance policy-based support to realize carbon
neutrality* As there has been a significant perception gap between companies and investors in previous years regarding the evaluation of the role expected of external directors, new questions
were added to the questionnaire to evaluate each expected role.
Survey on initiatives to enhance corporate value<Purpose> To implement recommendations for equity market reinvigoration and achieving a sustainable society based on results of surveys on initiatives and awareness ofcompanies/investors<Survey targets and response rate> Listed companies 39% (473/1,200 companies); investors 50% (105/208 companies)

For Companies

Recommendation (1): Management goals/financial strategies

Continued

3

Recommendation (1): Raise shareholder returns over the medium and long terms(dividend payout ratios of at least 30%)
76% of investors are not fully satisfied with the level of shareholder returns and dividends. There has been no change in investors’ position in thisrespect compared to the previous fiscal year.



63% of investors, a greater percentage than in the previous fiscal year, expect firms to offer dividend payout ratios of at least 30% over the medium
and long term. However, the actual dividend payout ratios remained under 30% for 48% of all firms.

⇒ Increase shareholder returns over the medium and long terms, with a payout ratio ofat least 30% after gauging investor expectations through dialogue【For investors】
Satisfaction level for shareholder returns and dividends (select one)
Satisfactory at nearly
all firms (80%+)【For investors】
Desired medium- and long-term level of dividend payout ratios (select one)
20-30%

63%

Satisfactory at many
firms (60-80%)

2022

76%
Satisfactory at about
half of firms (40-60%)

2022

Satisfactory at
not many firms(20-40%)Level does notmatter59%

2021
10-20%

Less than
10%20%

10-20%

60%

40%

60%

80%

100%

80%

60%
40-50% 50-60% or over

48%

2022
40%

60% orover

Reference: Distribution of payout ratio for listed companies (actual)

2021

20%

50-60%

30-40%

0%

79%

0%

40-50%

20-30%

30-40%

44%

100%
2021

Note: Percentage figures are rounded to the nearest percent, so they will notnecessarily sum to 100. The same applies hereafter

0%

20%

Source: Nikkei QUICK

40%

60%

80%

100%

Note: TOPIX components (excluding unprofitable firms)

For Companies

Recommendation (1): Management goals/financial strategies

Continued

4(Reference) Disclosure of numerical shareholder return (SR) targets
Proportion of firms with official SR targets

Number of firms disclosing numerical SR targets by target type
900

100%

830
800

Undisclosed
80%

66% 66%

54% 51%
57%
59%

45% 48% 44%

38%

775
693

700

586

600

60%

500

432 431
400

40%

20%

Disclosed

35% 34%

46% 49%41% 43%300

55% 52%

56%

62%

37

54

51

37

35

35

93

99

95

244

250

306

37
96

43
91

49
92

673

68

74

DOE *

56

(less than 30%)

504

Payout ratio(at least 30%)

182

120
55

Total payout
ratio, etc.

74

Payout ratio

58

94

200

100

0%

91

80
90

126

92

557
527

631

196

336

373

405

426

430

461

0

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: LIAJ research
Based on survey of top 1,200 listed stocks by market capitalization

Source: LIAJ research
Based on survey of top 1,200 listed stocks by market capitalization
Note: Firms with multiple SR targets are counted for each target*DOE: dividend-on-equity ratio

For Companies

Recommendation (2): Management goals/financial strategies Continued

5

Recommendation (2): Set ROE targets adjusted for cost of capital andtarget higher ROE levels


87% of investors expect ROE of at least 8% over the medium and long term. Meanwhile, ROE remains under 8% at 45% of listed firms.



The ratio of firms that have not calculated their cost of capital (return expected by shareholders) was 34%, indicating no major change from theprevious fiscal year. The fact that some firms do not assess their cost of capital remains a reason for the gap between investor expectations and thestatus quo.

⇒ Set ROE targets adjusted for cost of capital, eyeing medium- and long-term improvement in ROE【For investors】Desired medium- and long-term level for ROE (select one)
Level does
not matter

87%
2022

8-10%

At least
12%

10-12%

6-8%【For companies】(select one)
Do you calculate a precise cost of capital(return expected by shareholders)?
No assessment of cost of capital

34%

88%

2021

2022
0%

20%

40%

60%

80%

6%

100%

Reference: Distribution of payout ratio for listed companies (actual)
8-10%

45%
Less than
6%

2022

6-8%

10-12%

2021

At least 12%

0%

2021

20%

40%

60%

80%

Source: Nikkei QUICK
Note: All listed firms (excluding unprofitable firms and the financial sector ）66%

Cost of capitalassessed but notcalculated

Cost of capital
calculated

28%

65%

35%

49%

0%

7%

28%

100%

20%

40%

60%

80%

100%

For Companies

Recommendation (3): Improving corporate governanceContinued

6

Recommendation (3): Improve disclosures about expectations of external directors’ roles
and their performance

Regarding the fulfillment of roles by external directors, when it came to the overall role and individual items, a majority of companies responded that the “role is being
fulfilled,” while roughly half of the investors responded with “fulfilled inadequately and needs improvement” or “cannot be determined,” showing a perception gap inrecognition between companies and investors.
There is a possibility that investors’ evaluation of external directors is low because they have few opportunities to come into contact, and there needs to becommunication between companies and investors, such as explaining to investors through enhanced company disclosures and respectful dialogue about the roles andperformances of external directors.
⇒Improve companies’ disclosures about investors’ expectations of the roles and performance of external directors,
and explain these matters to investors via respectful dialogue

社外取締役に期待する役割・実績についての情報開示充実【 For companies/investors 】 (select up to three)
What roles expected of external directors do you see as particularly important?
65%
64%
63%

【 For companies/investors 】 (select one)
Are external directors currently fulfilling the roles that are expected ofthem?
Fulfilled to some extent
Fulfilled adequately in line with expectations
2%
Speak and act from an
independent, objective stance
35%
Cannot be
Fulfilled inadequately andSupervise through decision-making
on management strategy, important
projects and other matters

51%

51%

Provide advice on businessexecution

34%

Supervise systems to prevent
malfeasance

10%

30%

Deter any conflict-of-interest
behavior

4%

18%

15%

10%
10%
Investors
投資家
23%
60%

40%

2%

Provide advice as experts
in accounting, law andother fields

20%

Investors
投資家
Companies
企業

27%

6%

投資家
Investors
Companies
企業

40%

2%

Investors
投資家

企業
Companies

26%
9%

投資家
Investors

Companies
企業

40%

15%

13%

Investors
投資家
Companies
企業

47%
32%

Advise on sustainability

2%Companies
企業

Not fulfilled at all

Dialogue with investors

4%

Investors
投資家

45%

3%

Reflect the opinions of minority
interests and other stakeholders
in management

10%

企業
投資家

Investors

Companies
企業

40%

7%

Advise from a variety ofviewpoints(gender, globalization, etc.)

19%
16%

Companies
企業

needs improvement

5%

Get involved in and provide advice
on performance evaluations of the
management team(election/dismissal, remuneration)

30%

44%

evaluated byinvestors

Companies

Investors
投資家
Companies
企業

46%

Investors
投資家
Companies
企業

43%

Investors
投資家

4%

Companies
企業
Investors
投資家

14%

0%

Overall evaluation

2%0%Companies
企業

43%
10%

20%

Other Investors
投資家
30%

40%

50%

60%

70%

80%

90%

100%

For Companies

Recommendation (4): Enhancing dialogue

Revised

7

Recommendation (4): Improve disclosure/dialogue on medium- and long-term investment strategy, including
investments in human capital and intellectual property linked to management strategy


65% of companies believe the levels of cash balances are appropriate. Meanwhile, 78% of investors see current levels of cash balances as excessive,
which continues the historical gap in perception between investors and companies.
 In their medium- and long-term investment/financial strategies, companies see capex as vital, while investors put most emphasis on investments inhuman capital, and emphasized intangibles such as IT (DX support, digitalization) and R&D.
 Companies and investors are both emphasizing “initiatives linking management strategies and human resource strategies” toward realizing the humancapital management the Japanese government is promoting.
⇒ Target appropriate cash levels, and improve disclosure/dialogue related to medium- and long-term investment strategy, including human capitaland intellectual property linked to management strategy【 For companies/investors 】 (select up to three)
What do you think should be emphasized to achieve human capitalmanagement?

【 For companies/investors 】 (select one)How do you see current levels of cash holdings?
Companies
企業

32%

Investors
投資家

Appropriate

Excessive

0%20%

Inadequate

65%

4%

78%
40%

22%
60%

80%

IT investment
IT投資（DX対応・デジタル化）(DX support, digitalization)
R&D
investment
研究開発投資100%

人材に関するKPIを用いた「Asis-toQuantitative understanding of
the beギャップ"as is-to-begap" using KPIs related to human resources（現状とあるべき姿のギャップ）」についての定量把握
Formulate and implement a dynamic human
動的な人材ポートフォリオ計画の策定と運用
resources portfolio plan

38%（2021:31％）
72%（2021:58％）
Companies
48%
Investors
65%
Companies
39%
Investors
53%
Companies
Investors

Optimization資本構成の最適化
of capital formation

Initiatives to establish a corporate culture
企業文化への定着のための取組
知・経験のダイバーシティ＆Initiatives for diversity and inclusion ofknowledge
and experience
インクルージョンのための取組
Initiatives for reskilling and relearning
リスキル・学び直しのための取組

Shareholder
returns
株主還元
Capital expenditure
設備投資

80%
75%

Initiatives社員エンゲージメントを高めるための取組
to improve employee engagement【 For companies/investors 】 (select up to three)
What do you think are important matters to consider, or should beconsidered, in your medium- and long-term investment/financial
strategies?
Human capital investment
人材投資

Companies
Investors

Initiatives
linking management strategy
経営戦略と人材戦略を連動させる取組
and human resource strategy

Companies
Investors 20%

54%
Companies
企業

Ｍ＆Ａ
M&A

Investors
投資家Interest-bearing
debt repayment
有利子負債の返済
0%

20%

40%

60%

80%

時間や場所にとらわれない
Initiatives to promote
work styles without
time
or location restraints
働き方を進めるための取組

Companies
企業
Investors
投資家

その他
Other
0%

20%

40%

60%

80%

For Companies

Recommendation (4): Enhancing dialogue

Revised8

Reference: Trends in labor costs, IT investment, capex, and R&D spending inJapan/US
3.0* Indexed with the 1997 values set as 1.0

2.5

IT investment （US）

IT investment (Japan)

Labor costs (US)Labor costs (Japan)

Capex（US）

Capex (Japan)

R&D spending（US）

R&D spending (Japan)

2.0

1.5

1.0

0.5
1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Sources: OECD statistics, data from the Cabinet Office, and Ministry of Internal Affairs and Communications of Japan, and the U.S. Department of Commerce.

For Companies

Recommendation (5): Enhancing dialogue

Continued

9

Recommendation (5): Encourage involvement of top management in dialogue

88% of companies have systems in place to share dialogue content with management, but investors feel that “dialogue content does not reachmanagement” and there is “non-participation by senior managers.”⇒ Actively involve management in dialogue and provide feedback on the results of sharing dialogue to investors【For companies】 (select one)
Do you have a system in place to share dialogue content with management?

System in place88%【 For companies/investors 】 (select up to three)
What are the main dialogue-related issues regarding the systems andmeasures of your company / the systems and measures for companies?
Inadequate disclosure of information as

対話の材料となる情報開示が不十分
material for dialogue

None
12%

Dialogue content does not reach
対話内容が経営層に届いていない
management

0%

20%

40%

60%

80%

100%

15%

47%

Investors

Companies

Non-participation by senior managers
経営トップが対話に関与していない【 For companies】(Select multiple)
System for sharing dialogue content with management, if such a system isin place

10%

Investors

41%

投資家の対話や議決権行使方針へ
Improve investor dialogue and69%

取締役会や経営会議で報告する機会を設けている
Opportunities
are given to report to the Board of Directors
and Executive Committee

Companies

understanding of policies on shareholderの理解度向上 voting
Lack of resources and personnel

定期的に経営陣が投資家と対話を行い、経営陣内でDialogue with investors is held regularly by management

54%

and shared within management

共有化している

対話関係のリソース・人材が不足
involved in dialogue
Improve the skills and knowledge of

Dialogue is compiled into a report and regularly sent to
レポート形式にして定期的に経営陣へ送付している
management

51%

Opportunities are given to provide direct, regular reporting
to top management
経営トップに直接定期的に報告する機会を設けている

47%

対話担当者のスキル・知識の向上
dialogue staff
Companies
企業

None
特段なし

Investors
投資家

Other
その他

その他
Other

0%

20% 40% 60% 80%* Options are based on the written
responses of investors.

0%

20%

40%

60%

80%

For investors

Recommendation (6): Enhancing dialogue

Continued

10

Recommendation (6): Promote dialogue based on in-depth understanding of companies and dialogue from a
medium- and long-term perspective that contributes to the solution of issues facing companies


Both companies and investors feel that the key dialogue-related issues are that dialogue is based on a short-term perspective and there is only asuperficial analysis and understanding of companies.



Looking at discussion themes for which companies took action based on dialogue, themes such as information disclosure, sustainability(initiatives for environmental and social issues), and shareholder returns accounted for large shares of the responses. However, financial strategy
and profitability represented only around 20% of the responses, indicating that some items have not yet led to specific actions.
⇒ Promote dialogue from medium and long-term perspectives that will benefit companies, based on in-depth understanding ofcompanies【 For companies/investors 】 (select up to three)
What are the main dialogue-related issues for investors/what do investors
themselves see as the main issues?
perspectives and themes

Superficial analysis and understanding ofCompanies
Investors

企業に対する分析や理解が浅い(対話内容が形式的)
companies (dialogue is mostly a formality)

Information disclosure

52%
49%

Companies
Investors

Dialogue based only on short-term
短期的な視点・テーマのみに基づく対話の実施【 For companies/investors 】 (select up to three)
Themes for which action was taken or visible changes at investee
companies were made, following dialogue

37%

情報開示

Sustainability (initiatives toaddressサステナビリティ
environmental andsocial issues)（環境・社会課題への取組み）

54%

Shareholder returns

株主還元

None
特段なし

経営戦略・事業戦略
Management/businessstrategy

Inadequate explanation of the purpose of dialogue

External directors (Number of external
社外取締役関係（社外取締役の人数、
directors, independence of external
社外役員の独立性／出席率等）
directors / attendance rate,etc.)

and other matters (shareholding policy, shareholder
対話目的等の説明が不足（保有方針、議決権行使方針、
voting policy, role of dialogue, process after
対話の位置づけ、対話後のプロセス等）
dialogue)

財務戦略
Financial strategies

Lack of resources and personnel involved
in dialogue
対話関係のリソースや人材が不足

収益性
Profitability

Companies 17%
Investors16%

Anti-takeover 買収防衛策
measures

Lack of dialogue 対話担当者の対話スキルが不足
skills among dialogue staff
企業
Companies

その他
Other

Investors
投資家(Investors only) Clarify policy on and approach（投資家のみ）対話活動の方針や考え方の明確化
to dialogue activities* Options are based on the written responses
by companies

Companies 25%
Investors 18%

Malfeasanceresponse
不祥事等の対応
Companies
企業

アクションを起こしていない
No action
taken / Effects of
dialogue cannot be felt
/対話の効果を感じられない

Investors
投資家

その他
Other

0%

20%

40%

60%

80%

0%

20%

40%

60%

80%

For Companies

Recommendation (7): Shareholder voting

Continued

11

Recommendation (7): Provide clearer explanations of proposals with a high dissent ratioCompanies have been working intensively to provide clearer explanations of proposed agendas in convocation notices. Accordingly, around 80%
of both companies and investors feel that explanations on individual agenda proposals have improved to a certain extent.

That said, investors have stronger expectations than assumed by companies, for companies “to enhance explanations through dialogue and AGM
notices” for prior resolutions that had substantial opposition.

⇒ Provide better explanations of prior resolutions with high dissent ratios through dialogue and AGM notices【 For companies/investors 】 (select up to three)
What intensive measures are being taken and what means would be desirable
for companies to provide better explanations of individual proposals?
Companies
Investors

Explain proposals more clearly

招集通知の議案内容の説明充実
in AGM notices

76%
65%

Regularly explain the company’s stance through対話を通じた継続的なスタンスの説明【 For companies/investors 】 (select up to three)
What measures do companies take to address prior resolutions that had
substantial opposition / and what measures do you expect of companies?
Dissenting
vote analysis
反対理由の分析

dialogue

Provideclearer explanations at AGMs
総会当日における説明充実
Companies
企業

総会前の議案の事前説明の実施・充実
Explain proposals more clearly before AGMs

Investors
投資家

その他
Other
0%

20%

40%

60%

80%

【For companies/investors 】 (select one)
Are explanations of individual proposals adequate?
Adequate

企業
Companies

投資家
Investors 3%
0%

To some extent

82％

27%

83％
20%

Companies

Dialoguewith investors
投資家との対話

Provide explanations of proposals via websites
ホームページ等を活用した議案の説明
and other means

Inadequate

55%

80%
40%

60%

80%

Almostnone

Explain more clearly in
招集通知書への説明充実
AGM notices

72%

Companies 20%
Investors

42%

Modify/withdraw
resolutions
議案の修正・取り下げ
Analyze opposing
shareholders
反対株主の分析

15% 3%

None
特段なし

16% 1%

Other
その他

100%

35%

Investors

Companies
企業
Investors
投資家

0%

20%

40%

60%

80%

For investors

Recommendation (8): Shareholder voting

Continued

12

Recommendation (8): Greater transparency for shareholder voting processesAround 50% of both companies and investors recognize the importance of voting based on the actual circumstances of each company through dialogue.



In addition, around 30% of companies believe it is important to “improve disclosure of voting criteria” and “improve disclosure of voting results(including disclosure of the reasons for voting decisions).”⇒ Greater transparency for shareholder voting processes through voting rationale and explaining voting decisions【 For companies】 (select up to three)
What kinds of improvements do you expect from investors on shareholder
voting?
対話等により個別企業の実態を踏まえた
Voting based on the actual circumstances

49%
53%

2022
2021

of each company through dialogue

議決権行使の実施【 For investors】 (select up to three)
What kinds of improvements do you think will be necessary with respect toyour shareholder voting?
対話等により個別企業の実態を踏まえた
Voting based on the actual circumstances

2022
2021

of each company through dialogue

議決権行使の実施

Explain the reasons for voting for or
自社への議決権行使賛否理由の説明

Improve voting-related dialogue
議決権行使に関する対話の充実

Conduct voting from a medium- and long中⾧期的な視点での議決権行使の実施

中⾧期的視点での議決権行使の実施
long-term perspective

against each company’s proposals

53%
53%

Conduct voting from a medium- andterm perspective

Improve disclosure of voting criteria

議決権行使基準の開示の充実

2022
2021

32%
32%

Improve
disclosure of voting results
議決権行使結果の開示の充実(including reasons for voting decisions)

2022
2021

31%
29%

（賛否理由の開示を含む）

議決権行使結果の開示の充実
Improve
disclosure of voting results(including reasons for voting decisions)（賛否理由の開示を含む）

Improve
disclosure of voting criteria
議決権行使基準の開示の充実
Explainthe reasons for voting decisions
投資先企業個社への議決権行使
to individual companies receiving
賛否理由の説明
investments

Improve voting-related dialogue
議決権行使に関する対話の充実
Utilize proxy advisory firms properly
議決権行使助言会社の適切な活用
Consistency between dialogue and voting
対話内容と議決権行使判断の整合
decisions2022

Consistency
between dialogue and voting
対話内容と議決権行使判断の整合
decisions

2021

Utilize proxy advisory firms properly
議決権行使助言会社の適切な活用

2022
2021

その他
Other

Other

その他

0%

20%

40%

60%

80%

0%

20%

40%

60%

80%

For Companies

Recommendation (9): Promoting ESG initiatives

Continued

13

Recommendation (9): Disclosing additional non-financial information including ESG
primarily through integrated reports

The survey indicates the gap in perception between companies and investors about disclosure of ESG initiatives. 40% of companies believe theirdisclosures are adequate, while only 2% of investors share the same view. Investors expect companies to enhance disclosure of “non-financial
information such as Environmental (E), Social (S) and related issues.”
Although the companies often disclose ESG information on their website, investors are requesting for ESG disclosures to be released throughintegrated reports.
⇒ Encourage companies to disclose additional non-financial information including ESG primarily through integrated
reports【 For investors 】 (select up to three)
What do you expect companies to do to provide opportunities for dialogue
and improve disclosures as material for dialogue?

【 For companies/investors 】
Is the current disclosure of ESG initiatives adequate? (select one)Not disclosed
Adequate

To some extent

40%Companies
企業

2%

Investors
投資家
0%

Inadequate

53%

6% 1%

83%
20%

40%

15%
60%

80%

100%

【 For companies/investors 】
What kinds of media do you use to disclose ESG initiatives? (select multiple) /Which would you like companies to use? (select up to three)Companies
69%
統合報告書
Integrated
ReportInvestors
73%
Companies
89%
Websiteホームページ
Investors
57%
CSR
Report / Sustainability Report
CSRレポート・サステナビリティレポート
IR presentationmaterials
IR説明会資料
Corporate
Governance Report
コーポレート・ガバナンス報告書
Annual Securities
Report
有価証券報告書

2022
2021

Non-financial information on Environmental (E),
環境（E）・社会（S）等の非財務情報
Social (S) and related issues

46%
44%

Evaluation of the effectiveness of the
取締役会の実効性評価（G）
Board of Directors (G)

38%
33%

Identify materiality (important issues for
マテリアリティ（企業の重要な課題）の特定
companies)

34%

Analysis of operating results and
業績の分析・経営陣の見解
management’s views

Companies
企業
Investors
投資家

No disclosure of information on ESG
ESGの取組に関する情報開示は必要ない
initiatives is needed.

0%

20%

40%

60%

80%

43%

31%
29%

Reasons for the appointment of社外取締役の選任理由や活動状況
external directors and their activities

26%
27%

Plans
to nurture successors to theCEO等の後継者の育成計画
CEO and other key posts
Supplemental
and detailed earnings data
決算に関する補足・詳細データ

15%
14%

Policy on remunerationof Board
役員報酬の方針
members

11%
15%
6%
8%

Policy on nomination of役員指名の方針
Board members

Earnings
Report
決算短信
Other
その他

47%
47%

None
特段なし

3%
1%

Other
その他

1%
2%
0%

2022
2021

20%

40%

60%

For Companies

Recommendation (10): Promoting ESG initiatives Continued

14

Recommendation (10): Formulating medium-term management plan that contains
ESG initiatives in order to achieve sustainable growthUnder the COVID-19 pandemic, companies that realize the growing importance of ESG activities has increased, and in FY2022, 70% companies
realize that importance.
22% of companies have not yet incorporated ESG initiatives in their medium-term management plans, while companies incorporating them intheir management plan has rose to 78%.
There is a gap between investors and companies, as 42% investors answered they view business model transformation is important due to the
COVID-19 impacts, while only 19% of companies had the same view.

⇒ With the view that ESG initiatives do affect corporate value, companies should formulate medium-term management
plan that contains ESG initiatives in order to achieve sustainable growth【 For companies】
How has your awareness of the importance of ESG initiatives changed in
response to the spread of COVID-19? (select one)
70％

2022

64%

60％

2021

45％

2020

6%

56%
41%

29%

4%
4%

0%
10%
20%
30%
40%
Recognizedasimportant
before;importancehas
以前から重要と認識しており、より重要性が増した
increased further
Recognized as important before; no change in
以前から重要と認識しており、変化はない
importanceNot recognized as important before; no change in
以前から重要と認識しておらず、変化はない
importance

39%
53%

50%

1%

1% 2%

【 For companies】 Trend in the percentage of companies that responded to the question“Which management policies incorporate ESG initiatives? (select multiple)” and replied thatthey incorporate ESG initiatives in their medium-term management plans

78%

2021

71%

2020

56%
0%

20%

40%

60%

Promote work
style reforms
働き方改革の推進
Improve businessprofitability
事業の収益性改善
Companies

Business modeltransformation
ビジネスモデルの転換

60%
70%
80%
90%
100%
Not
recognizedasimportant
before;importance
以前は重要と認識していなかったが、重要性が増した
has increased
Recognized
as important before; importance has
以前は重要と認識していたが、重要性が下がった
decreased
Not
recognized as important before; important has
以前から重要と認識しておらず、より重要性が下がった
decreased further

2022【 For companies/investors 】
Initiatives you will emphasize in response to the spread and long-term
persistence of COVID-19 (select up to three)

80%

19%

Investors

42%

Strengthenサプライチェーン管理の強化
supply chain management
Formulate and strengthen business
BCP（事業継続計画）の策定・強化
continuity planning (BCP)
Diversify employment
formats
雇用形態の多様化
Reorganize and withdraw from
不採算事業の整理・撤退
unprofitable businesses
Enhancein-house personnel
社内の人材育成強化
development
Promote researchand development
研究開発の更なる促進
further
Diversify fundprocurement methods
資金調達手段の多様化
Diversify
businesses
事業の多角化Companies
企業
Investors
投資家

None or not sure
特にない・わからない
Other
その他
Increase capital and enhance internal
資本増強・内部留保の拡充
reserves

0%

10% 20% 30% 40% 50% 60%

For Companies and Investors

Recommendation (11): Promoting ESG initiatives

Revised

15

Recommendation (11): Companies should enhance disclosure of corporate information on climate change
impacts and investors should use these information to evaluate companies, and bothcompanies and investors should set quantitative targets on GHG emission reduction
Around 70% of companies have already disclosed climate change-related information based on TCFD recommendations, which is an improvement fromthe previous fiscal year, but there is still room for reviews and upgrading of periodical analyses.
Meanwhile, just 39% of investors are using disclosure of climate change-related information based on TCFD recommendations for company evaluations
or dialogue activities.
Certain companies and investors newly formulated carbon neutrality targets in FY2022 to reduce greenhouse gases, while around 30% of companies andaround 60% of investors are still yet to formulate such targets.

⇒ Companies should enhance disclosure of corporate information on climate change impacts and investors should use theseinformation to evaluate companies, and both companies and investors should set quantitative targets on GHG emission reduction【For companies】
Are you considering TCFD-style climate-related disclosures? (select one)
2022

70％

28%

2021

12%

42%

22%

22%
43%

16%

5% 3% 0%【 For companies/investors 】
Greenhouse gas reduction targets for achieving carbon neutrality in 2050 atyour company or in your investment portfolio (select one)

【Companies】
2022

59%

20%

40%

Already providing enough disclosure
既に十分な開示をしている（定性分析・定量分析）(qualitative and quantitative analyses)
Considering
adoption for disclosure
現在、開示に向けて検討中Noplans for disclosure
現在、開示する予定はない

60%

80%

Already providing a certain level of disclosure
既に一定程度の開示はしている（定性分析のみ）(only
quantitative analysis)
Planning
to consider disclosure
今後、開示に向けて検討する予定
Not familiar with the TCFD
TCFDについてよく知らない

39％
14%

2021

11%
0%

25%
22%
20%

17%
22%
40%

17%

24%

3%

20%

19%

5%

60%

80%

25%

3%

35%

3% 14%

42%

6%

100%

【For Investors】
Are you considering using TCFD-style climate-related disclosures in theevaluation of firms or for dialogue? (select one)2022

2% 10%

5% 1%
2021

0%

28％

100%

Already providing enough disclosure
既に十分に活用している（定性分析、定量分析）(qualitative and quantitative analyses)
Considering adoption for disclosure
現在、活用に向けて検討中

Already providing a certain level of disclosure
既に一定程度活用している（定性分析のみ）(only quantitative analysis)
Planning
to consider disclosure
今後、活用に向けて検討する予定

No
plans for disclosure
現在、活用する予定はない

Not familiar with the TCFD
TCFDについてよく知らない

0%

20%

40%

【Investors】
2022
2021

80%

100%

62％

23%
9%

60%

11%

13%

33%

2%
47%

29%
32%

0%
20%
40%
60%
80%
100%
We
have formulated and announced carbon neutrality targets for 2050 and interim targets
2050年カーボンニュートラル目標、および（2030年頃の）中間目標を策定して公表している(for around 2030).
We
have not formulated interim targets (for around 2030) but have formulated and（2030年頃の）中間目標は策定していないが、2050年カーボンニュートラル目標は策定して公表している
announced carbon neutrality targets for 2050.
We have not formulated carbon neutrality targets for 2050 but have formulated and2050年カーボンニュートラル目標は策定していないが、（2030年頃の）中間目標は策定して公表している
announced interim targets (for around 2030).
具体的な目標は策定していないが、対応を検討しているWe
have not formulated specific targets but are considering appropriate steps.
Wecurrently have no plans to formulate targets.
現在、目標を策定する予定はない

For Government

Recommendation (12): Promoting ESG initiatives Continued

16

Recommendation (12): Take steps to promote ESG initiatives across government ministries/agencies

Following on from the previous fiscal year, investors and companies both continue to expect the government to support corporate disclosure, takesteps to prevent duplication of guidelines and other frameworks, and strengthen cooperation between government bodies on related policy planning,in the course of promoting corporate ESG initiatives and ESG investment and finance by investors.
Meanwhile, the government has bolstered various initiatives to promote ESG initiatives. It has enhanced cooperation between various government
bodies through steps such as the announcement of the joint measures package, “Study Group on Financing for the GX (Green Transformation) of
Industry” by three government bodies, specifically the Ministry of Economy, Trade and Industry (METI), the Financial Services Agency (FSA), andthe Ministry of the Environment.
⇒ Step up the creation of policies on the promotion of ESG initiatives across government ministries and agencies,in order to encourage the disclosure of ESG information and ESG investment and finance【 For companies/investors 】
What do you expect government authorities to do to promote ESG initiatives(companies) and ESG investment and finance (investors)? (select up to two)
Steps toprevent duplication
ガイドライン等のof guidelines and other
複線化防止に向けた対応
frameworks

54%

Companies
Investors

46%
77%

Investors

Strengthen cooperation
関連政策の立案における
betweengovernment bodies
on 省庁間の連携強化
related policy planning

Financial Services
Agency30%
Investors
36%

Companies

Lobbying other countries or
他国・国際機関への働きかけによる

Ministry of
Economy, Tradeand Industry

Establish
a hotline
相談窓口の設置
Recognize exemplary firms via
モデル企業の選定、表彰制度
awards

企業
Companies
Investors
投資家

Other
その他

0%

20%

40%

ESG Initiative Promotion Guidelines
Study Group on Financing for the GX of Industry
Measures Package
Supervisory Guidance on Climate-related Risk
Management and Client Engagement
Code of Conduct for ESG Evaluation and Data Providers

20%
15%

international organizations to reflect
their opinions on international
国際的な枠組み等への意見反映
frameworks, etc.

Ministries/Agencies
Ministry of Economy,
Trade and Industry,
Financial Services Agency,
and Ministry of theEnvironment

23%

Companies

Support disclosure
情報開示のサポート

Reference: Government meeting structures and guidelines on ESG
promotion initiatives

60%

80%

TCFD Guidance 3.0
Guidance for Collaborative Value Creation 2.0/ITO
Review 2.0

Ministry of theEnvironment

Green Bond Guidelines Green Loan and Sustainability
Linked Loan Guidelines (2022) (Loan edition revised at
the same time)

Cabinet OfficeIntellectual Property/Intangible Assets Governance
Guidelines

Cabinet Secretariat

Human Capital Visualization Guidelines

For Government

Recommendation (13): Promoting ESG initiatives

Continued

17

Recommendation (13): Further enhance policy-based support to realize carbon neutralityThe share of both companies and investors who said there was a “high likelihood” of achieving carbon neutrality in 2050 was only about 10%.
Meanwhile, the roadmap to achieving this goal is uncertain, with many respondents stating that they “cannot determine the likelihood of achievement
at this stage.”
As for expectations for government actions, responses included “Propose energy policies centered on renewable energy,” “Develop infrastructure to
expand renewable energy”, and “Formulate specific roadmaps”.

⇒ Formulate specific policies and further enhance policy-based support to increase the feasibility of realizing carbon neutrality【 For companies/investors 】 (select one)
Which of the following statements most closely describes yourcurrent position on the likelihood of achieving carbon neutrality in
2050 at your firm or in your firm’s investment portfolio?
Companies
企業
11%

Investors
投資家 4% 8%

0%

18%

22%

20%

31%

7%

7%

40%

High
likelihood of achievement
達成できる可能性は高い
Somewhat difficult to foresee achievement, with
達成に向けて課題が多く、やや達成が見通し難いmanyissues along the way
Cannot determine the likelihood of achievementat達成可能性を判断できる段階にない
this stage

33%

58%

60%

80%

100%

Somewhathigh likelihood of achievement
達成できる可能性はやや高い
Difficultto foresee achievement, with an
達成に向けて課題が非常に多く、達成が見通し難い
extremely large number of issues along the way(Reference) Major initiatives to address climate change by the government

Green Growth Strategy (Announced December 2020)
Industrial policy to lead the challenging goal of carbon neutrality
to a “Positive cycle of economic growth and environmental
protection”
Basic Policy for the Realization of GX(Announced February 2023)
Summaries objectives for the upcoming 10 years for GX, which
has the goals of decarbonization and energy supply-demand
structure conversion【 For companies/investors 】 (select up to three)
What do you expect the government to do to achieving carbon neutrality in
2050?
Proposeenergy policies centered on
再エネを中心とするエネルギー政策の提示
renewable energy

Companies
Investors

Developinfrastructure that enables
再エネ拡大を可能とするインフラの整備
growth in renewable energy
Formulatespecific roadmaps
具体的なロードマップの策定

Companies
Investors

36%

46%

24%
33%

Companies
Investors

Build supply
chains for next-generation
次世代エネルギーのサプライチェーン構築
energyFunding
assistance for innovative
革新的な技術開発に対する資金援助
technology development

22%

48%

45%

28%

28%
23%
22%

Promote policies
across government
省庁横断的な政策の推進
ministries/agencies
カーボンニュートラルの必要性に対する国民の理解促進
Promote understanding of the need for carbon

12%
13%

neutrality among citizens

Introduce carbon pricing (carbon tax,
カーボンプライシング（炭素税、排出権取引等）の導入

42%

19%

17%

emissions trading, etc.)
Supportforefficient
decarbonization of
高環境負荷産業の円滑な脱炭素化に向けた支援
industries with high environmental impact

8%
10%
7%
6%

他国・国際機関との協力関係の強化
Strengthen cooperative
relationships with othercountries and international organizations
特にない・わからない
None or not sure5%
2%

Design systems to expand green
投資家のグリーン投融資拡大に向けた制度設計

3%

investment and finance among investors
Others
その他

企業■Companies■Investors
投資家

21%

2%
0%

0%

10%

20%

30%

40%

50%

18

【Topics】 Current Status of Human Rights in Japan

In Japan, the level of human rights initiatives expected by companies and investors has rapidly increased, following the formulation of the
Guidelines on Respecting Human Rights in Responsible Supply Chains, National Action Plan on Business and Human Rights, among otherdevelopments.



Human rights due diligence and provision of remediation are expected by the United Nations and other organizations. The shares of companies
that replied that they have “already implemented” these initiatives were low, at 30% and 15%, respectively.

Investors expect companies to take steps such as establishing governance systems, enhancing disclosure and implementing human rights due
diligence. There is a gap between investors’ expectations and the measures currently implemented by companies.

【 For companies/investors 】 (Select multiple)
What initiatives are you already taking, or what initiatives do you expect
companies to undertake, to foster respect for human rights?
Strengthen
education and training
従業員への教育・研修の強化
seminars for employees

52%
57%
52%

Formulate humanrights policies
人権方針の策定
Establish governance systems to fulfill human
人権責任を果たすためのガバナンス体制の整備
rights responsibilities

36%

Companies
Investors

Enhancedisclosure related to human rights
人権取り組みに関する情報開示の充実
initiatives

Companies
Investors

Implement人権デューディリジェンスの実施
human rights due diligence

Companies
Investors

Strengthen
engagement and cooperation
投資家とのエンゲージメント・連携強化
with investors

17%

12%
11%
10%

human rights NGOs and other organizations

Disclose lists of suppliers
サプライヤ－（取引先）リストの公開

35%
30%

1%

Guidelines on Respecting Human Rights in Responsible Supply
Chains (Announced September 2022)
METI formulated the guidelines to promote companies’ respect forhuman rights initiatives, taking into account international
standards such as the UN’s Guiding Principles on Business andHuman Rights, OECD’s Guidelines for Multinational Enterprises
and the ILO’s Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy (MNE Declaration).

45%

43%

27%

Companies 15%
Investors 14%

Strengthen engagement and cooperation with
人権NGO等とのエンゲージメント・連携強化

必要な取り組みはない
No initiatives
are needed

60%

37%
29%

Bolster supply
chain management
サプライチェーン管理の強化

Provide remediation (grievance mechanisms)
救済メカニズム（グリーバンスメカニズム）の構築(Reference) Recent domestic trends concerning human rights

企業■Companies■Investors
投資家

2%
4%
0% 10% 20% 30% 40% 50% 60% 70%

Life Insurance Association of Japan
Human Rights Response Handbook(Announced February 2023)
The LIAJ has published a broad rangeof content to raise the level of humanrights response within the industry fromthe basic concept of corporate
responsibility to respect human rights tospecific examples of important humanrights issues at life insurancecompanies.

Implementation of collaborative engagement

19

Supported efforts by companies to address decarbonization through requests
for improving climate change disclosures

From FY2017, the life insurers in the Stewardship Activities Working Group (WG) jointly initiated a collaborative engagement campaign toconvey their awareness of issues to companies. In FY2022, just as in FY2021, the campaign targeted 151 listed companies (156 companies intotal), while keeping in place the three themes of improving shareholder returns, improving ESG disclosures and improving climate change
disclosures.
On the theme of improving climate change disclosures, the campaign continued its efforts from the previous fiscal year to make the following two
requests to all companies in about the top 50 by greenhouse gas emissions: (1) perform a quantitative and qualitative analysis of management risks
and opportunities associated with climate change and disclose this information; and in addition, (2) formulate and disclose a roadmap forgreenhouse gas emission reductions with a view to achieving net zero emissions in 2050. Companies that have already made disclosures areencouraged to periodically review and upgrade analyses (1) and improve disclosures as necessary for (2).
Equity market
reinvigoration

Achieving a sustainable society

Improving shareholder
returns

Improving ESG disclosure
Improving climate change disclosures

Targeted: 57 listedcompanies

Targeted: 47 listedcompanies

Companies with sound finances, a low
ratio of investing CF relative tooperating CF, and a long-term dividend
payout ratio of less than 30%

Companies in the top 300 by market
cap that do not provide integrated
disclosure of financial and nonfinancial information

Dialogue by letter and meetings
Stewardship Activities WG(11 life insurers)

Targeted: 52 listed companies
Targeted: Companies in about the top 50 bygreenhouse gas emissions (including companies
to which requests were sent last year)
Encourage companies that have already madedisclosures to review and upgrade their periodical
analysesImplementation of collaborative engagement

20

Results of the collaborative engagement campaign in the previous fiscal yearWith regard to improving shareholder returns, of the 63 targeted companies, 21% met the standard of a dividend payout ratio of 30%, and 80% ofcompanies improved, which exceeded FY2021, including those companies that increased dividends even if not achieving the standard.
Looking at improving ESG disclosure, of the 59 targeted companies, 25% newly issued integrated disclosures, which was an increase over FY2021.
In terms of improving climate change disclosures, of the 52 targeted companies, all companies have made disclosures about risks and opportunities
and 85% have disclosed a roadmap, while those companies that have not made disclosures have all been confirmed to have a forward-looking attitude
toward improvement in the future.
Improving climate change disclosures(Top: Disclosure of risks and opportunities;
Bottom: Roadmap formulation and disclosure）

Improving shareholder returns
Dividend payout ratio
配当性向30％以上
of at least 30%

2021

21%

Delisted
上場廃止
80% of companies improved2%
59% (Increase in dividends) （No 19%
increase in

31%
0%

2021

38%

69％

20%

2020
31%

60%

80%

100%

25%

2020

22%
0%

20%

20%

2021
0%

Improving ESG disclosure

2021

82%

10%

Not disclosed

Implemented
since FY2021

Newly issued
integrated
reports

58%
Disclosed (only qualitative analysis)

8%
0%

40%

All companies (100%) disclosed

42%

dividends）

Dividend payout ratio of less than 30%

2020

Disclosed (with quantitativeand qualitative analyses)

20%

40%
Disclosed
85%
40%

60%

80%

100%

Not disclosed

15%
60%

All companies confirmed to havea forward-looking attitude toward
improvement in the future

80%

100%

(Reference) Status of activities of collaborative engagement in FY2021
Progress on
disclosure

No progress on
disclosure

14%

Theme

61%
63%

16%
40%

60%

80%

100%

Targeted companies
63

Companies with sound finances, a low ratio of investing CF
relative to operating CF, and a long-term dividend payout ratioof less than 30%

59

Companies in the top 300 by market cap
that do not provide integrated disclosure of financial and nonfinancial information

52

Companies in the top 50 by greenhouse gas emissions (Scope 1
and Scope 2) (Including companies to which requests weresent last year)

Improvingshareholder
returns

companies

Improving ESG
disclosurecompanies

Improving climatechange disclosurescompanies

Total

companies

170（174 companies in total ）Upgrading the initiatives and approaches of life insurers: Stewardship Activities WG

21

Initiatives and approaches taken or considered by WG participants to improve stewardship
activities

Based on the sharing of activity details among WG participants and interviews with external investors and other experts, each WG participant
continuously strengthened its initiatives and other activities.
WG participants are also actively engaged in dialogue on ESG issues such as climate change (E) and human capital and human rights (S).
Additionally, WG participants took steps to expand stewardship activities beyond domestic listed shares, with initiatives centered on domestic
corporate bonds.

Activity details

Comparison with the previous fiscal year
FY2021

FY20221111• E (climate change) dialogues1111• S (human rights, diversity) dialogues

10

11• Governance (G) dialogue

11

11Manage, use anddisclose the resultsof dialogue• Dialogue findings used in investment decisions

11

11• Externally disclosed the outcomes and results of dialogue

11

11

Expand the scopeof stewardship
activities• Expanded stewardship activities to domestic corporate bonds

11

11• Expanded stewardship activities beyond domestic corporate
bonds (to foreign shares and corporate bonds, etc.)

4

6（7）

・ Disclose voting criteria

1010・ Disclose voting results and the reasons for voting decisions

11

11

11

11

(Number of WG participants)

Dialogue theme

Enhance voting
disclosures
Conduct dialogue toaddress the spreadof COVID-19• Conducted dialogue on themes based on the spread of
COVID-19, such as work style reforms and digitalization* Figures in parentheses include the number of companies
considering implementation in the next fiscal year.

Upgrading the initiatives and approaches of life insurers: ESG Investment and Finance WG

22Efforts to strengthen initiatives and approaches taken or considered by WG participantsEach WG participant is conducting interviews with external investors and other experts, as well as sharing information and exchanging views on
participants’ initiatives and approaches.

Each WG participant is establishing systems and pursuing initiatives aimed at promoting ESG investment and finance, based on factors such as
their respective investment strategies.



Notably, in FY2022, each WG participant strengthened initiatives such as disclosing net zero emission targets in the investment portfolio andimpact investment.

Activity details

Approach

Addressing
climate change

Main ESG
investment andfinance methods
being used

Comparison with the previous fiscal year
FY2021【18】10FY2022【20】11• Become a signatory to PRI *1

14

15• Endorse TCFD recommendations*1• Disclose information according to TCFD
recommendations• Disclose net zero emission targets in theinvestment portfolio

17

17

16

16

10

15（18）• Clearly include the term “ESG” in the basic
investment policy• Disclosed interim targets for investment portfolio and GHG emissions reduction

10（15）• Conducted quantitative analysis related to investment portfolio and climate change

13（18）• Integration *2

18

19• Engagement (Dialogue)

16

16

*3

7

8

• Negative screening*4

18

20• Impact investing

8

12（14）• Measured outcome*5

3

9（14）

• Positive screening*1: Including cases where TCFD recommendations are signed andendorsed at the holding company level and the commitment also
covers group companies.
*2: Meaning that ESG factors are reflected in the investment process.

*3:Selected investment targets for specific stock, etc., from an ESG standpoint*4: Defining securities for portfolio exclusion from an ESG perspective*5:Completed measurements include companies that have not made disclosures* Figures in parentheses include thenumber of companies considering
implementation in the next fiscal year.

Upgrading the initiatives and approaches of life insurers: ESG Investment and Finance WG

Interviews on progressive actions to enhance initiatives/approachesParticipants in the ESG investment and finance WG continued to invite external experts to host seminars to foster their understanding of ESG
investing and finance and enhance their initiatives/approaches.

In FY2022, LIAJ held joint seminars for the ESG Investment and Finance WG and the Stewardship Activities WG on Environment (E) andSocial (S) themes such as addressing climate change and human rights.

< Joint seminars with the Stewardship Activities WG >Instructor

SeminarUN Principles for Responsible Investment
(PRI)

•

Responsible investment trends

Partnership for Carbon Accounting Financials(PCAF) Japan•

Standards for measurement of CO2 emissions•

Network for Greening the Financial System (NGFS) scenario and practicalanalysis•

Regulatory trends in sustainable finance•Transition and innovation finance•

Human capital management

Ministry of the Environment•

Climate change and biodiversity

PricewaterhouseCoopers Arata LLC•

Business and human rights as an institutional investor

Bank of Japan
Financial Services Agency

Ministry of Economy, Trade and Industry

23