Japan Decent Work 8 Index

Research and Study Committee on ESG-S Indicators (ESG-S Indicators Committee)

Introduction
What is JD8?
The indicator of “S (Social)” in ESG needs to be consideredin earnest. The reason for this is that what happened in the“E (Environment)” area is likely to occur in the “S” area as
well. In the “E” area, it is becoming increasingly clear thatthe impact of climate change caused by corporate activities
poses systemic risks that could shake the foundations ofeconomic activities. In response, disclosure frameworks suchas the TCFD have been developed to incorporate these risks
into market decisions. These development have also
encouraged market participants to decarbonize theirinvestment as well as company’s operations to ultimately
improve their long-term value creation.
In the “S” area, there are structural challenges arising fromdecreasing social cohesion caused by economic inequality,
lack of protection of human rights, and depletion of humancapital. The erosion of society’s trust in markets andeconomies is a serious systemic risk. This is a global
challenge and, therefore, has led to increased international
concerns about economic inequality, human rights, andhuman capital.
Many international guidelines and standards have been
proposed for “S” indicators. However, because of Japan’s
unique social systems and employment practices,international standards and indicators alone may not besufficient. For example, in Japan, wages for part-time
employees are lower than full-time. Meanwhile, full-time
employees are more constrained by companies, making it
difficult for them to balance work with housework, childcare,nursing care, etc., resulting in a widening gender gap.

It is necessary to create indicators that appropriately reflect thestructure of these issues unique to Japan.
Given this background, QUICK ESG Research Center andResearch Institute For Advancement Of Living Standards(RENGO-RIALS) established the “Research and Study
Committee on ESG-S Indicators (ESG-S IndicatorsCommittee)” in September 2020 to study “S” indicators.
Based on exchanges of opinions with many corporate
stakeholders and institutional investors, the committee hascompiled the “Japan Decent Work 8 Index (JD8).”
JD8 does not intend to increase the burden on companies by addingnew indicators to the many already existing ones in Japan andabroad.
Instead, while maintaining consistency with existing ones, it
adds unique perspectives, such as employment management
category, based on circumstances peculiar to Japan. JD8 is
not merely a “checklist of disclosure items,” but rather aguideline to encourage dialogue between companies andinvestors and to drive tangible changes.
This will help not only realize a society where everyone isrespected and can work without any concerns but alsoenable companies to accumulate human capital and increase
their corporate value.

Chair of Research and Study Committee
on ESG-S Indicators,

Takeshi Mizuguchi
President, Takasaki City University ofEconomics

Japan Decent Work 8 Index02

Japan Decent Work 8 Index (JD8)
Based on the social (S) issues facing Japan, the ESG-S Indicators Committee proposed eight indicators (13 coreindicators and 12 complementary indicators) to realize decent work for enhancing corporate value.

Adequate working
hours and wages
Average annual total working hours
by employment management
categoryCore

Average annual income byemployment management category

Number of employees by
employment management category
and genderCore

Training expenses per person by
employment management category

System for acquiring new skills andproactive career development

Number and percentage ofemployees in each position bygender

Flexible working
styleCore

Percentage of employees using
remote work and average weekly
remote work hours by genderCore

Average annual income by genderCore

Acquisition rate and duration ofchildcare leave by genderCore

Average years of service by gender

Complementary

Number of employees on nursing
care leave by gender

Complementary

Availability and use status ofsystems that support ease of work

Complementary

Workplacesecurity
Initiatives to enhance
psychological safety
Percentage of employees onmental leaveCore

Complementary

Complementary

Investment in
human capital
Annual total training hours perperson by employment
management category

Elimination ofgender gap

Working conditionin supply chain

Diversity &inclusion
CoreCore

Complementary

Number of employees withdisabilities (by disability type) andtheir average years of service

Core

Ratio of mid-career hires to regular
employees and turnover rates ofmid-career and new graduate hires
within 3 years

ComplementaryInitiatives and support systems forsexual minorities

Complementary

Number of foreign nationals
working in Japan with major statusof residence

Complementary

Human rights due diligence insupply chain

Core

Adequate transactions withsubcontractors and other supply
chain companies (price and deliverytime)Core

Initiatives to improve the treatmentof temporary/contract workers andfreelancers

Complementary

Sound labormanagement
relations
Existence of labor unions, union
membership rates, and scope ofunion membershipCore

Availability of labor-management
negotiations/consultations onwages, working hours, and otherworking conditions

ComplementaryStatus of labor-management
dialogue on management issues,
such as changes in industrial
structure and business
transformation

Complementary

Japan Decent Work 8 Index03

Theory of Change
Sustainable Corporate GrowthDecent Work
Reduction of economic
disparity
Reduction of disparity
by employment
management category[Working hours and wages]

Elimination of gender gap
Flexible working style
Remote work,
Childcare & Nursing care

Improvement ofcapability for humanresource acquisition
Challenging andrewarding work
Ease of work
Capacity development

Improvement ofemployee
engagement

Accumulation ofhuman capital

Reskilling
Diversity & inclusion
Investment
in human capital(regardless of employmentmanagement category)

Supply chain

Sound labor-management
relations

Workplace security

Decent working
condition

A society whereeveryone is respected
and can work without
any concerns

Wage increase & Improved working condition

Growth and distribution cycles
Reduction ofdisparity & Stabilityof the economic
foundation

Adaptation toinnovation andindustrial restructuring

Expansion of consumption
Increase in births

Investors

Improvement ofSustainable
Corporate Value- Pension plan management & investment- Status of dialogue with companies

Sustainable societyJapan Decent Work 8 Index

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