The Evolution of ESG Investment,
Realization of Society 5.0, andAchievement of SDGs
—Promotion of Investment in
Problem-Solving Innovation

Messages on the publication(title at the time)

NAKANISHI Hiroaki, Chairman, Keidanren
Digital Transformation and the disruptive innovation has opened up
entirely new possibilities for the world. It will also open the way for solutions
to many of the issues that were previously considered difficult, such as global
warming, energy, food, concentration in large cities, and health and medicalcare. It’s both an ambitious challenge and a huge opportunity for companies
working on these issues. This will lead to the achievement of the United
Nations’ SDGs and the creation of a society in which people around the world
can live happily and with peace of mind.
In order to realize Society 5.0 for SDGs, we must focus our human andfinancial resources to accelerate change. I hope that this joint research madenot only by industry but also with the University of Tokyo, a representative of
academia, and the GPIF, the world’s largest asset owner, will help accelerate
the creation of the new society.

GONOKAMI Makoto, President,
the University of Tokyo
Society 5.0 has been described as “a sustainable, human-centered society inwhich the physical and cyber worlds are highly integrated by digitaltransformation, no one is left behind, and everyone works together to create
safe and comfortable lives and new growth opportunities.” Society 5.0, which isa better, knowledge-intensive society, is not something that is achieved
automatically or spontaneously. We must protect and nurture cyberspace as a
global commons that enables everyone to use data fairly and impartially acrossborders. It is also necessary to transform expansionist economic growth, which
seems to have reached its limit due to the manifestation of environmental
issues, into growth driven by inclusiveness in which no one is left behind, or“inclusive growth,” and to make a “difference” as a new source of growth.
Working in partnership with Keidanren, the GPIF, and all sectors ofsociety, the University of Tokyo will drive a paradigm shift for a new model ofa knowledge-intensive society toward the realization of Society 5.0 for SDGs as
a “global base for knowledge collaboration” that will contribute to the future of
the planet and human society.

TAKAHASHI Norihiro, President,
The Government Pension Investment Fund
Having stable and sustainable growth of corporate value and the capital
market as a whole is essential to obtain stable profits over the long term forthe benefit of the public pension insured, with funds totaling 160 trillion yen
as of the end of March 2019. Against this backdrop, the GPIF has actively
promoted ESG investment as a “super-long-term investor” and “universal
owner” to enhance the sustainability of financial markets as a whole.
This time, a joint study conducted with Keidanren and the University ofTokyo has shown quantitatively and qualitatively that corporate activities
promoting Society 5.0 for SDGs in Japan contribute to environmental andsocial sustainability and sustainable economic growth from the viewpoints ofcompanies, investors, and academics. This finding is extremely significant
from our standpoint as we keep precious insurance premiums of insured
persons, and we have high expectations for future development.

The Evolution of ESG Investment,
Realization of Society 5.0,
and Achievement of SDGs

Joint Research Report by Keidanren, the University ofTokyo, and the GPIF for the Promotion of Investment in
Problem-Solving Innovation

“Society 5.0 is a sustainable, human-centered society inwhich the physical and cyber worlds are highly integrated bydigital transformation, no one is left behind, and everyone
works together to create safe and comfortable lives and new
growth opportunities.”(From the analysis results of this report)

PurposeWe are faced with a time of greatchange,as
exemplifiedbythedevelopment of digital transformation(DX), changes in the socioeconomic
structure, an increasing sense of crisis
regarding global environmental issues,and changes in people’s mindsets.
To seize these changes as anopportunity to achieve medium- to longterm economic growth and build asustainable, human-centered society,the realization of “Society 5.0 for
SDGs”—aconcept
originatinginJapan—holds the key.
Therefore,
we
conducted
joint
research toward the realization ofSociety 5.0 for SDGs with three parties
representing the Japanese business
community, academia, and investors,
namely Keidanren, the University ofTokyo, and the GPIF.
In the joint research, a series of
discussions have been held with theshared recognition of the importance ofstable medium- to long-term funding forcompanies, universities, and start-ups
promoting problem-solving innovation
for the realization of Society 5.0 for
SDGs.
Accordingly, we have set an aim ofrealizing Society 5.0 and achieving
SDGs by identifying the trend of now
globally expanding ESG investment,
further evolving it, and connecting it to
the promotion of investment in problemsolving innovation. We then examinedmeasures to achieve the aim.
Specifically, we established four
themes to promote investment inproblem-solving
innovation,andconducted
researchon
specific
initiatives of each player.
At the end, through these discussions,
we present a future action plan of thethree parties for the realization of“Society 5.0 for SDGs.”

Table of Contents
Overview

p. 1

Chapter 1 Background of the Study 4 Looming Megatrends
 Society 5.0 for SDGs
 ESG Investment and Society 5.0
 Evolve ESG Investment and Connect It to Society 5.0 to
Achieve SDGs Swiftly and Reliably
 Collaboration with Various Stakeholders to Realize Society 5.0 for
SDGs, and Roles of Each of Them

p. 3
p. 6
p. 11
p. 13
p. 16
p. 17

Chapter 2 Current Status of the Understanding of Society 5.0 and
Measures to Improve It
 Current Status of Recognition and Understanding (Questionnaire Results)
 4 Concrete Measures to Improve Recognition and Understanding

p. 21
p. 24
p. 28

Chapter 3 Economic and Social Impacts
 Opportunities Provided by Society 5.0
 New Opportunities Provided by Society 5.0 (Quantitative Analysis)
 Various Discussions on Future Industrial Outlook

p. 34
p. 37
p. 39
p. 46

Chapter 4 Direction of Information Disclosure by Companies Promoting Society 5.0
 “Future” Financial Information Denoting Companies Addressing Society 5.0
 Megatrends to Capture Long-Term Vision That Evokes Expectations for Future Growth Direction of Information Disclosure and Specific Corporate Initiatives

p. 49
p. 52
p. 54
p. 56
p. 60

Chapter 5 Improvement of the Investment Environment Examples of Initiatives to Improve the Investment Environment for Society 5.0
 Examples for the Promotion of Investment in Universities and Start-Ups
 Examples of Investment Methods (Indices, etc.) for Society 5.0

p. 64
p. 67
p. 72
p. 75

Conclusion

p. 77

Action plan of Keidanren, University of Tokyo, and the GPIF
to realize Society 5.0 for SDGs

Overview
Chapter 1: Background of the Study•••

Society 5.0 for SDGs is a concept that transforms four megatrends into opportunities for
economic growth and problem-solving.
In order to achieve this, it is essential that medium- to long-term stable funding be channeled toa variety of players promoting problem-solving innovation, such as companies and universities,
and that the innovation ecosystem itself evolves autonomously.
Therefore, we identify the trend of now globally expanding ESG investment and further evolveit to accelerate investment in problem-solving innovation, in order to achieve the realization ofSociety 5.0 and the swift and reliable achievement of SDGs.

Chapter 2: Current Status of theUnderstanding of Society 5.0 and
Measures to Improve It

Chapter 3: Economic and Social Impacts

Explore the current state ofunderstanding of Society 5.0 andconsider measures to improve it

Purpose•

Methodology

•

•

•
•

ResultPurpose
Methodology

Questionnaire survey oncompanies and investors

Estimate the economic and social
impacts of Society 5.0 and clarify
itsbenefits＊
Estimation by Nomura (2020)•

Same survey + natural
language processing

Presentation of growth
opportunities in key industrial
Industrial sector(excerpt)

Discussion among the threeparties, etc.

Next-generation
healthcare
Digitization of
manufacturing
Smart mobility
Smart living
Next-generationenergySociety 5.0 is lessrecognized than ESG/SDGs
Incorporating Society 5.0
into ESG investment will
have a variety of benefits,
including higher returns
and a broader scope forproblem-solving

ResultGrowthopportunities(2030)
36.2
28.5

21.3
18.9
19.3

•

Estimated that if alltechnologies are implemented
in society, a growth opportunityof 250 trillion yen (nominal
GDP: 900 trillion yen) would becreated in the economy as a
whole

•

Cumulative investment needed
to realize Society 5.0 is 844
trillion yen over 15 years

ESG(Mainly focusing on the negative impacts onsociety and risk reduction)）

Investors

SRI(Mainly focusing on compliancewith ethical standards)* Nomura (2020): A report titled “Society 5.0 for SDGs — Creating Future
Economic Assessments” by Koji Nomura, Project Leader, the 21st Century
Public Policy Institute and Professor, Keio University

1

The Evolution of ESG Investment, Realization of Society 5.0, and Achievement of SDGs

Companies, universities, etc.
promoting Society 5.0

Society 5.0alyMainly focusing on the positive
impact on society and the mediumto long-term growth of companies

ial

es

Chapter 4: Direction of Information
Disclosure by Companies
Promoting Society 5.0

Purpose•Questionnaire survey oncompanies and investors +natural language processing

Methodology•(1) Collect long-term visions
and other information fromcompanies, and (2) collectinvestor evaluations of them.

•

Examples of initiatives toimprove the investment
environment•

Role of each player•(1) and (2) are processed innatural language to extract thecontents of long-term vision, etc.
and expression methods
required by investors.

•

Fundraisers: Inclusion ofSociety 5.0 in the integrated
report and other publications,promotion of the formation ofprojects, etc.

•

Smart life, population structure,climate change, etc. ranked highas megatrends to be captured•

Concrete recommendations forthe promotion of investment
in universities and start-ups

3 elements of the long-term
vision of highly rated companies(1) Business development
based on people(2) Solving global issues(3) Creation of new markets••

Universities: Identification of
key technologies contributing
to Society 5.0, etc.

•

Proposed recommendations ofinvestment methods forSociety 5.0•

Megatrend indices, integrated
management of DX and ESG
indices, etc.

Methodology
be

ded

y

Purpose Explore concrete
recommendations to improve
the investment environment torealize Society 5.0
Discussion among the threeparties, etc.

Explore the direction of
information disclosure bycompanies addressing Society 5.0

Purposednity

Chapter 5: Improvement of the Investment
Environment

ResultResultAction Plan•

The three parties of Keidanren, the University of Tokyo, and the GPIF manifest their commitment toSociety 5.0 for SDGs, and as concrete measures for its realization, they will foster the formation ofprojects concerning Society 5.0, promote engagement, and form a social system for its realization.

2

1.
Background of the Study

Summary
We see 4 megatrends looming
currently. Going forward, Japan andthe rest of the world will undergo
major changes that are not in linewith past trends.

that contributes to the achievement
of
SDGs
by
investors.
ESG
investment and Society 5.0 share
three common themes: forwardlooking and pursuing both economics
and sustainability. Currently the two
are not connected, but the evolutionof ESG investment (which meansthat as part of ESG investment, morecompanies and universities will
invest in problem-solving innovation)is critical to truly achieving SDGs.

We need to turn these megatrends
into opportunities for medium- tolong-term growth and for the creationof a sustainable society.
The key to achieving this is therealization of “Society 5.0,” a concept
originating in Japan. “Society 5.0” isa “growth strategy” that makes themost of digital transformation,
overcomes various human limitations,solvesglobalissuessuchasenvironmental problems and health,and realizes a sustainable, humancentered society. This will greatly
contribute to the achievement of theSDGs advocated by the United
Nations.

This chapter proposes a new idea:“FurtherevolutionofESG
investment and the realization ofSociety 5.0 are critical to the swift
and reliable achievement of the
SDGs.” And, four strategies for therealization are presented.
In addition, this chapter presents
therolerequiredofvariousstakeholders for realization of Society
5.0.

On
the
other
hand,
ESG
investment is an investing method3

“ Although the paradigm shift that starts

with digital transformation poses negative
risks, it has the positive potential to leadthe world to inclusive growth, include all
people while reducing various disparities,
and create a better society.
This is the image of Society 5.0 as the‘better society’ that Japan has been
discussing ahead of the rest of the world.”
GONOKAMI Makoto,President,
the University of Tokyo4

“, the Universityof Study
Tokyo(Overview)
Chapter 1: Backgroundof theBackground4 megatrends
DigitalTransformation

Changes in thesocioeconomic
structure

Globalenvironmental
issues

Shifts in people’s
mindsets

Turn the megatrends into
opportunities

Direction

Realization of Society 5.0
Evolution of ESG Investment

Swift and reliable achievement of SDGs
Challenge
On the other hand, investment in problem-solving innovation through ESG
investment is still halfway to completion. Society 5.0 will not be realized
without investment in problem-solving innovation
4 strategies• Direction of Information
他方、ESG投資を通じた課題解決イノベーションへの投資は道半ば。
• Current
Status of Understanding andDisclosure (Chapter 4)
Measuresto
Improve
It(Chapter2)
Society 5.0の実現には、課題解決イノベーションへの投資促進が不可欠。
• Improvement of the Investment• Economic and Social Impacts (Chapter 3)
Environment (Chapter 5)
Role of each stakeholder in realizing Society 5.0 for SDGs

5

4 Looming Megatrends

DigitalTransformation

The looming megatrends are changing society
drastically. Here, we introduce four major such trends.

Digital transformation (DX)
Digital technology has further advanced to connect
not only digital devices but also all “things” to theInternet. In addition, advances in AI technology thatcan predict, analyze, and optimize information, andsocialimplementationof
5G
communication
technology that connects various technologies are
imminent.

The first megatrend is the progress of “DX (digitaltransformation)” which brings about the possibility of
new social change.

Diffusion of digital devices
Since the 1990s, personal computers and theInternet have rapidly spread to common households,
and the “information society,” in which many people
can freely access a wide range of information, hasarrived.

These developments in digital technology are notlimited to the spread of individual technologies, but
are expected to significantly change the appearance ofsociety. This transformation is commonly referred to as“digital transformation (DX).”

With the advent of smartphones in the mid-2000s,
possession of advanced information devices changed
from “one per house” to “one per person.” This has
made it easier for people of all ages to access moreadvanced information today.

Digital transformation expands people’s capabilities,
enables new things, and provides freedom

Approximate amount of time it takes new products topenetrate 50% of the U.S. population
85 years for cars, 25 years for PCs, and 10 years forcell phones
0

20

40

60

Digitaltransformation

New things
that youcan doAnalytical
capacityAI

Substitution
and support
for complex
work

Ability toobtainknowledge

Big
data

Substitution
and support
for skilledwork

Human ability

Creativity

80

Car
Airplane
TelephoneElectricity
Video recorderRadio
Television
PC
Internet
Cell phone
Time to adopt technology (years)

Note: Adoption refers to the amount of time it takes a technology to penetrate
50% of the U.S. population.
(Source) Prepared by Keidanren Secretariat based on the United Nations
Development Programme (2015): Human Development Report

6

EffortRobotic
IoT

・
・
・

・
・
・

Substitution
and support
for routine
work
・
・
・

Acquiring freedom withnew tools and methods

How to determine thevalue to be pursued
becomes importantChapter 1 Background of the Study

Changes in thesocioeconomic
structure
The second megatrend is the change in thesocioeconomic structure of Japan and the world.

Shift of the world economy to Asia andemerging countries

Demographic changes (progress of lowbirthrate and aging population)

The world economy is expected to shift further to
Asian and other emerging countries, and China is
expected to become an economic superpowercomparable to the United States and Europe. India
and ASEAN are also expected to grow rapidly. As aresult, demand for high-value-added products andservices will increase in Asia and emerging countries.

Since the 1990s, Japan has experienced a rapidly
aging population with a declining birthrate and alonger life expectancy. As a result, the country faces
various challenges, including a labor shortage, adecline in the vitality of rural areas, and an increase insocial security costs.

Changes in nominal GDP (U.S. dollar) of countries and regions

There is also growing concern over the declining
birthrate and aging population in Europe, and inplaces in Asia such as China and South Korea. For
example, according to population prospects released by
the United Nations, the working population in Europe
is expected to decline by about 50 million between
2010 and 2025.

30
25

Levelling20
15
10

At the same time, demand for products and services
in response to the aging of society is expected toincrease, and measures to respond to the declining
birthrate and aging population are becoming acommon global issue.

（age）

2018

0
2015
米国
US

100

500

0

0

500

1,000 1,500

1,000

500

0

0

（千人）

0

500

2024
インド
India

(year)

ASEAN-5
ASEAN-5Furthermore, since the global financial crisis of
2007–2008, developed countries in Europe andelsewhere have continued to have low growth and low
interest rates, as in Japan, and there is a concern thatthese will be prolonged.

50

1,500

日本
Japan

Since the bursting of its economic bubble in the
1990s, Japan has experienced a prolonged period of
low growth and low interest rates, known as the “Lost30 years”, deflationary recession, or protracted
stagnation.

100

2050

2020
欧州
EuropeConcerns about low growth and prolonged
low interest rates in developed countries

Male

0
1,000

中国
China

(Source)IMF

50

1,500

Levelling

5

Japan’s declining birthrate and aging population willcontinue to advance: in 2050
Female(trillions of dollars)

1,000 1,500(Source) National Institute of Population and Social SecurityResearch

7

Globalenvironmental
issues
The third megatrend is global environmental issues,
for which there is a growing sense of crisis worldwide
in recent years.

Climate change
Concerns over climate change are growing both athome and abroad against the backdrop of factors suchas extreme weather events, including typhoon
disasters and extreme heat in recent years, and theUnited Nations Climate Action Summit in September
2019.

Global environmental problems thatpose global risks
The World Economic Forum’s The Global Risk
Report 2020 ranks global risks after 2007 in terms of

Climate change is a global issue, and members of
the international community are working together toreduce greenhouse gases under the Paris Agreement
adopted by the United Nations in 2015. The Paris
Agreement sets a goal for the second half of thiscentury of balancing global emissions and sinks, andthe creation of disruptive innovation driven bybusiness is essential to achieving this goal.

two indices, namely the probability of riskmaterialization (likelihood) and the adverse impacts ofrisk materialization (impact).
According to the report, environmental issues did
not rank in the top five in either index until 2011.
However, in 2020, environmental issues made up the
top five in terms of risk materialization probability(likelihood) and three of the top five in terms of theadverse impacts of risk materialization (impact).
Environmental issues as global risks have been
positioned as extremely important.

In addition, the market for “E” (Environment)
among ESG investments has expanded significantly inrecent years. According to an estimate by theInternational Finance Corporation (IFC), the amountof green bonds (bonds specifically for environmental
projects) issued exceeded 27 trillion yen in 2019,setting a record high.

Biodiversity and marine plastics
It is essential for human life to benefit from natural
resources, and the blessings of nature that grow in asuperior environment are sources of high added value
such as nutritious food. Maintaining biodiversity andbuilding a sustainable society in harmony with natureare essential conditions for realizing a human-centeredsociety.

**

In addition to marine pollution and the impact on
the ecosystem, the issue of marine plastics, which has
attracted increasing attention in recent years, has thepotential to affect the human body through the foodchain. The formation of a circular economy is also
important from the viewpoint of realizing the healthy
life of people.

The top five issues of concern in terms of the probability of risk materializationand the adverse impacts of risk materialization assumed by the WEF are
indicated in different colors.
Green indicates environmental risk, red indicates social risk, blue indicates
economic risk, purple indicates technological risk, and orange indicatesgeopolitical risk.
(Source) World Economic Forum

8

Chapter 1 Background of the Study

Shifts inpeople’smindsets
The fourth megatrend is shifts in people’s mindset
due to the emergence of new generations.

generation who have been surrounded by digital
devices since they began to understand things.
Millennials

Adoption of SDGs and awareness ofsustainability

Millennials have spent a long time in the age of
uncertainty, beginning with the global financial crisisof 2007–2008, and are not focusing solely on economic
growth, but also on improving the quality andsustainability of society as a whole. For this reason,
they consider environmentally and socially conscious
products and services as elements of high added value.

In 2015, the UN General Assembly unanimously
adopted the “Transforming our world: the 2030
Agenda for Sustainable Development” (“2030 Agenda”
hereinafter), which, based on the principle of leaving
no one behind, set 17 SDGs and 169 targets asinternational common goals to be achieved by 2030.

In addition, they are highly interested in“experiential consumption” which emphasizes not only
the functional aspects of products and services but also
the experience gained through them.

The 2030 Agenda calls for the cooperation ofdiverse stakeholders to balance and achieve
simultaneously the three dimensions of the SDGs: theeconomic, social, and environmental dimensions.

Digital Native generation

According to Better Business Better World by theBusiness and Sustainable Development Committee, anorganization composed of the world’s business
community and experts, achieving the SDGs opens up
new opportunities for companies, and the market
opportunities are estimated to be worth over 12 trillion
dollars per year in four economic systems.

The Digital Native generation have been enjoying
the new benefits of the rapidly spreading Internet anddigital devices since the late 1990s, as soon as they
began understanding things.
This generation aim to do more efficient activities
and create smooth human relationships with the use ofdigital devices. They are also said to have thecharacteristic of not being bound by conventionalcustoms, and acting based on their own values andways of thinking.

Over12Over
trillion
12 trillion
dollars
dollars
per
year
per
year

When using an approach with conventional ideas, it
is difficult to gain response from these generations
who have such new modes of behavior and values;
companies, universities, investors, and others are
required to flexibly change their ways of thinking.

(Source) Prepared by Keidanren Secretariat based on Better
Business Better World

Major core generation changes in thenext few years
It is said that over the next 5 years, approximately
half of consumers and workers will be “millennials”
who value not only economic growth but also
contributions to society, and the “Digital Native”

9Realization of Society 5.0 for SDGs
in the 4 Megatrends Holds the Key

Changes in thesocioeconomic structure

DigitalTransformation

Global environmental
issues

Shifts in people’s mindsets

Society 5.0 for SDGs
Society 5.0 turns the megatrends into opportunities
The above four megatrends, namely the development of digital transformation (DX), changes
in the socioeconomic structure, increasing sense of crisis regarding global environmental issues,and shifts in people’s mindsets, will cause major changes over the medium to long term.
Depending on our efforts, we may be at risk of creating new, more complex challenges.
However, the “Society 5.0 for SDGs” concept originated in Japan is an ambitious concept thatviews such changes and challenges as opportunities, connects them to medium- to long-term
growth, and leads to the solution to global challenges.

10Chapter 1 Background of the Study

Society 5.0 for SDGs

Society 5.0—a Creative Society

Utilizing technology and industry tocreate a human-centered society

What is Society 5.0?
Society 5.0 is the concept of the fifth future society,following the hunting society, agricultural society,industrial society, and information society.

The difference between Society 5.0 and the fourth
Industrial Revolution, such as Germany’s Industrie 4.0,
lies in that the goal of the latter is to pursue
technological and industrial transformation, while theformer pursues human happiness and the building of abetter society based on such transformation.

In Japan’s fifth Science and Technology Basic Plan,Society 5.0 was defined as a “super smart society” inwhich cyberspace and physical space (real space) arehighly integrated by utilizing rapidly developing
digital technology.

In the fourth Industrial Revolution, which aims totransform technology and industry, innovativetechnologies will be introduced into industry to achieve
more efficient and smarter production. But as a result,it can have a negative impact on people and society.

Society 5.0 is a “Creative Society”
In its proposal “Society 5.0: Co-creating the future”(“the Society 5.0 Comprehensive Recommendation”
hereinafter) published in November 2018, Keidanren
defined Society 5.0 as a society “where digitaltransformation combines with the imagination andcreativity of diverse people to solve social problems
and create value.” It also named the society a“Creative society.”On the other hand, with the goal of creating a more
comfortable life and a better society, Society 5.0
focuses on how technological and industrial
transformation should be utilized to achieve happinessand a better society.
In other words, Society 5.0 is a concept that aims
for an inclusive and sustainable society in whichpeople play a leading role, with a broad perspective on
the use of innovative technologies.

Behind this lies the idea that the society to be
pursued in Society 5.0 is not only a “super smart
society” but also a society in which anyone, anytime,
anywhere, with peace of mind, creates values whileliving in harmony with nature by utilizing innovativetechnologies.

Future-Society 5.0
Creative Society
End of 20th century–

In addition, it presents two elements, namely“digital transformation” and the “imagination andcreativity of diverse people,” as important means ofrealizing Society 5.0, and calls for companies to utilize
digital transformation and reform the organizational
structure so that diverse people can demonstrate their
imagination and creativity.

Society 4.0
Information Society
End of 18th century–

Society 3.0

4th Industrial
Revolution

Industrial Society

Digitaltransformation

13,000 BC

Society 2.0
The emergence ofhuman beings

Society 1.0

2nd Industrial
Revolution

Hunting Society

Heavy andchemical industry

1st Industrial
Revolution
Light industry(Source) Keidanren

11

3rd Industrial
Revolution

Agrarian Society

Automation andinformatization

Society 5.0“for SDGs”

In Society 5.0, a world that saw a large-scale
paradigm shift, cyberspace and physical space become
two sides of the same coin. For this reason,
appropriate and responsible development, use andmanagement of the common platform for humanity
spanning both spaces (global commons) will support
Society 5.0 and play an extremely important role inrealizing its goal of a sustainable, human-centeredsociety.

Social vision of Society 5.0
What will Society 5.0 look like? For example, theCharter of Corporate Behavior (Box 1.2) formulated by
Keidanren presents a sustainable, human-centeredsociety in which economic growth is compatible withthe resolution of various social issues such as healthand medical care, agriculture and food, environmentand climate change, energy, safety and disasterprevention, and equality of people and gender, and inwhich each and every person can live and work
comfortably and with peace of mind.

Society 5.0 “for SDGs”
Thus, Society 5.0 is in line with a society which has
achieved the United Nations SDGs, in which both
economic growth and problem-solving have been
attained. To clearly indicate this, Society 5.0 isreferred to as “Society 5.0 ‘for SDGs’.”1

In addition, in the Society 5.0 Comprehensive
Recommendation, five figures of societies realized bySociety 5.0 are presented.

1. “Value Creation” Society

Significance of Society 5.0 in terms ofachieving SDGs

 A society that creates new added value by
responding to diverse needs and solving
problems

On the other hand, from the perspective ofachieving SDGs, Society 5.0 is also significant in thatit makes it easier for economic entities such ascompanies and investors to encourage efforts toachieve SDGs. This is because Society 5.0 emphasizes
the achievement of SDGs through business andinnovation.

2. “Diversity” Society A society in which diverse people display
diverse talents and pursue diverse values

3. “Decentralized” Society A society in which wealth and information are
not concentrated on a specific person orcompany, and in which there is an opportunity
for everyone to play an active role anytime
and anywhere.

In addition, because Society 5.0 is a concept thataims to achieve the SDGs through the use ofinnovativetechnologies,itispossibletosimultaneously resolve a number of social issues thathave been considered as trade-offs in conventional
technologies. For example, it enables the provision ofcheap and clean energy by combining innovative clean
energy technologies, storage battery technologies, andthe like.

4. “Resilient” Society A society where people can live with peace ofmind free from concerns such as climatechange, abnormal weather, social unrest, andcyber attacks

5. “Harmony with Nature” Society A society where people can live with peace ofmind free from concerns such as climatechange, abnormal weather, social unrest, andcyber attacks

1 The terms “Society 5.0 for SDGs” and “Society 5.0” are usedin this report for the above reasons and refer to the same
concept.

12

Chapter 1 Background of the StudyESG Investment and Society 5.0

What is ESG
investment?

On the other hand, in the global financial andcapital markets, interest in ESG investment has
increased in recent years.

Contributing to the achievement of SDGs
(ESG for SDGs)
ESG investment is also one of the approaches taken
by investors to solve social issues, and there is a strong
recognition among investors that ESG investment willlead to the achievement of SDGs.

What is ESG investment?
ESG investment was originally proposed in the
Principles for Responsible Investment (PRI) launchedin 2006, and which presented E (Environment), S(society), and G (Governance) as factors influencing
medium- to long-term corporate value.

For example, in a questionnaire survey oncompanies and investors, 3 96% of the investors said
that their ESG investments contribute to achieving
the SDGs.

Expansion of ESG investment

Variety of ESG investing methods

ESG investments expanded rapidly, particularly inEurope, with the total assets under management of
the fund managers signing the PRI amounting toabout 66 trillion dollars and the actual assets allocatedto ESG investments reaching about 30 trillion dollars. 2

Investing methods of “ESG investment” vary widely.
For example, the GSIR classifies ESG investment
methods into seven strategies.
According to the report, negative screening, which
excludes certain sectors and companies that do notmeet ESG criteria from investment, has the largest
amount of assets.

Interest in ESG investment is also growing inJapan, reflecting the GPIF’s strong commitment to
ESG including the inclusion of ESG in its Investment
Principles.
70(trillions of
60

The method with the second-largest amount ofassets under management is “ESG integration” which
introduces ESG elements into financial analysis.

(number) 2500

In addition, although still relatively small inamount, positive screening and themed investing have
surged in recent years.

dollars)
2000

50
1500

40

Impact investing(billions of U.S. dollars)

Thematic investing

30

1000
Positive screening

20

Norms-based screening

500

Engagement10

ESG integration

0

0

Negative screening

Total funds of PRI signatory institutions
Number of signatures of PRI signatories

0
Europe

5000
USA

10000

Canada

15000

Oceania

20000

25000

Japan

*(Source) GSIR; amounts are adjusted to U.S. dollars according to the method of the source

Throughout this report, the “questionnaire survey oncompanies and investors” refers to the findings of the survey
presented in Appendix 1 of this report.
32

Global Sustainable Investment Review 2018 by Global
Sustainable Investment Alliance (“GSIR” hereinafter)

13

Common features of ESG investment and Society 5.0

Potentiality
Profitability
Sustainability

ESG for SDGs

Society 5.0 for SDGs
Society 5.0？

ESG

Promoting companies,
universities, etc

Investors

ESG investment by investors and Society 5.0 bycorporations have the following three features incommon, and they are expected to be connected witheach other.

Improving economic growth and returns(profitability)
ESG investment and Society 5.0 both aim toincrease not only social but also economic value.

Being forward-looking (potentiality)

Aiming to achieve SDGs (sustainability)

Both ESG investments and Society 5.0 are forwardlooking—rather than being backward-looking andinvesting and carrying out activities based on
historical conditions and data, they look ahead andinvest and conduct corporate activities accordingly.

Both ESG investment and Society 5.0 aim toaddress global issues, achieve SDGs, and realize asustainable society.

ESG investment in problem-solving innovation
accelerates realization of Society 5.0
Stable medium- to long-term funds from ESG investments drive the achievement of Society 5.0, andSDGs will be achieved.
(1) Investors make medium- to long-term,
stable investments in the innovation
ecosystem to solve problems

Start
-ups

Society 5.0

Fund

Investors

Innovation

ecosystem

大学等

Companies

Gov.

NGOs

Public(3) The ecosystem evolvesautonomously, acceleratingproblem-solving innovation.
This leads to the realization ofSociety 5.0 and the swift andreliable achievement of SDGs.

(2) Diverse stakeholders support investors’
movements for innovation

If ESG investment and Society 5.0, which have the common features, are
combined, the problem-solving innovation ecosystem will evolve
autonomously, Society 5.0 will be realized, and SDGs will be truly achieved.
If ESG investment and Society 5.0, which have the three features in common, were to be
combined (medium- and long-term stable investment funds were to be directed to the problemsolving innovation ecosystem), the ecosystem would evolve autonomously to realize Society 5.0
and truly achieve SDGs (swift and reliable achievement of SDGs).

14

Chapter 1 Background of the Study

Further evolution of ESG investment is critical toachieving Society 5.0 and SDGs

Society 5.0
present

ConsiderEthical issue

Maximize
Positive Social Impact& Financial Return

Minimize
Negative Social Impact& Financial Risk

Furthermore, currently an increasing number ofpeople have the view that solving social issues throughcorporate business activities and innovation not only
has positive impacts on society but also is a key tocorporate growth over the medium to long term.

Further evolution of ESG investment isessential
Meanwhile, it is difficult to say that ESG
investment and Society 5.0 are currently wellconnected. This is probably because ESG investment isstill in the process of evolving.

This further evolution of ESG investment(promotionofinvestmentinproblem-solving
innovation) will also lead to the realization of Society
5.0 and the true achievement of SDGs.

ESG investment originally came from Socially
Responsible Investment (SRI), which excludes
companies that do not conform to the code of ethics
from investment destinations. It later evolved toinvestment centered on reducing the negative impact
of corporate activities on society and the risk of
medium- to long-term fluctuations in corporate value.

It is therefore important to promote the evolution of
ESG investment and connect it to Society 5.0.

Box 1.1: The GPIF’s views on ESG investments and SDGs
GPIF and Investment Chain

The GPIF organizes the relationship between ESG
investments and SDGs as shown in the chart on the left,
and clearly demonstrates that “addressing social issues
will lead to the creation of business and investment
opportunities.”
Specifically, it explains that companies will be able tosustainably improve their value by selecting from the 17
goals of the SDGs the ones that are best suited to themand incorporating them into their business activities.
Thus, the GPIF’s ESG investment targets a wide
range of social issues, including the SDGs.

Source GPIF

In the future, more and more investors, such as the
GPIF, are expected to expand the range of issues that
their ESG investments address.

15

Evolve ESG Investment and Connect It to Society 5.0
to Achieve SDGs Swiftly and Reliably

Improvement of theInvestment Environment

Direction of information
disclosure

ESG

Economic impact,
etc.

Improvingunderstanding

4 strategies to connect ESG investment and Society 5.0

Investors

Problem-solving
innovation

Society 5.0

SDGs

Promoting companies,
universities, etc.

Accelerate the evolution of ESG investment and connect it toSociety 5.0 to achieve SDGs quickly and reliably
In light of the above, this report aims to “Accelerate the evolution of ESG investment andconnect it to Society 5.0 to achieve SDGs swiftly and reliably.” The following is a list of four
specific strategies to achieve these objectives and concrete examples of how they will be realized.

4 strategies to connect ESG investment and Society 5.0
Chapter 2: Current Status of Understanding and Measures to Improve It
Gain an understanding of the level of recognition of Society 5.0, and organize
strategies to increase the interest and understanding of Society 5.0 among
not only investors but also a wide range of people to create an investment
climate for Society 5.0.

Chapter 3: Economic and Social Impacts
Show the economic and social impacts of Society 5.0.

Chapter 4: Direction of Information Disclosure
Explore the direction of information disclosure by companies addressing
Society 5.0.

Chapter 5: Improvement of the Investment Environment
Present the challenges and measures to support the realization of Society 5.0
from a financial and capital market perspective.

ESG Investment connected to Society 5.0
Evolution of ESG investment
Society 5.0 has led to a greater realization that the evolution of current ESG investments willallow for more effective economic growth, more effective problem-solving, and the trueachievement of SDGs. Investors will thus be encouraged to invest in ESG to realize Society 5.0.

Evolution of problem-solving innovation ecosystem that contributes to therealization of Society 5.0
With a long-term and stable supply of investment funds, funds will circulate among companies,
start-ups, universities, and the like, and more disruptive and transformative innovations will becreated autonomously to realize Society 5.0.

Evolution of stakeholders to achieve SDGs
A variety of forward-looking, constructive dialogues based on the common concept of Society 5.0
for SDGs will be held to connect diverse stakeholders.

16Chapter 1 Background of the Study

Collaboration with Various Stakeholders to
Realize Society 5.0 for SDGs, and Roles of Each of Them
Companies
Knowledge,humanresource
development,
andinnovativetechnologies

Ideas,
mobility andtechnology

Technology, funds, andhuman resources
Legal system and funds

Universities
Government

Startups

Mobilizing
the strengthsof diverse
stakeholders

Citizens
Consumption
behavior, etc.

Fund

Financial
institutions/investors

NPOs/
NGOs

Society 5.0 for SDGs
Toward a sustainable, human-centered society

Project
implementation
experience

Collaboration with a variety of
stakeholders is essential

utilization of excellent resources throughout theecosystem, and to develop superior human resources.

In addition, realizing Society 5.0 for SDGs requires
a variety of stakeholders to play a role. The roles areshown here.

Role of financial institutions andinvestors
Financial institutions and investors have a vitalrole to play in providing capital to drive the evolutionof the problem-solving innovation ecosystem. Funding
should not be limited to short-term profitability, butshould be done from a medium- to long-term perspective,
taking into account the value it brings to society.

Role of companies
The role of companies is defined in the ten articles
presented in the Charter of Corporate Behavior (Box1.2). In particular, Article 1 “Develop and provide
socially beneficial and safe goods and services throughinnovation” is important.

Role of the national and local
governments

Also, in order for open innovation to take root andbecome fully fledged, it is necessary to invest their
management resources such as superior humanresources, funds, technology and data in the ecosystem.

Governments and local governments are required toplay diverse and fundamental roles in the evolution of
the innovation ecosystem. These include giving
financial support for basic research, supporting
projects that are socially needed but for which it isdifficult to mobilize private funds, providing
demonstration fields, and deregulating and developing
a legal system for the social implementation oftechnologies.

It is also important to build medium- to long-termsustainable relationships with customers and otherstakeholders through these initiatives.

Role of start-ups
Start-ups are expected to have a clear vision andambitious ideas for solving problems and developmentof innovative technologies, and the enthusiasm andmobility to realize them. Therefore, as a key player inrealizing Society 5.0, they are required to demonstrate
their maximum ability in the innovation ecosystem
and implement a new business model.

Role of NPOs/NGOs
Stakeholders, including NPOs and NGOs, arerequired to provide experience in and implement
various projects, in addition to raising awareness forthe realization of Society 5.0 for SDGs. In doing so, it
is also important to use a framework that encourages
public interest activities by the private sector throughdormant deposits (JANPIA). (Box 1.7)

Role of universities
Universities are responsible for providing cuttingedge knowledge and technology, and superior humanresources within the ecosystem and working withother stakeholders to create and nurture cutting-edge
innovation seeds. It will also lead a paradigm shift to a
new model of a knowledge-intensive society throughstudies of the socioeconomic system that underpins
Society 5.0.

Role of citizens
Citizens are encouraged to deepen theirunderstanding of Society 5.0 for SDGs, and they arealso expected to play a role as a fund provider byutilizing their skills and experience, and going forward,
cloud funding and other means. In addition,
consumption behavior which contributes to therealization of Society 5.0 for SDGs is also required.

For this reason, universities are required toestablish systems and foundations to enable the17Box 1.2: Charter of Corporate Behavior: companies’ role in realizing Society 5.0
for SDGs
Companies have a wide range of roles to play in realizing Society 5.0 for SDGs. Keidanren revised
its Charter of Corporate Behavior in November 2017 and clarified such roles.

Charter of Corporate Behavior- For the Realization of a Sustainable Society Keidanren (Japan Business Federation)
The role of a corporation is to take the lead in the realization of a sustainable society by creating
added value that will benefit society and generating employment, through autonomous and responsible
behavior, on the basis of fair and free competition. To this end, regardless of its location, a corporation
is expected to comply with the letter and spirit of relevant laws and regulations and international rules
and to fulfill their social responsibility with a strong sense of ethical values, by acting in line with thefollowing ten principles.
Sustainable economic growth and the resolution of social issues
1. Develop and provide socially beneficial and safe goods and services through innovation,and strive for sustainable economic growth and the resolution of social issues.
Fair business practices
2. Engage in fair and free competition, appropriate transactions and responsible
procurement. Also, maintain a sound relationship with political bodies and government
agencies.
Fair disclosure of information and constructive dialogue with stakeholders
3. Disclose corporate information actively, effectively and fairly and engage in constructive
dialogue with a wide range of stakeholders, with a purpose of enhancing corporate value.

Respect for human rights
4. Conduct business that respects the human rights of all persons.
Relationships of trust with consumers and customer
5. Provide consumers and customers with appropriate information about goods and services,
communicate with them in good faith, and earn their satisfaction and trust.
Reform of work practices and enhancement of workplace environments
6. Realize work practices that will improve the capability of employees and that respect
their diversity, character, and personality. Also, provide safe and healthy working
environments.
Engagement in environmental issues

7. Proactively initiate measures in acknowledgment of environmental issues, the common
challenges they pose to humanity and their importance to a corporation's operation andpersistence.
Involvement in community and contribution to its development
8. Actively engage in community involvement activities and contribute to community
development as a good corporate citizen.
Thorough crisis management
9. Conduct thorough and organized crisis management in the face of actions by antisocial
forces, terrorism, cyber attacks, natural disasters and other crises that pose a threat tocivil society and corporate activity.
Role of top management and implementation of this Charter
10. Top management shall recognize that it is their role to realize the spirit of this Charter, build
effective governance systems for the conduct of business, and strive to raise awareness of theCharter's spirit within the corporation and the entire corporate group to achieve its full compliance.
Top management should also encourage behavior based on the principles of this Charter within thecorporation's supply chain. In the event that the corporation violates the spirit of this Charter andloses the trust of society, top management shall proactively take responsibility to respond to thesituation, including resolving the problem, investigating the causes, and preventing the problem
from recurring.

18

Chapter 1 Background of the StudyBox 1.3: Expanding ESG investment
Challenges
presented by SDGs

Social challenges presented by
SDGs

Issues in ESG elements
particularly considered tohave negative impacts

The scope of ESG issues perceived by investors is expanding.
Traditionally, ESG investments have particularly focused on
negative impacts among the elements of “environment,”“society,” and “governance.”

In recent years, however, an increasing number of investors
such as the GPIF regard broader issues presented by SDGs andthe like as issues to be addressed in ESG investment.
Society 5.0 also aims to solve the broad social issues of SDGs,
and it is hoped that companies’ pursuit of Society 5.0 andinvestors’ ESG investments will be connected under SDGs in the
future.
Target issues of ESG investment(1) Environment
Climate change, environmental pollution, circular
economy, biodiversity, etc.
(2) Social
Human rights, labor standards, safety and health, quality
safety, human diversity, relationships with local
communities, etc.
(3) GovernanceCorporate governance, corruption, the rule of law

1.

No poverty

2.

Zero hunger

3.

Good health and well-being

4.

Quality education

5.

Gender equality

6.

Clean water and sanitation

7.

Affordable and clean energy

8.

Decent work and economic
growth9.

Industry, innovation andinfrastructure

10. Reduced inequalities
11. Sustainable cities andcommunities
12. Responsible consumption andproduction
13. Climate action
14. Life below water
15. Life on land

16. Peace, justice and strong
institutions
17. Partnerships for the goals

Box 1.4: Views on Society 5.0 and ESG in the Charter of Corporate Behavior
The Keidanren Charter of Corporate Behavior
views ESG and Society 5.0 as follows:

Member corporations should fully recognize that
their development is founded on the realization of asustainable society, and they should exercise theirsocial responsibilities by creating new added value
and generating employment that will be beneficial
to society at large and by conducting their businessin a manner that takes the environment, society,and governance (ESG) into consideration.
Overall corporate
activities

Through behavior

Through businessactivities

Management thattakes ESG into
consideration

New added value
useful to society atlarge (Society 5.0)

The following diagram shows a specific exampleof how the Charter of Corporate Behavior views
Society 5.0 and ESG.

Examples of the views on Society 5.0
and ESGManagement that takes ESG into consideration:
Enhancing the in-house training system
Society 5.0: Delivering quality education through VR

Management that takes ESG into consideration:
Cooperation in biodiversity activities

SDGs (Sustainable society)

Society 5.0: Establishment of cooperative farming
methods to maintain biodiversity in deserts

19

Box 1.5: Three categories of “economy,” “society,” and “environment” in SDGs
The SDGs consist of 17 targets, which areconsidered to be divided into three categories:“economy,” “society” and “environment.”
In addition, a concept called “wedding cake model”
has also been presented, in which three levels of“economy,”“society”
and“environment”
arehierarchized as shown in the figure on the left.

Box 1.6: Blended finance and diverse stakeholder engagement
Implementation of Society 5.0 for SDGs
in new markets and developing countries
may not be profitable in the short term,
BlendedSome aremigrated Some
Society 5.0
and may be difficult with private funds
aremigrate
Financedalone. Therefore, it is necessary toFunds fordevelopment
construct blended finance mainly byand support
government
andinternationalorganizations.
Blended finance is a method of combining the funds of public financial
institutions such as the International
Funds forcommercia
l purposes

Finance Corporation (IFC) and private financial institutions to finance projects with high uncertainty, and isused for economic development in developing countries. This approach is expected to attract funds from a wide
range of stakeholders and strongly drive the social implementation of Society 5.0 for SDGs in developing
countries.

Box 1.7: Resolution of social Issues utilizing dormant deposits through JANPIA
and by NPOs and NGOs
JANPIA is an organization established in 2018 under the leadershipof Keidanren, and it is designated to utilize dormant deposits(Designated Utilization Organization) based on the “Act on Utilization ofFunds Related to Dormant Deposits to Promote Public Interest Activities
by the Private Sector.” Masaya Futamiya, Chairman of Sompo Japan
Nipponkoa Insurance Inc., serves as Chair, while representatives fromvarious fields in Japan, namely the business community, labor circles,
local governments, academics and NPOs, participate in the council.
With the purpose of “Resolving various social issues that are difficult for the national and local governments to deal
with” and “Fostering public interest activities by the private sector and improving the environment for financing public
interest activities by the private sector,” JANPIA provides grants (for the time being, approximately 3 billion yen) through“Funds Distribution Organizations” to “Private Organizations Carrying out Public Interest Activities” (NPOs/NGOs) that
promote the resolution of social issues.
In FY2019, JANPIA selected 24 Funds Distribution Organizations for four projects (Grassroots Activity Support
Program, New Project Support Program, Social Business Creation Support Program, and Disaster Recovery Support
Program) in three areas (support for children and young people, support for people having difficulties in their daily andsocial lives, and improvement of regional vitality). At the same time, the organization is also carrying out programs tostrengthen the infrastructure to support public interest activities in the private sector in a sustainable manner, such as
assessing social impact, recruiting and developing specialized human resources, and matching with companies.

Box 1.8: Stable investments over the medium to long term are important forsocial implementation of disruptive innovation
It took 60 years from the principle of artificial intelligence
technology to its practical application, and it is expected to takefrom 25 to more than 50 years for quantum computers

Approx.
60 yrs.

1957: Perceptron

Principle–1990s: Quantum
algorithm

1980s: Multilayer,
convolution, etc.

Foundation

2020s: Quantum
supremacy, NISQ

2010s: Deep learning

Practical
use

20xx:

Fault-tolerant
quantum computer(Source) FUJII Keisuke, “The Possibilities of Quantum Computers andDevelopment Race”

Disruptive innovations that change the assumptions of society
are likely to take a very long time from the discovery of principles
to their practical application.
For example, it took about 60 years for artificial intelligence
technology to be implemented in society, and it is believed thatquantum computers, which are capable of processing information
well beyond the abilities of supercomputers and provide high levelsof security, will need about another 20 years. Investors need tohave a medium- to long-term perspective to achieve suchinnovations and the investment required for them.

20

2.
Current Status of the Understanding ofSociety 5.0 and Measures to Improve It

Summary
The realization of Society 5.0 is aconcept promoted by Keidanren andincorporated in the growth strategy oftheJapanesegovernment,butaccording to the questionnaire survey
on companies and investors, therecognition level is lower than ESG andSDGs.

companies and investors on medium- tolong-term management strategies.
Therefore, we have come torecognize that in order to evolve ESG
investment and connect it to Society
5.0, it is important to improve therecognition and understanding ofSociety
5.0
amongvariousstakeholders including investors.

On the other hand, according to thequestionnaire survey on investors, if“Society 5.0” is incorporated into theirown ESG investment, they expect that
it will lead to a high return on their
ESG investment and solve a wider
range of problems.

Therefore, this chapter presents
four
concretestrategies:(1)
identification of words and phrases
that give response to Society 5.0 using
natural language processing, (2)presentationofexamplesofconcretization of Society 5.0 (issues tobeaddressed
andtechnologies
expected to be implemented in society),(3) creation of various publicity tools,and (4) approach to influential
institutions in Japan and abroad.

In addition, it has become clear that
if companies recognize Society 5.0 as
their revenue driver and handle it indepartments close to management,
then the realization of Society 5.0 could
promote constructive dialogue between

21

“Compared to the time when the GPIF began
ESG investment in Japanese stocks, thecurrent market and corporate reaction arevery positive, and there is an atmosphere
where it can be viewed as a business.
We will do our best to continue thismomentum without making it a temporary
boom.”
TAKAHASHI Norihiro,
President, GPIF

22

Expectations and direction

Status

Chapter 2: Current status of Understanding and Measures to
Improve It (Overview)
Society 5.0 is less recognized than ESG and SDGs.
Implementation of the questionnaire survey oncompanies and investors

Society 5.0 can help ESG investments (1) achieve higher returns,(2) solve a range of SDGs challenges, and (3) facilitate
constructive dialogue between companies and investors on
medium- to long-term management strategies
Direction

Improve recognition and understanding of Society 5.0
to help evolve ESG investment

４concreate measures
Challenges

Solutions

1. What expressions convey Society 5.0
in an easy-to-understand manner?

Using the questionnaire survey oncompanies and investors and natural
language processing to identify “factors
and phrases that give response toSociety 5.0”

(Identification of phrases that improveunderstanding)

Using the questionnaire survey oncompanies and investors and natural
language processing to identify “issues
and technologies expected to be solvedfor Society 5.0”

2. What technologies and challenges
should be addressed to concretize
Society 5.0?
(Priority issues/technologies expected
to be solved/realized for Society 5.0)

Presenting concrete measures for the
publicity activity of Society 5.0 basedon a discussion between the threeparties

3. What PR tools should be used to show
concrete examples?
(Public relations tool to improve therecognition and understanding ofSociety 5.0)

Based on a discussion between thethree parties, present the specificinstitution and method to approach todisseminate Society 5.0 at home andabroad

4. What kind of institution to approach?
(Approach to Influential Institutions)23

Chapter 2 Current Status of the Understanding of Society 5.0 and Measures to Improve It

Current Status of Recognition and Understanding(Questionnaire Results)

Current level of recognition of Society 5.0
ESG

Society 5.0

SDGs

47%

30%

70%

95%

75%

79%

Companies

Investors

Companies

Investors

Companies

Investors*Percentage of respondents who answered “I know about its content.”
See Reference 1 for details.

Possibility of raising awareness throughintegrated reports and other publications

Compared to ESG and SDGs, recognition
is a challenge for Society 5.0

Furthermore, regarding Society 5.0, SDGs, andESG, the percentages of being mentioned in corporate
integrated reports and the like, were 45%, 87%, and83%, respectively.

We conducted a questionnaire survey on companies
and investors4 and surveyed the degree of recognitionof Society 5.0, SDGs, and ESG. Of the respondents, thepercentage of companies who answered “I know about
its content” was 47% for Society 5.0, 70% for ESG, and
75% for SDGs, respectively, while that of investors
who gave the same answer was 30% for Society 5.0,
95% for ESG, and 79% for SDGs, respectively.
Recognition is a challenge for Society 5.0 compared to
ESG and SDGs.

While the reference rate to Society 5.0 is not ashigh as that of SDGs and ESG, 49% of the respondentcompanies said that “We are considering mentioning it
going forward.” It is therefore expected thatrecognition of Society 5.0 among investors and citizens
will be improved through corporate integrated reports
and other publications.

Improving public recognition is aparticularly important issue
According to the “Awareness Survey on of SDGs” 5
conducted by Keizai Koho Center (KKC) between
January and February 2019 and the “Awareness
Survey on Society 5.0” 6 conducted between Octoberand November of the same year, 3% and 12% of
citizens answered that they “I know its content” forSociety 5.0 and SDGs, respectively.

Society 5.0
3%

SDGs
12%

13%
37%





Public
26%

57%

27%
PublicPublicPercentage of beingreferred to in thecompany’s report andthe like







25%

On the other hand, “I don’t know at all” was themost common answer, accounting for 57% for Society
5.0 and 37% for SDGs.



Understand
Understand some of them
Know a word but do notunderstand at all
Don’t know at all
Understand
Understand some of them
Know a word but do notunderstand at all
Don’t know at all

100%
13%

16%

87%

83%

SDGs

ESG

49%

4

Data from the questionnaire survey on companies andinvestors was obtained from 102 companies out of 408
belonging to the Keidanren Committee on Financial and CapitalMarkets, the Committee on Responsible Business Conduct &SDGs Promotion, and the Committee on Startups, and from
117 investors out of 34 commissioned by the GPIF. See
Reference 1 for details.

Society 5.0 : 45%
SDGs : 87%
ESG

5

: 83%

45%

0%

Society 5.0

https://www.kkc.or.jp/society/survey.php?mode=survey_show&id=114

There are no plans to mention
To be mentioned in the future

6

Already mentioned

https://www.kkc.or.jp/society/survey.php?mode=survey_show&id=11724

Impacts of Society 5.0 on ESG investment
On the other hand, we also look at what impacts
Society 5.0 will have on current ESG investments.

37%

of investors answered that“higher returns can be expected” in Society
5.0 for SDGs than their ESG investments.
Of which, 26% said it will further enhance“high returns and social responsibility”

We set two conditions, namely “ESG investment
contributing to the achievement of SDGs” and “ESG
investment contributing to Society 5.0 for SDGs.” Then
we asked investors how they thought their current
perception of ESG investment would change if they
were to conduct such investments.

100%

24%

28%

ESG investments contributing to SDGs
emphasize social responsibility

3%4%First of all, 52% of the investors answered that
“ESG investment contributing to the achievement ofSDGs” (ESG for SDGs) would put more emphasis onsocial responsibility than their own ESG investments.

32%

50%

52%

Society 5.0 will bring higher returns on
ESG investment

26%

37%

19%
11%

2%

0%

Next, regarding “ESG investment contributing toSociety 5.0 for SDGs,” 37% of investors answered thathigher returns can be expected than their own ESG
investments.”

ESG investment contributing to ESG investment contributing toSociety 5.0 for SDGs

SDGs

Same as their own ESG investment
More risk averse

In addition, 26% of the 37% said that “both higher
returns and social responsibility can be expected” thantheir own ESG investments. These results suggestthat Society 5.0 may lead to higher returns or both
higher returns and social responsibility for ESG
investment.

Place more emphasis on social responsibility
Both higher returns and social responsibility can be expected
Higher returns can be expected

Society 5.0 will expand the scope ofproblem-solving ofinvestors’ own ESG investment

Society 5.0 expands the scope of issues
to solve.

120

Next, we asked investors “What are the individual
SDGs that you feel you have high/low affinity withyour ESG investments?” and “What are the SDGs thathave high affinity/low affinity with Society 5.0?”

100
80
60

The chart on the left shows the difference between
the number of people who answered “feel high affinity”
and the number of people who answered “feel low
affinity” for each goal of the SDGs. As a result, manyof the respondents feel that “ESG investment” has anaffinity with environmental issues.

40
20

Partnership

Life on land

Peace/justice

Climate changeLife below water

Circular economy

Sustainable cities

Inequalities

Industry/innovation

EnergyIssues addressed by Society 5.0

Work and economic

Water and sanitation

Education

Gender equality

Hunger

Health and well--20

Poverty0

On the other hand, regarding “Society 5.0,” many
felt that it has an affinity with industrial/innovationand educational issues.

Issues addressed by your ESG*The vertical axis represents the number of responses that feel high affinity for each issue minus thenumber of responses that feel low affinity for the issue.

In addition, while many of the respondents felt that ESG investment has a low affinity with“inequalities” and “partnership,” many answered that Society 5.0 has an affinity with these issues.
These results suggest that incorporating Society 5.0 into ESG investment will enable ESG investment
to contribute to solving a broader range of issues, as the issues with an affinity with Society 5.0 also comeinto the scope of the issues to be solved through ESG investment.

25

Chapter 2 Current Status of the Understanding of Society 5.0 and Measures to Improve It

Increasing various corporate values
through Society 5.0

Society 5.0 is highly expected to solve global issues
 increase competitiveness through digitaltransformation
 create innovative new businesses
0%

20%

40%

In addition, companies, investors, and the generalpublic expect that Society 5.0 will bring about various
changes in Japanese companies and serve as anopportunity to increase corporate value.
60%

When asked about the expectations placed onJapanese companies by Society 5.0, companies said
there were high expectations for “solving global issues,”“creating innovative new businesses” and “reforming
working styles and having a model change of
employment
practices.”
Meanwhile,
investors
expressed
highexpectations
for“enhancing
international
competitivenessthrough
digitaltransformation” and “increasing added value andreturn to society.”

80%

Solution of global issues
Digital transformation
Increasing added value
Creating innovative businesses
Investments to promote start-ups
Open collaboration
Use of internal digital technologies
Respect diversity and younger
Reform of working styles
Developing leadership human resources

Sharing cross-sectoral data
Ensuring privacy and cybersecurity

Society 5.0 as a revenue driver forcompanies

Promotion of R&D
Other
Companies

Investors

Regarding companies’ perception of Society 5.0, it
was found that of the companies that answered thatthey mentioned “Society 5.0” in their integrated
reports and the like, 66% viewed Society 5.0 as arevenue driver.

Public66% of companies recognize Society 5.0 as
their top revenue driver
0%Society 5.0

66%

ESG

On the other hand, of the companies thatmentioned “ESG” or “SDGs” in their integrated reports
and the like, 41% answered that they regarded ESG asa revenue driver, while 49% answered they regarded
SDGs as such. This shows that Society 5.0 is a conceptthat companies can easily view as a revenue driver.

100%
34%

41%

57%

SDGs

49%

Revenue driver

Both revenue driver and risk factor

50%

Risk factor

Society 5.0 is close to management andpromotes constructive dialogue on longterm management strategies.

27%of companies have the corporate
planning department take charge of Society 5.0.
Possibility of promoting constructive dialogue
between companies and investors on mediumto long-term management strategies

A survey on corporate divisions responsible forSociety 5.0, SDGs, and ESG found that the corporate
planning divisions and the sustainability/CSR
divisions are likely to be in charge of all three.
Looking at the details, 27% of the corporate
planning divisions were in charge of Society 5.0, thehighest percentage compared to ESG and SDGs. In thesustainability/CSR divisions, 28% and 23% of themwere in charge of ESG and SDGs, respectively, while
only 13% were in charge of Society 5.0. The percentage
of Society 5.0 taken charge of by technology, R&D, andinformation systems divisions was also high.

Management planning
27%

IR/Public relations

Other

24%
16%
14%
12%

Technology/R&D

23%

Information system
10%

14%

Sustainability/CSR 28%23%

6% 5%

13%

Sales (domestic)

5% 8%
2%
1% 3%

4%3%
4%6%
2%
1%
9%
3% 2% 1% 2%
3%
3% 2%
3%

Society 5.0

ESG

Based on the above, Society 5.0 is considered to be aconcept close to the corporate planning division andmanagement strategies. Thus, utilizing Society 5.0 is
expected to facilitate constructive dialogue on longterm management strategies between companies andinvestors.

General affairs/HR

SDGs

Production control/quality

Sales (overseas)
Manufacturing/production

Accounting/ financecontrol
Procurement/purchasing*Percentages in bold are for divisions responsible for Society 5.026

Summary: Incorporating Society 5.0 into ESG investments will provide higher returns,
resolve broader issues, and promote constructive, future-oriented dialogue

SDGs
ESG +
Society 5.0
for SDGs

ESG for
SDGs

ESG

SocietySociety 5.0
5.0

According to the questionnaire survey on investors,
when Society 5.0 is incorporated into ESG investment,
their ESG investment is expected to•

produce higher returns•

solve a wider range of issues•

enhance various corporate values•

promote future-oriented constructive dialogue
between companies and investors

Incorporating Society 5.0 into ESG investment provides high returns andsolutions to a wide range of challenges
Taken together, these findings suggest that adding “Society 5.0” to ESG investment by investors
will have the following four benefits. Specifically, their ESG investments will: (1) provide higher
returns; (2) expand the scope of issues to be solved (solve a wider range of issues); (3) enhancevarious corporate values; and (4) promote forward-looking and constructive dialogue between
companies and investors.
Given this, it is important to promote the evolution of ESG investment by improving therecognition and understanding of Society 5.0 among investors.

4 concrete measures to improve recognition and understanding
We therefore propose the following four concrete measures to improve the recognition andunderstanding of Society 5.0.

4 concrete measures to improve recognition and understanding
1. Identification of phrases that contribute to improved recognition andunderstanding
Various explanations on Society 5.0 have been given by organizations such as Keidanren
and the Cabinet Office, but in order to showcase it to the general public, it is important to
explain it in easy-to-understand phrases.

2. Examples of Society 5.0 concretization (issues to be addressed andtechnologies expected to be implemented in society)Showing concrete examples of Society 5.0 will help improve the recognition andunderstanding of Society 5.0. Therefore, we identify issues to be addressed in Society 5.0
and technologies expected to be implemented in society.

3. Public relations tool to improve the recognition and understanding ofSociety 5.0
We need to use a variety of public relations tools, including videos and icons, to widely
communicate the Society 5.0 concept.

4. Approach to influential institutions
In order to improve the recognition and understanding of Society 5.0, it is important toapproach various influential institutions in Japan and abroad. In particular, we will
participate in international initiatives and promote rulemaking.

27

Chapter 2 Current Status of the Understanding of Society 5.0 and Measures to Improve It

4 Concrete Measures to Improve Recognition andUnderstanding
1. Identification of phrases that contribute toimproved recognition and understanding
Next, natural language processing was applied tothe collected answers, and the following eight elements
were extracted from the answers as elements of theimage of Society 5.0.

Consider Society 5.0 from a PR
standpoint
At present, Society 5.0 is explained as follows by
Keidanren and the Cabinet Office.
Society 5.0 will be a Creative Society, where
digital transformation combines with theimagination and creativity of diverse people tosolve social problems and create value. (Society
5.0 Comprehensive Recommendation)[. . .], Keidanren is aiming for the realization ofSociety 5.0, a future society in which the IoT, AI,
robots, and other innovative technologies will be
used to maximum effect for the optimization ofindividual lives and of society as a whole. In thisfuture society, economic growth will become
consistent with solutions to global and local
challenges, [. . .] (“Revision of the Charter ofCorporate Behavior”)

Society where everyone
can live safely andcomfortably

Coexistence of diverse
values and needs

Integration of virtual andreal space

Collaboration andcooperation

Utilization of AI and otherscience technologies

Environmentally friendly
and sustainable society

Economic development
and resolution of social
issuesExpression of creativity(imagination of value)

Furthermore, the following results were obtained
when the evaluation from the viewpoints ofcomprehensibility and response was scored.

A human-centered society that balances
economic advancement with the resolution ofsocial problems via a system that highly
integrates cyberspace and physical space(Cabinet Office)

Score

Numbersubmitted

Score

Numbersubmitted

Society where everyone canlive safely and comfortably

Integration of virtualand real space

In order to further improve the recognition andunderstanding of Society 5.0, it will be important to
explain Society 5.0 in more understandable words andphrases.

Utilization of AI and otherscience technologies
Economic development andresolution of social issues

We asked 304 companies and investors about theirimage of Society 5.0 in order to find out what points
companies and investors would respond to in thecurrent explanation of Society 5.0.

Coexistence of diverse
values and needs

Three sympathetic elements of Society
5.0

Collaboration andcooperation

We asked companies and investors to describe theirimage of Society 5.0 in 150 words or less.

Environmentally friendly
and sustainable society
Expression of creativity(imagination of value)

Society 5.0(Image)Element
1

Answer3

Element2

Answer4

Element
3

Answer5

Element
4

In terms of the number of responses, “Economic
development and resolution of social issues” and“Expression of creativity (imagination of value)”ranked high. But in order of comprehensibility andresponse scores, “Society where everyone can live
safely and comfortably” as well as “Integration ofvirtual and real space” and “Utilization of AI and otherscience technologies” ranked high.

Natural language processing

Answer1

Answer2

28

Reasons why the 3 elements gained
response

How to structure the expression thatconveys Society 5.0 in an easy-tounderstand manner?

Society where everyone can live safely and comfortably
There is an expectation that everyone can live an equal and convenient
life by solving problems and concerns about the future such as the gap
between the rich and the poor and between the regions.

Component

Direction of themessage

Key phrase
Inclusion

Utilization of AI and other science
technologies

FuturevisionBoost
expectations
for the future

People strongly hope that AI and robotics will make life and workeasier so that they can focus on things only they can do.

Integration(of technology and life)

Challenge

It is expected that by collecting and analyzing various kinds of real
data in virtual space, we can see possibilities that we could not see
until now, and that by returning it to the real world, we can solve
problems that were thought to be difficult to solve until now.

There is the following observation 7 regarding thereasons for and implications of why these threeelements gained response.

Path tothefutureReference tothe technology
to bespecificallyutilized

Now

Explain which of
the current issues
are being
addressed

Overcoming the wall
(between people)

Diversity
Coexistence in harmony(with nature)

Integration of virtual and real space

Balancing(economic
development and sustainability)

DigitalConvenience

Information

AI/IoT

Aging

Rural areas

The explanation structure of Society 5.0 that wasreceived as easy to understand was one that (1) shows
the current issues, (2) provides the future vision, and(3) presents the path to the future.

First of all, the reason why “Society where everyone
can live safely and comfortably” gained the most
response was that many people expressed theirconcerns about the future, such as the expansion of thegap between rich and poor and between regions, aheadof the expectation for the future. This suggests that it
is easier to gain response if we emphasize to many
people that “Society 5.0 can solve anxieties andconcerns about the future.”

As the “Keywords” that gain response, “Equality,”“Balancing (economic development and sustainability),”“Expanding the possibilities (of humans),” “Challenge,”“Diversity,” “Coexistence in harmony (with nature),”and “Convenience” were mentioned regarding thepresentation of the future vision, “Digital,”“Information,” and “AI/IoT” were mentioned regarding
the path to the future, and “Aging” and “Rural areas”
were mentioned for the present.

Second, as for the reasons why “Utilization of AI
and other science technologies” gained response, it isthought that people strongly want to use AI androbotic technology to make life and work easier andfocus on things that only they can do. This suggeststhat it is easier to gain response if we emphasize that“Society 5.0 focuses on humans” in describing Society
5.0.

Phrases that gain response
Based on the analysis results above, the following
three phrases can be considered for gaining responsewith Society 5.0.
Examplephrase:Third, the reason why “Integration of virtual andreal space” has gained response is that by collecting
and analyzing various pieces of actual data, a new
approach will be found to solve issues that have beenthought difficult to solve, and momentum to tackle
problems will be created. This suggests that it is easier
to gain response by emphasizing that “Technologies
integrating reality and virtual reality that contributeto Society 5.0 are a ‘blue ocean’ with infinite growthpotential.”

Society 5.0 is highly
expected toSociety where everyone
can live safely andcomfortably

A society in which all people can live with peace of mind while taking on thechallenge of creating diverse values through digital technology

Utilization of AI andother science
technologies

A society where, while AI takes over conventional production activities,
humans focus on creating new value and human evolution accelerates

Integration of virtualand real space

A society in which a new frontier with limitless possibilities iscreated through the integration of real and virtual space

In addition, to summarize these three points, thefollowing phrase (the analysis result and a shortened
version) is conceivable.
Analysis Result

Sympathy elements

3 specific points

Improving the quality oflife, a convenient andcomfortable society

Elimination of anxiety
about the future

Utilization of AI andother science
technologies

Pursuit of “what only
humans can do: creation”

Integration of virtualand real space

Technologies integrating
reality and virtual reality
are a “blue ocean”

Society 5.0 is a sustainable, human-centered society
in which no one is left behind and the physical andcyber worlds are highly integrated by digitaltransformation, to create safe and comfortable lives
and new growth opportunities.
Short version (advertising slogan)
A sustainable, human-centered society createdthrough digital transformation

7 VISITS Technologies (2020) “Society 5.0 Project”

29Chapter 2 Current Status of the Understanding of Society 5.0 and Measures to Improve It

2. Examples of Society 5.0 concretization(issues to be addressed and technologies expected to be implemented in society)
Megatrends
Demographic change

Issues to be
captured forSociety 5.0

Potential issues/changes

Technologies expected tobe resolved

Dangerous driving by the elderly

Automated driving

Labor shortage due to declining
birthrate

RobotsConcentration in large
cities

Depopulation and weakening of ruralareas
Shortage of doctors in rural areas

Remote work technology

Extension of healthy life
expectancy

Spread of dementia

Preventive medicine

Spread of lifestyle-related diseases

Data security

Formation of a circular
economyResource shortage

Reuse of resources

Waste pollution

Waste disposal

Diversification of working
stylesDecrease in-office working hours

Diversification of culture

Increase in the number of foreigners

Translation technology

Safe and smart life byutilizing technology

Smart city/smart life

Clean energy

Energy shortages and risks

Climate change anddisaster prevention

Increasing severity of disasters due
to climate change Increased dangerof disaster relief/response

Pursuit of greater efficiency

Toward the concretization of Society 5.0

Telemedicine

Image recognition, speech
recognition, etc.
Various sensor
technologies

Climate projection
Drone

Figure A

Women respond to a wide range oftechnologies and solutions

In order to improve the recognition of Society 5.0, it
is important to concretize Society 5.0 (specific issues tobe solved by and technologies expected to be socially
implemented in Society 5.0) in the sectors in whichpeople have high expectations, and collect examples.

By gender, men’s answers on technologies expected
to be implemented in society focused on “Automateddriving” and “Machine translation” while women citeda wide range of technologies, including “Telemedicine,”“Waste disposal,” and “Solar power generation.”

As part of this effort, we conducted thequestionnaire survey on companies and investors
regarding issues expected to be solved in Society 5.0
and technologies expected to be implemented in society
in the future. Concrete methods are shown below.

Women also expressed hope that these technologies
would solve a wide range of problems.
Male

1. Individuals fill in the image of Society 5.0 andthe technologies to be expected in the
future.
2. Each answer is checked by anotherrandomly selected person.

Issues expected to be solved andtechnologies expected to be implemented

FemaleIssues in the
background

Technology

Issues in the
background

Automated driving (1)Traffic accidents (1)Telemedicine (1)Shortage of doctors inrural areas

Automated driving (2)Dangerous driving by
the elderly

Waste disposal

Pollution control

Technology

Automated driving (3)Life of the elderly

Solar power generation

Prevention of global
warming

Healthcare data

Disease prevention

Introduction of AI by
the government

Convenient life

Telework

Population
concentration

Automated driving

Traffic accidents (1)Robots

Hazardous work

Diagnostic imaging

Shortage of doctors

Machine translation (1)Diversification ofcultureLocal development

Depopulation

Automated driving (4)Safe society

Alternative energy

Disaster prevention
measures

Automated driving (5)Rush hour congestion

RobotsNursing care problem

Machine Translation (2)Social advancement of
the disabled

Telemedicine (2)Shortage of medical
resources

Technologies with divided evaluations
In this survey, evaluation was divided for sometechnologies. For example, in the case of“Personalization of education through VR, etc.,” there
will be no standardized class, and each student will beable to receive a customized education, but the school
system as a place for group education will become asubject of discussion. It is suggested that there is aneed to study the broad impacts of each of thesetechnologies.

Figure A summarizes the results of the survey.
Specifically, the survey found that dangerous drivingby the elderly, depopulation in rural areas, dementia
and lifestyle-related diseases, smart cities, and climatechange are issues and constraints that respondents
feel should be solved first.
These issues can also be grouped into eight
megatrends such as “demographic change” by focusing
on the background events.

30

3. Public relations tool to improve the recognition andunderstanding of Society 5.0(Source) The University of Tokyo’s website

It is also necessary to improve the recognition andunderstanding of Society 5.0 by utilizing various public
relations tools such as case study collections, videos,SNS, and icons. Here are some of them.
Information
dissemination
on SNS

Developmentof icons

For the generalpublicExamples of problem-solving innovations leading to
the realization of Society 5.0 like these need to becontinuously collected and presented.

Production of Society 5.0-related videos

Websites

A video provides a more concrete picture of Society
5.0 and is an effective tool for improving recognition
and understanding. As part of this joint research,
Keidanren produced a video about Society 5.0 titled“20XX in Society 5.0—Our Future created throughDigital Transformation.” (See Box 2.1)

Information
dissemination by
distinguishedpersons
Productionof videosHigherrecognition

Higherunderstanding
VR and other Society 5.0
mock experiences

Establishment of “Theater 5.0”
As an awareness-raising activity for Society 5.0 for
SDGs, we’re launching a platform “Theater 5.0” thatcomprehensively collects videos related to companies’
initiatives for Society 5.0 for SDGs.

For specificpeopleExamples contributing to Society 5.0
One example of case study collections contributing
to Society 5.0 is the University of Tokyo’s Future“Society Initiative SDGs Project” website. On thiswebsite you can check various innovations, projects,
and the like of the University of Tokyo for therealization of a future society based on a classificationof the 17 goals of the SDGs.

We hope that this platform will help many to better
understand Society 5.0 for SDGs by demonstrating
how companies are using digital transformation tosolve challenges and create value.

Other
Other public relations efforts could include
launching a website, having distinguished persons
post on SNS, and creating a Society 5.0 icon like SDGs
(Box 2.3). It would also be worth considering providing
people with an opportunity to familiarize themselveswith Society 5.0 using new technology, such as virtual
experiences through VR.

Case study collections that classify innovations inaccordance with the 17 targets of the SDGs include“KeidanrenSDGs.com,” which is Keidanren’s dedicatedSDGs website, and the organization’s collection of casestudies “Innovation for SDGs,” and “Tangible
Examples” by B20 (see page 36).
For example, they introduce ways to achieve a safe
transportation system by using face recognition
technology, and ways to optimize and improve
efficiency by using drones and AI to make theagriculture, forestry and fisheries industry, whichlacks labor, sustainable.

31

Chapter 2 Current Status of the Understanding of Society 5.0 and Measures to Improve It

Box 2.1: Video showing examples of Society 5.0 for SDGs

Telemedicine+ Capsulesurgery

As an awareness-raising activity for Society 5.0
for SDGs, we created a video to show its concept
and examples.

Real-time translation

VR + Sports

This video consists of four specific examples of(1) telemedicine and capsule surgery, (2) real-timetranslation, (3) virtual reality (VR), and (4) brain–
machine interface, along with (5) animation ofdevelopments from Society 1.0 to Society 5.0.

Brain–
machineinterface

The four examples show technologies that are
expected to be implemented in society in the future,and describe how those technologies can solve
problems and create a better future.
In the animation section, it is shown that Society
5.0 will not aim to transform technology and thelike but will transform society as a whole.
We also created a short 1-minute-and-30-second
version that brings together four scenes andemphasizes Society 5.0 for SDGs in which “digitaltransformation can create any future.”Box 2.2: Identifying technologies contributing to Society 5.0 and promoting R&D
Although there are various technologies that contribute to Society 5.0, if we collect concrete examples of Society
5.0 from companies and universities’ research and development based on technologies that many people expect tobe implemented in society first, we can help to improve the recognition and understanding of Society 5.0.
Issuesconstraints
Issuesand andconstraints
expected expected
to be solved
to be solved

Technologies
that invokeda highTechnologies
thatinvoked aresponsehigh response

Overcoming language barriers
Overcoming language barriers

Machine translation

Health promotion/reduction of people requiring
Health promotion/reduction ofnursing carepeople requiring nursing care
Eliminating medical disparities of rural areas andEliminatingremote
medicaldisparities ofislands
rural areas and remote islands

Telemedicine
Telemedicine

Improving mobility convenience

Improving mobility convenience
Expansion of transportation means for
Expansion ofthetransportationmeans
elderly
for the elderly

Zero traffic accidents
Zero traffic accidents
Reduction of traffic congestion
Reduction of traffic congestion

Reductionof greenhousegas emissions
Reductionof greenhousegasemissions
Reduction of energy costs
Reduction of energy costs
Reducing food
Reducing
foodwaste
waste

Machine translation

Automated driving
Automated
driving
Public transportationtransportation
operated
AI andandIoT
IoT
operated using
using AI
Effectiveof energy
energyEffective use
use ofHighlysolar
Highly efficientefficient solar
power
power generation
generation

Low-cost
treatment
Low-cost waste treatment

Examplesof
ofresearchresearchinitiatives
initiatives
Examples• •Departmentof Mechanical
Department
ofEngineering,
Graduate
Mechanical
Schoolof Engineering,theEngineering,
Graduate
Universityof Tokyo
School ofEngineering,
Mitsuishi
Haradathe University of Tokyo•Laboratory
Mitsuishi Harada
Laboratory

Microsurgical
Microsurgical
Robotic
Robotic
Systemfor
System for
Neurosurgery•
Neurosurgery

SelfSelfLocalization
Localization• Dept.
ofof• Dept.3,3,Institute
Institute
Industrial
IndustrialScience,
Science,theUniversityof Tokyo
the Universityof• Kamijo
Tokyo Laboratory• Kamijo Laboratory

Ubiquitous
Ubiquitous
Power
Power
Network
Network• Center for Advanced•PowerCenter& for Advanced
Power &
Environmental
Environmental
Technology(APET),
Technology
theUniversity(APET),ofthe University of
Tokyo
Tokyo

Box 2.3: Iconifying Society 5.0 for SDGs
One of the main reasons why SDGs have become so popular
is that they have simple icons representing the 17 targets.
AI

Drone

Cloud

To improve the recognition and understanding of Society
5.0, it is also conceivable to iconify the elements representing
Society 5.0 and present the contents of Society 5.0 in a visuallyeasy-to-understand format.
In doing so, it is likely that more people will use icons if wecreated some starting with those for technologies for which ahigh degree of response was shown in the questionnaire survey
on companies and investors.

32

4. Approach to influential institutions
Cooperation with national and internationalorganizations is essential for the international
development of Society 5.0 for SDGs. The following are
the influential institutions that should be approachedin particular.

In order for the public and private sectors to work
together on Society 5.0 for SDGs, it is necessary toreach out to the United Nations, UNDP, the World
Bank, International Union for Conservation of Nature(IUCN) and other international organizations, inaddition to the governments and ministries concerned,
for their understanding and cooperation.

Business and economic organizations
At the 2019 Tokyo Summit, Business 20, which
comprises economic organizations from twenty majorindustrialized countries, adopted a joint declaration on“Society 5.0 for SDGs.” We should continue tocooperate with economic organizations belonging to B
20.

Young people and future generations
It is necessary to showcase the concept to young
people and future generations, who are the main
players of the realization of Society 5.0 for SDGs, in a
way more familiar to future generations by utilizing
SNS, video, and the like.

The World Economic Forum, which hosts the Davos
Conference, is leading the way in setting the global
agenda on economic and social issues, and a strong
approach is required.

Other efforts (toward improved
recognition and understanding)

The World Business Council for Sustainable
Development (WBCSD) is working with Keidanren on
the information dissemination of Society 5.0, and will
present its vision for the next 30 years at the 2020
Council Meeting in Tokyo. Further cooperation isimportant.

Improving recognition andunderstanding through cooperation
among the three parties

In addition, it is necessary to collaborate on Society
5.0 for SDGs with economic organizations which aim
to solve global problems, such as the International
Chamber of Commerce (ICC).

The three parties of Keidanren, the University ofTokyo, and the GPIF should work together to improve
the recognition and understanding of Society 5.0 for
SDGs.

Investors, financial institutions, andrating agencies

Continuation of collecting examples
We will continue to collect specific examples andvideos that will contribute to Society 5.0 for SDGs toillustrate the concept.

Initiatives such as the PRI and TCFD8 are alignedwith the society that Society 5.0 for SDGs aims for. It
is necessary to encourage the inclusion of Society 5.0
for SDGs’ concept of economic growth and problemsolving through innovation, among others, in theactivities of these initiatives.

Wide variety of public relations activities
It is necessary to advance the creation of various
publicity tools which intend to improve the recognition
and understanding of Society 5.0 for SDGs. For
example, “CEO Guidelines for Realizing Society 5.0 for
SDGs” for corporate managers, or creation of icons forSociety 5.0, new videos, or tools using virtual reality
and computer graphics to experience Society 5.0 can beconsidered.

In addition, we need to encourage the World
Benchmark Alliance, GRI, and ESG rating agencies toimprove their recognition and understanding of theimportance of Society 5.0 for SDGs, and to deepen
discussions on how to cooperate with each other.

Universities and research institutions
It is necessary to encourage universities andresearch institutions in and outside Japan, such as the
Brookings Institution engaged in research on SDGs,
and international initiatives in the academic worldsuch as Future Earth, to respond to Society 5.0 for
SDGs.

Participation in and promotion of rulemaking at international organizations
In response to international initiatives andstandards on technology and sustainability, it isnecessary to actively approach influential institutions
in order to formulate international rules that willcontribute to the realization of Society 5.0.

Governments and internationalorganizations

8 It is comprehensively presented in Box 1 of the GPIF and theWorld Bank (2018) “Incorporating Environmental, Social andGovernance (ESG) Factors into Fixed Income Investment.”33

3.
Economic and Social Impacts

Summary
What are the opportunities forcompanies, investors, and society as awhole to be provided by therealization of Society 5.0? This
chapter describes the reasons for the
economic and social impacts of Society
5.0 and provides a quantitative
analysis of them.

amount to 36.2 trillion yen in thenext-generation healthcare field, 21.3
trillion yen in the smart mobility field,
and 19.3 trillion yen in the nextgeneration energy field.
If all of these technologies are
implemented in society, 250 trillion
yen will be created as a new growth
opportunity in 2030, and thecumulative investment required torealize this will be 844 trillion yen. At
the same time, it has been found that
it will have social impacts such as
improving the wage gap between men
and women and reducing CO2
emissions.

First, the reasons Society 5.0 has
such a huge economic impact include
that it utilizes AI and robotics to boost
productivity, expand new demand,
optimize inputs, and accelerate
economic transactions.
Also, the reasons for the social
impact include the elimination ofindividual
constraints
andtheresolution of various social issues, thesimultaneous resolution of all issues,
inclusive
growththroughthedissemination of high-quality products
and services, and compliance withvarious ethical standards.

Finally, looking at the futureindustrial shape to be achieved byrealizing Society 5.0, this chapter
discusses a change in the industrial
structure in the process of realizing
Society
5.0,
examplesofananticipated industrial structure basedon various surveys, and futurechallenges.

According to quantitative analysis,
if Society 5.0 is realized, new growth
opportunities in each industry would34

“ In the past, ‘business’ came first.
This was based on the idea that wehave to contribute to society, makedonations, and protect theenvironment because business puts aburden on society.
But now this has changed.
It is precisely because companies areuseful to society that they canreceive orders and generate sales.”NAKANISHI Hiroaki,
Chairman, Keidanren

35Economic and Social Impacts

Chapter 3: Economic and Social Impacts of Society 5.0(Overview)
This chapter shows the economic and social impactsof realizing Society 5.0.
2 perspectives

Why it has impacts?

What impacts does it have?

The reasons for the economic and social
impacts are summarized into four
categories based on various discussions.

Introduce the estimates made by
Nomura (2020) regarding the
economic and social impacts in thecase of realizing Society 5.0

Nomura (2020) results
Economic impacts

Social impacts

With the realization of Society 5.0, the following
results were obtained for each industry:
Industrial sector(excerpt)
Next-generation
healthcare
Digitization of
manufacturing

GrowthMarket size
opportunities(2030)(2030)

36.2

As women advance into society, the genderwage gap will improve to

85% by 2030.

86%

Wage
ratio between men and women
男女の賃金比率
84%

95.1
82%

28.5

108.0

Smart mobility

21.3

64.4

Smart living

18.9

46.0

Next-generationenergy

19.3

37.4

80%

78%
Soci ety 5.0ケース
5.0 ca seSociety

ベースラインケース
Ba seline case

76%
2000

Society 5.0 will also create 250 trillion yen
in growth opportunities throughout Japan.

2005

2010

2015

2020

2025

2030

The number of employed people aged 65 orolder increased by approximately 1 million

Industrial
structure

The cumulative amount of investment required
to achieve this goal is 844 trillion yen
Organize various discussions andpresent concrete examples based on
the results of the questionnaire
survey on companies and investors
and other materials

Consider changes in the industrial
structure in the process of realizing
Society 5.0.

36

Opportunities Provided by Society 5.0
Why Society 5.0 Has Economic Impacts
Society 5.0 has many economic impacts by solving
individual constraints and challenges (needs). There
are four main reasons for this.

Cost reduction through drastic reductionof production input

Substitution of markets through new
products and services

Labor input

AI

Intermediate
input of raw
materials

IoT Robots

Society 5.0

Until now

Plows

Tractors

Drones, robots, etc.

As technologies contributing to Society 5.0, robots
are replacing the labor force of simple workers, and AI
is replacing the labor force of intelligent workers. In
addition, by optimally managing the supply chain andusing other means, the input of raw materials andenergy required to provide products and services canbe made more efficient and the input can be reduced.
This greatly reduces production costs.

The development of digital technologies is expected
to create products and services that can solve existingneeds more optimally and efficiently.
For example, in the past, the need for “plowing thefields with ease” was only met by using labor withplows and hoes, but now it is efficiently realized in ashort time by tractors.

Furthermore, higher price competitiveness due tocost reductions will lead to increased demand for those
products and services.

If smart agriculture is realaized, robots and drones
will be able to meet the needs more optimally andefficiently. In other words, conventional products andservices will be replaced by those contributing toSociety 5.0.

Acceleration of economic transactions

従来Society 5.0

Certain needs were met, but
not all the needs of diverse
people were met

Will be able to meet all theneeds of diverse people

Consumer

Certain needs
that are alreadymet

Retail andwholesale

Creationof new
demandTrue need(potential
demand)Factory

Raw material

Enabling approach to meet potential
demandTechnologies contributing to Society 5.0 will greatly
improve the efficiency and time required to complete
the entire transaction (production, delivery, andsettlement of goods and services).

In Society 5.0, by analyzing consumers’ attributes,
behaviors, and purchasing data, it will be possible tohighlight the needs of consumers, especially real needs
that are not yet clear (potential demand).

Faster transactions of goods and services not only
reduce the stress of economic transactions but also
accelerates the speed of transactions and increase theamount of economic activity per hour.

On the other hand, by digitizing factories andintroducing robots, 3D printers, and the like,companies will be able to produce and provide products
and services customized to the diverse needs ofconsumers.

In this process, the utilization rate oftransportation machinery, equipment, and the like isincreased, and the production cost is also reduced.

By enabling consumers to meet their needs moredeeply in both supply and demand, we will create newmarkets and create new value.

37

Chapter 3 Economic and Social Impacts

Why Society 5.0 Has Social Impacts
Want to beable to work
anywhere

Want tomove easily

Utilizing digital transformation to solve various problems

Want to be able to get
cutting-edge medicalcare everywhere

Want to reducethe burden ofhousework

Want you toreceive what
you want
immediately

Want to enjoy
entertainment
anywhere
Want tocommunicate withpeople fromvarious countries

Needs of individuals

Needs of society

Diverse constraints andvalues of individuals

Various regional
issues and values

Want to reduceenergy costs
Want tocreate acirculareconomyWant to create achild-rearing
environment

Want toeliminate traffic
accidents

Want to extend healthy life
expectancy for the elderly

Want todevelop the
economyWant to live
comfortably

Want toeliminate traffic
accidents

Want to alleviate climatechangeCommon constraints
and values

Global issues and values

Society 5.0 will have many social impacts inaddition to many economic ones. The main reasons are
as follows.

Inclusive growthSociety 5.0 will bring inclusive growth to people.
For example, data on the advanced skills of skilledworkers, the introduction of robots with more complex
movements, and the like, will make it easier for highquality goods and services to become widely available
at prices that will enable a wider range of people toobtain such goods and services.

Solving individual limitations andresolving social issues
Society 5.0 is a concept that aims for economic
growth by eliminating people’s constraints and solvingsocial problems.

Powered suits that support individual movements
also enable people with disabilities to live and work inthe same way as people without disabilities.

For example, technologies contributing to Society
5.0 can reduce traffic accidents and congestion,
increase mobility for the elderly, revitalize rural areas,
reduce medical disparities of rural and remote islands,
lower electricity costs, and reduce food waste.
Example: revitalization of local areas
enhancement of local natural and cultural values

Respect for various ethical standards
Unlike the fourth Industrial Revolution, Society 5.0
is a concept that aims not for a better industry but fora better society. Therefore, the realization of Society
5.0 includes compliance with ethical standards incorporate activities.

andTechnologies contributing to Society 5.0 will makeit easier to access previously undiscovered local natureand culture, leading to increased value for local
resources and revitalization of local communities.

Compliance with ethical standards for innovativetechnologies

More specifically, automated driving, multilingualtranslation, and haptic technology that simulates a
travel experience are technologies that help foreign
tourists gain access to rural areas.

Innovative technologies such as AI can have anegative impact on society through misuse. For thisreason, both domestic and international ethicalstandards, such as the international “Asilomar
Principles” 9 and the Japanese government’s “Social
Principles of Human-Centric AI” must be complied
with.

Solve all challenges “optimally andsimultaneously”
Society 5.0 will build a structure that collects avariety of social data, uses AI to identify optimal
conditions for society as a whole, and uses the IoT androbots to execute efficiently. As a result, multiplesocial issues will be solved optimally andsimultaneously.

Sustainable relationships with diverse stakeholders
To realize Society 5.0, it is essential to engage
diverse stakeholders and build long-term andsustainable relationships with them. Companies will
promote their efforts based on the Charter ofCorporate Behavior and international standards forthe environment and human rights.

9 https://futureoflife.org/ai-principles-japanese/38New Opportunities Provided by Society 5.0 (Quantitative Analysis)
Growth opportunities created by Society 5.0 and theamount of investment required
In addition, robots that reduce the burden of nursing
care will help prevent skilled workers from leaving
their jobs to care for sick family members, creating a
new growth opportunity worth 11 trillion yen, with amarket size of 30 trillion yen.

Growth opportunities and market size
created by Society 5.0, and the amount ofinvestment required
Nomura (2020) 10 shows the new growth
opportunities (added value) in each industry that willbe created when technologies contributing to Society 5.0
are implemented in society, and the size of the market
in the new field. This section provides an overview ofthe opportunities provided by realizing Society 5.0,
presenting the macroeconomic growth opportunities
and required investment amount that would arise if
technologies contributing to Society 5.0 were introduced
to the full extent.

Innovative drug discovery utilizing AI will enable
the development and provision of new drugs tailored toindividual attributes, leading to the creation of new
demand. This alone represents a growth opportunity of
8.6 trillion yen and a market size of 22 trillion yen.

Smart
Smart mobility
mobility

Next-generation healthcare
healthcare
Next-generation

21.3
36.2

trillionyentrillion yen

trillionyenyentrillion21.3 trillion yen’s worth of growth
opportunity with smart mobility
Smart mobility, such as automated driving, urban
traffic optimization, and car sharing, will significantly
change the face of mobility and create new growth
opportunities of 21.3 trillion yen and a market size of
64.4 trillion yen.

36.2 trillion yen’s worth of growth
opportunities in next-generation healthcare
As Japan’s population ages, the next-generation
healthcare industry is expected to benefit the most frominnovative technologies, with a growth opportunity of
36.2 trillion yen in 2030 and a market size of 95.1
trillion yen.

For example, effective use of travel time andefficient travel routes achieved with automated driving
will lead to increased labor productivity and thecreation of new demand in all industries.

For example, increasing healthy life expectancy
through early detection and treatment of disease
through data healthcare can improve the productivityof older workers. Telemedicine services will also savetravel and time costs and facilitate advanced medicalcare in rural areas and remote islands that has beendifficult due to distance constraints.

At the same time, the efficiency of the energy
required for operating vehicles will be improved so thatthe energy can be used without waste.
In addition, more people will be able to use a variety
of faster logistics services by automating andstreamlining logistics such as with delivery robots,
drones, and automated ships. In the field of logistics
services, there will be a market expansion of 12.1
trillion yen, and a growth opportunity of 5 trillion yen
will be created.

10 NOMURA

Koji (2020): “Society 5.0 for SDGs — Creating
Future Economic Assessments.” He is Project Leader at the 21stCentury Public Policy Institute and Professor at Keio University

39Chapter 3 Economic and Social Impacts

Digitization
Digitization ofof manufacturing
manufacturing

Next-generation energy
Next-generationenergy28.5

19.3

trilliontrillion
yen yentrilliontrillion
yen yen28.5 trillion yen’s worth of opportunity indigitization of manufacturing

19.3 trillion yen’s worth of opportunity fornext-generation energy

In addition to digitizing production processes andproduct lifecycles, the introduction of unmanned
factories and collaborative robots will replace humanlabor and significantly increase productivity in the
manufacturing industry.

Next-generation energy will contribute to balancing
the economy and the environment, and its
implementation will bring a new growth opportunity of
19.3 trillion yen and market size of 37.4 trillion yen.
For example, the construction of systems forhydrogen power generation and hydrogen storage andtransportation will bring about a new market size of 8.3
trillion yen and a growth opportunity of 3.5 trillion yen
in 2030. In addition to next-generation floating wind
power generation and supercritical geothermal power
generation, carbon capture technologies such as CCUS
and artificial photosynthesis will also create growth
opportunities.

Furthermore, by providing high-quality products at
popular prices through the use of data on the intuitionand experience of skilled workers, and realizing
production that meets the diverse needs of consumers,such as shift toward service industry of manufacturing
and 3D printing, there will be a growth opportunity of
28.5 trillion yen in total manufacturing and a newmarket size of 108 trillion yen.

Smart living
living
Smart

FinTech/InsurTech
FinTech/InsurTech

14.5

18.9

trillionyen
trillionyentrillionyentrillionyen

18.9 trillion yen’s worth of growth
opportunity in smart living

14.5 trillion yen’s worth of opportunity at
FinTech/InsurTech

Smart products that make life more comfortable formany people, such as home robots that replace more
complex and skilled domestic work, will be introduced
to general households. The new growth opportunity ofsmart living technology is expected to be 18.9 trillion
yen and the market size will be 45.9 trillion yen.

FinTech, which focuses on cashless payments andmore efficient accounting operations, and InsurTech,
which focuses on improving the profitability of
insurance services and creating new health-enhancing
services, offer a growth opportunity of 14.5 trillion yen
and a market size of 36 trillion yen.

Of these, domestic robots, which help bear theburden of housework and offer comfortable living, havea growth opportunity of 14.5 trillion yen and a market
size of 34.8 trillion yen. In addition, technologies thatchange the way people work at home, such as thosethat enable telework, will be introduced to realize awork-life balance.

FinTech alone expects a growth opportunity of 8.6
trillion yen and a market size of 20 trillion yen.
The InsurTech market alone will create a growth
opportunity of 5.9 trillion yen and a market size of 15.5
trillion yen.

40

Smart agriculture
Smart agriculture

7.0 trillion yen’s worth ofopportunities in smart agriculture
Smart agriculture, which utilizes artificial
intelligence and drones, will greatly improve
production efficiency and reduce the burden on
farmers. The new growth opportunity of smart
agriculture will amount to 7 trillion yen and themarket size will be 15.1 trillion yen.

7.0
trilliontrillionyen
yen

Cybersecurity
Cybersecurity

4.4 trillion yen in cybersecurity
As the integration of virtual and real spaceadvances, the impact of cyber attacks will havea more direct impact on the real world,increasing the importance of cybersecurity. In
the field of cybersecurity, a growth opportunityof 4.4 trillion yen and a market size of 15.8
trillion yen will be created.

4.0
trillion trillion
yen
yen

Digitalentertainment
Digitalentertainment

2.8 trillion yen’s worth of growth
opportunity in digital entertainment
New technologies such as VR and AR will
bring
new
experiences
and
value
to
entertainment such as live performances,
sporting events, and games, creating 2.8 trillion
yen’s worth of growth opportunity and 6.8
trillion yen as the market size in 2030.

2.8
trilliontrillionyenyenGrowth opportunities for cross-sectoral
fundamental technologies, products, and services
Cross-sectoral fundamental technologies

Cross-sectoral products and services

Robotstrillionyentrillionyentrillionyentrillionyen

Smart cities

Low carbon

trillionyentrillionyen

Economic impacts of cross-sectoral technologies, products, and services
Society 5.0 will create significant growth opportunities based on cross-industrial technologies(IoT, AI, robots, and 5G).
In addition, the combination of products and services provided across industries also will create
significant growth opportunities.

41

Chapter 3 Economic and Social Impacts

Summary of estimation results
New areas ofbusiness(technology)

Next-generation
healthcare

Smart mobility

Next-generationenergySocialimplementation oftechnology

Increase ininvestment

Image of theoveralleconomic cycle

Increase inincomeSmart home…

FinTech/InsurTech

Solvingissues/creating value

Increase in
consumption

Production
increase

If all the new technologies envisioned in the model are implemented in 2030
In the accumulation of fields

Image of theJapanese
economyIn the accumulation of fields

The cumulative amount ofinvestment required

Growth opportunities

250 trillion yen

844 trillion yen

Nominal GDP(Market size)

900 trillion yen (Note)(Note) Nominal GDP is based on 2015 and does not factor in actual economic growth rates for the four years from 2016 to 2019
(Reference: Sakakibara vision (2015): Nominal GDP of 833 trillion yen, average growth rate of +4.0% in 2030)(760 trillion yen)(Source) Nomura (2020)

and the United States in 2015, the labor productivity inJapan will reach the current level of the United Statesin the late 2020s, and the labor productivity gap
between Japan and the United States will be reduced to
0.11 by 2030.

New growth opportunity and market sizeof 250 trillion yen in Japan as a result ofSociety 5.0
Nomura (2020) estimates that the accumulation ofthese new technologies in new fields will lead to a new
growth opportunity of 250 trillion yen and a newmarket size of 760 trillion yen in Japan in 2030, if the
impacts of these new technologies spread to people andsociety as a whole, including the vitalization of
consumer activities.

On the other hand, the gap in labor productivity
between Japan and the U.S. may not be narrowed or
may widen if we don’t address Society 5.0.
U.S. labor productivity (forecast value)

Image of estimation results(nominal GDP per
trillion yen)If the realization of Society 5.0 goes well, there
can be a new growth opportunity of 250 trillion
yen, nominal GDP of approximately

1000

USA

900 trillion yen (Note)

Case where
Society 5.0 is
realized

800

Baseline case
Japan

600

(Source) Excerpt from Nomura (2020)

Baseline case:Approximately 650 trillion
yen in 2030

Dotted line indicatestrends from 1960 to 1990

400

200

(year)
0

1960

1970

1980

1990

2000

2010

2020

“Social acceptance of Society 5.0” is acondition for a virtuous cycle

2030(Note) Nominal GDP is based on 2015 and does not factor in actual economic growth rates forthe 4 years from 2016 to 2019

The amount of investment funds needed
to realize Society 5.0 is 844 trillion yen

Based on an economic model, it appears theintroduction of technologies that contribute to Society
5.0 will lead to the “autonomous” realization of avirtuous economic cycle, which will improve
competitiveness, expand production, increase income
and consumption, and lead to further investment in
new technologies.

The amount of cumulative investment required torealize Society 5.0 is estimated at 844 trillion yen in
total.

Society 5.0 can contribute to us the
improvement of labor productivity

On the other hand, if there is no social acceptance ofSociety 5.0 and related technologies, there is apossibility that production, income, consumption, andinvestment will not increase and the virtuous cycle willstop somewhere. In that case, it would be difficult toreap the huge benefits from Society 5.0.

In addition to the new growth opportunities in themacro economy as a whole brought about by therealization of Society 5.0, Nomura (2020) has also madea comparison of labor productivity levels between
Japan and the United States when such opportunities
are realized.

Therefore, mainly in academia, it is necessary to
deepen research not only on the technical aspects ofSociety 5.0 but also on the institutional design for ｘ
social acceptance.

The result shows that, although there was a 0.36
point difference in labor productivity between Japan

42

Social impacts created by Society 5.0
Creating social impacts throughSociety 5.0

Society where opportunities are available
anytime, anywhere

Next, we introduce the social impacts created byintroducing technologies that contribute to therealization of Society 5.0 into an economic model basedon Nomura (2020).

Labor income to increase by 2.4% due to the spreadof telework
Telework will spread throughout the country,
boosting labor income by 2.4%.

Society that meets diverse needs

Society where people can live with peaceof mind and challenge themselves

10.5% of manufacturing companies create new value
The manufacturing industry, where 3D printers,
innovative drug discovery, and smart cell industry meet
individual needs and create new value, will account for
10.5% of the added value created by the entire
manufacturing industry.

Securing of approximately 5 billion IoT devices
About five billion IoT devices in Japan will be
secured through cybersecurity and AI-enabled accidentprevention measures.
Introduction of disaster information linkage system

Society in which everyone candemonstrate diverse talents

A disaster information linkage system will beestablished to provide residents with quick and reliabledisaster-related information when a disaster occurs.

The number of employed people aged 65 or older toincrease by 1.05 million

Optimization andmaintenance costs

With power suits in smart agriculture, nursing
robots, and the increase of telework, participation in
the labor market by the elderly aged 65 or older will
increase by one point five million compared to 2015.

levelingof

infrastructure

Drones, AI, and sensors can be used to prevent
infrastructure accidents and to optimize and level thecosts required to maintain them.

Home robots to be installed in about 45% ofhouseholds

Society where people can coexist withnatureHome robots will be used in 45.5% of all households,
greatly reducing the burden of housework. As a result,
women’s participation in society and the environment
for raising children can be further enhanced.

The introduction of next-generation
technologies will improve energy efficiency.

energyImprovement of international indicators(projections based on the estimates)

Narrowing wage gap between men and women
The wage gap between men and women (wage gap
after adjusting for attributes other than gender) will benarrowed, leading to a more equal society.

According to the estimate by Nomura (2020), Society
5.0 has the potential to further improve international
indicators calculated by international organizations.
The Global Competitiveness Index

Wage ratio between men and womenTechnologies that contribute to Society 5.0 (telework,
home robots, etc.) are expected to improve items forwhich Japan’s score is particularly low in the Global
Competitiveness Index (GCI) published by the World
Economic Forum, such as workforce diversity anddigital skills.

Case where Society
5.0 is realized

Baseline case

Sustainable Development Report (SDGs Index)
It is expected that the wage gap between men andwomen and the time spent on domestic work, for which
Japan’s score is particularly low in the country-bycountry SDGs index published by the Bertelsmann
Foundation, will be further improved through theintroduction of domestic robots.

* Male wages/female wages (wage gap after adjusting fordifferences in labor attributes other than gender, educational
background, age, type of employment, and industry)(Source) Nomura (2020)

Facilitating communication with the disabled andthe elderly
Conversation aids such as a brain–machine interface(BMI) are widely used by 85.6% of the elderly andpeople with hearing and speech impairments, enablingsmoother communication.

43

Chapter 3 Economic and Social Impacts

Box 3.1: World Economic Forum’s Global Competitiveness Index
Japan’s International Competitiveness Index (2019 edition)
The World Economic
Forum, which is famous fororganizing the Davos
Forum, publishes the
Global CompetitivenessIndex (GCI) in its “Global
Competitiveness Report”
and it summarizes theinternational
competitiveness of eachcountry.
The index scores twelve
categories in four areas:
overall score, enabling
environment, humancapital, markets, andinnovation ecosystem.
(Source) Excerpt from WEF (2019)Japan ranks 6th in the world and has the highest score in the health field in the world. On the other
hand, Japan ranked 42nd in macroeconomic stability, 28th in education and skills, 19th in legal
framework, 17th in business dynamism, and 16th in labor market.
In terms of individual indicators, workforce diversity ranked 106th, credit gap 138th, complexity oftariff 107th, social capital 90th, critical thinking 87th, and digital skills 57th.

Box 3.2: The Bertelsmann Foundation’s SDG Index(Source) Excerpt from Bertelsmann Stiftung (2019)

Bertelsmann Foundation, which was founded by the German media conglomerate BertelsmannAG, publishes its annual “Sustainable Development Report” and it summarizes countries’ progress
towards SDGs.
According to data from the latest edition (published June 2019), Denmark (score: 85.2) received
the highest rating for achievement of SDGs. Japan is ranked 15th (78.9) in the world and thehighest in Asia. The score improved by 0.4 points from the previous year, with the promotion of
SDGs by Japanese industry led by Keidanren recognized as one of the positive efforts.
On the other hand, the average score of OECD member countries improved by 0.9 percentage
points from 2018 to 2019 (to 77.7 from 76.9), and that of East, Southeast, and South Asia also
improved by 1.6 percentage points (to 65.7 from 64.1). Therefore, further efforts are required ofJapan.
In the case of Japan, the report identified gender equality, responsible production andconsumption, climate change, and partnerships in particular as areas requiring improvement.

44

Specific Examples of Society 5.0 Based on Nomura (2020)
Based on the results of the economic and social impacts of Society 5.0 found by Nomura (2020), the following
explanation can be made.
Solving human and social issues through next-generation healthcare

36.2 trillion yen’s worth of growth Extension of healthy life expectancy
 Rectification of medical disparities
among countries and regions

opportunities in next-generation healthcare

Healthcare for all generations

It worked
The medicine worked

Digitalization andbiotechnology

It worked
It doesn’t suit myconstitution...

Standard drug

Medicine suitable for each constitution

Rectifying medical disparities among countries and regions and extending healthy life
expectancy through next-generation healthcare
In Society 5.0, we can protect the health and peace of mind of people of all generations through AI treatments
tailored to individual attributes and innovative drug discovery. This next-generation healthcare market is expected
to generate 36.2 trillion yen in new growth opportunities and 95.1 trillion yen in market size in 2030.
Solving local social issues through smart mobility

21.3 trillion yen’s worth of

growth opportunity with smart mobility

Current status

Rural andmountainous areas

Rural andmountainous areas

Society 5.0

Risk of traffic
accidents
Labor
shortage

Safety and security declining
Birth rate and aging population

System forzero traffic
accidents

Automated
driving

Support foroverseas
tourists

Multilingual
support

Improving mobility for the elderly and resolving local social issues through smart mobility
Society 5.0 will enable automated driving, accident-prevention systems, and other means to solve these problems.
The smart mobility market using these technologies will have a new growth opportunity of 21.3 trillion yen and amarket size of 64.4 trillion yen in 2030.
Solving global issues through next-generation power networks

19.3 trillion yen’s Diffusion of energy Contributing to the environment

worth ofgrowth opportunities in next-generation energy

Current status

Demand > Powergeneration capacity

Advanced energy
management

Society 5.0
Demand= Supply

No electricity
transactions withneighboringhousesElectricity
transactions withneighboring houses
Demand < Power generation
capacity → Lower utilization rateof power generation facilities

Using storage
batteries
locally

Demand =SupplyImproving the efficiency of energy use through next-generation energy systems andcontributing to solving global issues
In response to the issues of climate change and energy, if advanced energy management is realized, for example,
the optimum matching between households with surplus electricity and those with insufficient electricity will be
realized, thereby eliminating waste in the use of electricity. The growth opportunity of the next-generation energy
will be worth 19.3 trillion yen and the market size will be 37.4 trillion yen.

45

Chapter 3 Economic and Social Impacts

Various Discussions on Future Industrial Outlook
Discussion on future industrial structure
2. Cross-industry data
coordination

Cross-sectoral technologies havean impact on various industries
Agriculture,
forestry andfisheries

3. Shift toward service
industry

Various industries will
collaborate through data

Needs ofconsumers
Want to enjoysightseeing

Fibers・・・Transportation
EnergyWant to solve
the problem

Data

Wholesale andretailRobotsーAI

Want to behealthy

Manufacturing

Integrated shift toward service
industry

1. Cross-sectoraltechnologies

Cooperation among
various industries basedon consumer needs• Cars• Airplanes• Trains• VR technology• Car sharing• Bicycle sharing• Shared parking• Car rental• Restaurants• Transportation,
distribution, etc.

・・・

Industrial structure changes in theprocess of realizing Society 5.0

2. Data coordination across different
industries is important

So far, we have presented the economic and social
aspects of the realization of Society 5.0 based on
Nomura (2020).

It is also necessary to collect and analyze a variety
of social data in order to utilize digital transformation
to solve problems, create value, and promote corporate
growth. As a result, companies in a number ofindustries with various types of data are expected tocollaborate with each other, bringing their own data
and utilizing it, thereby facilitating cross-industry
collaboration.

On the other hand, as it is said that “digitaltransformation will displace industry boundaries,” thetransformation of the industrial structure that willtake place in the process of realizing Society 5.0 is alsoof interest to companies and investors. 11
This section summarizes the current discussions on
why digital transformation is changing the industrial
structure and what it will look like in concrete terms.
It also presents examples that have been presented invarious surveys, including the questionnaire survey oncompanies and investors.

3. Progress of shift toward service
industry, including goods

1. Digital technology is cross-sectoraltechnology

Under these circumstances, advances in digitaltechnology are enabling services that fulfill the“experiential consumption” to be provided atcompetitive prices.

People’s needs are shifting from owning particular
products or services to focusing on the experience
gained by using them, which is called “experiential
consumption.”

Digital technologies such as sensing technology, thecloud, machine learning, and robotics have featuresthat can be applied in various fields. This makes it
easier for companies with these technologies to enter
various industries.

For example, in the case of mobility as a service(MaaS), consumers who want an experience of “lessexpensive mobility” can meet their needs by using aservice that lets them use a car at a low cost rather
than owning a car. This will facilitate cooperation andmutual entry between the automobile industry and theinformation service industry.

For example, companies from various industries
such as the electrical machinery industry and theinformation service industry are entering theautomobile industry due to the development of CASE
(Connected,
Autonomous,
Shared,Electric)
technologies.

“Second ’Council on Digital Transformation’ Is Held,”
Keidanren Times (February 6, 2020 issue)
11

46

Chapter 3 Economic and Social Impacts

Examples of anticipated changes in theindustrial structure“Industry you expect to be competitive inyour industry 10 years from now”→“Your industry”↓

Construction

Car

Against the backdrop of these discussions, thefollowing three examples of anticipated industrialchanges are presented.

Finance
Precision
Other
WholesaleandCommunications Electricity
Real estate services
machineryand retail Insurance

Construction

Research on industries that are expected to competewith each other going forward

Car

In the questionnaire survey on companies andinvestors, the respondents were asked to select up to
three industries that they believe will compete in thenext 10 years, in addition to their own industry.

PrecisionmachineryCommunications

Electricity

The results show that people in many industries
expect competition from other services (information
services, etc.).

Wholesaleand retail
FinanceandInsurance

Regarding individual industries, there is a highexpectation of competition with real estate andelectricity
intheconstruction
sector,with
telecommunications in the automobile sector, and with
telecommunications, finance, and insurance in thewholesale and retail sectors. Industries such as CASE
and cashless industries, which have already beenentered by other industries, appear to have a concrete
image of their future.

Real estate

Other
services(Source) Prepared by the Keidanren Secretariat based on the results of thequestionnaire survey on companies and investors*The darker the red, the more likely it is to anticipate future competition; see Reference 1 fordetails.

Real estatecompany A:
Our social mission ofrevitalizing
companies throughthe work of creating
and nurturing cities
will not change.

Communications
company A
Communications
company B

In general, companies in thesame industry are plottedcloserCompanies whose long-term
aspects are close in direction

Communications
company A
Communications
company B

visionandotherCompanies in different
industries, Automobile
company A and real estateindustry company A, areplotted nearby.

Businesses whose long-term corporate visions andother aspects are close in direction may become closer
to each other in the future, and they may compete orcooperate with each other. In this respect, there is ananalysis that shows the results of natural language
processing by collecting long-term visions and the likethat are published on the websites of each company.

(Source) Prepared by the Keidanren Secretariat based onmaterials from VISITS Technologies

Automobile company A:
We will become a company that provides all
kinds of services related to the “mobility” ofpeople around the world.

Major categories oftechnologies(Nomura (2020))

Industries impacted by
the technology

In the figure on the left, dots are placed close toeach other because the same directional terms areused in the same industry, but companies that are indifferent industries but have the same direction are
also plotted close to each other. For example, theresults suggest that although Company A in the realestate industry and Company B in the automobile
industry are in different industries, they have asimilar vision in terms of “city” and “mobility.”

Next-generation
healthcare

Pharmaceuticals, otherservices, public services,etc.

Influence of cross-sectoral
industries in Nomura (2020)

Smart mobility

Railway, road and airtransportation, warehousing,insurance, etc.

Digitization of
manufacturing

Manufacturing in general,
other services, wholesale
and retail, research
institutions, etc.

Nomura (2020) uses an economic model to depict
how cross-sectoral technologies make an impact onvarious industries based on 510 activity categories,
including 54 new industries.

Next-generation energy

Electricity, road transportation,
automobiles,
telecommunications, public
services, etc.

FinTech/InsurTech

Financial insurance,
wholesale and retail,etc.

Smart living

Household, service,
manufacturing, public
service, etc.

Smart cell/bio, materials
informatics, and smart
agriculture

Agriculture, forestry andfisheries; chemistry; steel;
non-ferrous metals

technologies

on

For example, in next-generation healthcare, theearly detection and treatment provided by data
healthcare can reduce healthcare costs by extending
healthy life expectancy. On the other hand, it also
increases the productivity of older workers andcontributes to the expansion of new employment ofelderly persons.

47

Chapter 3 Economic and Social Impacts

Challenges for the Future
Updating estimates for Society 5.0

advance research on the ideal socioeconomic system
which supports Society 5.0.

Estimates for Society 5.0 are based on currently
assumed technologies, and the like, and need to be
updated regularly as new technological innovations
and social changes are expected in the future.

Further deepening knowledge about
Society 5.0
In addition to this report, there are other reasons
why Society 5.0 brings about economic and social
impacts, and presentations of changes in industrial
structure in the process of Society 5.0.

Research on the socioeconomic systemthat supports Society 5.0
In order to realize Society 5.0, it is important thattechnologies contributing to it are appropriately
accepted by society. Therefore, it is required to

Therefore, it is important to continue to deepen our
knowledge of Society 5.0.

Box 3.3: Method of estimating Society 5.0 for SDGs
In making estimates for Society 5.0, Nomura (2020) firstestablished the baseline (BaU) case based on the baseline of the
Cabinet Office’s “Economic and Fiscal Projections for Medium to Long
Term Analysis.”
Identification ofkeytechnologies
contributing toSociety 5.0

Predict the impact oftechnologies on
productivity, prices,demand, industry,etc.

Includevariouselements inthe model andestimate

Next, technologies contributing to Society 5.0 were identified byreferring to Keidanren’s Society 5.0 Comprehensive Recommendation,
Science and Technology Foresight Center of the Ministry of Education,
Culture, Sports, Science and Technology, and the Electric PowerCouncil for a Low Carbon Society (ELCS), and the like.

In addition, Nomura analyzed the impacts of the technologies on
productivity, prices, demand, industry, and the like, and estimated the
GDP growth rate and other figures by introducing the results of eachanalysis into the model.

Box 3.4: Potential for cross-border innovation collaboration based on the SDGs
For each goal of the SDGs,
products, services, and projects
that contribute to that target
are announced on Keidanren’s
dedicated website and the
University of Tokyo’s website.
Collaboration
Collaboration
within thewithin
the industry
industry

Industry–academia
Industry–academia
collaborationforcollaboration
for common
commongoals goals

Examples of Goal 7 on Keidanren’s dedicated SDGs

websitededicated SDGs website
Examples of Goal 7 on Keidanren’s
Trading
Tradingcompany
company

Forestry
Forestry

Heavy industry
Heavy industry

Collaboration
Collaboration
withinwithin thetheuniversity
university

Goal 7 projects published on the University ofTokyo’s
Goal 7 projects publishedon thewebsite
University of Tokyo’s website
Graduate School ofGraduate School of
Frontier Sciences
Frontier Sciences

Graduate School

Graduate School ofof Science
Science*Prepared by Keidanren Secretariat based on KeidanrenSDGs.com
・・・
and the Universityof Tokyo’s
websitebased on KeidanrenSDGs.com and the University of Tokyo’s website*Prepared
by Keidanren
Secretariat

48

Graduate School

Graduate School ofof Public Policy
Public Policy・・・

As shown in the figure on
the left, this information can
be
used
to
promotecollaboration among companies
as well as between companies
and universities with theSDGs as the axis.

Chapter 3 Economic and Social Impacts

4.
Direction of Information Disclosure byCompanies Promoting Society 5.0

Summary
In order to realize investments incompanies that are actively addressing
Society 5.0 (companies promoting Society5.0), it is essential to present the ideal
form of information disclosure that will
enablesuch
companies
tobeappropriately evaluated by domestic andforeign investors.

Then, we highlighted the elements ofthe vision that evoke megatrends andfuture growth expectations that should
be addressed from investors’ perspective.
To do this, a method was used in which
long-term visions and other information
are collected from companies in thequestionnaire survey on companies andinvestors, and are processed in natural
language together with comments forthem from investors.

As the first step, this chapter explores
the direction of information disclosurethat identifies companies addressing
Society 5.0.

As a result, “safe and smart life byutilizing
technology,”“demographic
change,” and “climate change anddisaster prevention” ranked high as the
top megatrends investors think should
be captured. In addition, three elements
were listed as the elements of the longterm vision evaluated by investors,
namely “business development based on
people,” “solving global issues,” and“creation of new markets.”

First, we paraphrased the companies
promoting Society 5.0 as “companies thatcan grow from a medium- to long-term
viewpoint
andcontributetoasustainable society,” and focused on the“future financial information” (nonfinancial information that represents the
future of the company) disclosed by suchcompanies, such as their long-term
vision.

Finally, this chapter presents theperspectives of information disclosure
assessment and examples of descriptionsof the specific efforts of companies
promoting Society 5.0.

Then, as the results of thequestionnaire survey, we found that 96%
of investors consider “sustainability” asimportant for mid- to long-term growth,and 76% of investors consider “digitaltransformation” as such.

49

Chapter 3 Economic and Social Impacts“In order for the Society 5.0 for SDGs to truly
take root, it is necessary to create a framework,in which companies that are willing to engage
in the “realization of Society 5.0” will beappropriately appreciated by domestic andforeign investors, among others, and throughsuch a movement, more companies will actively
engage in the “realization of Society 5.0.”
KUNIBE Takeshi,
Vice Chair/Chair, Committee on Financial and CapitalMarkets, Keidanren(Chairman of the Board, Sumitomo Mitsui Financial Group, Inc.)“Society 5.0 is a sustainable, human-centered,super smart society, and I think it is better to
use the positive term ‘future’ financial
information, rather than non-financial
information, to describe the disclosed
information of companies that aim for its
realization.”
FUTAMIYA Masaya, Chair,Committee on Responsible Business Conduct & SDGs
Promotion, Keidanren(Director-Chairman, Sompo Japan Nipponkoa Insurance Inc.)“Corporate integrated reports clearly describe
how they can contribute to the society of the
future. If we collect them, I think we can see
what kind of society we will have in the future.”
NAKA Hiroshi,
Professor, Institute for Future Initiatives,
the University of Tokyo

50

Chapter 3 Economic and Social ImpactsoPurpose

Chapter 4: Direction of Information Disclosure by Companies
Promoting Society 5.0 (Overview)Show the direction of information disclosure of Society 5.0
by extracting the image of companies addressing Society 5.0 from theirlong-term vision, etc.
Companies
addressing
Socie5.0
Companies promoting
Society

Methodology= Defined as “companies that can grow from a medium- to long-term
viewpoint and contribute to a sustainable society”
Focus on “future” financial information (non-financial information that indicatesmedium- to long-term growth of the company) as information to show the future
growth and sustainability of a company.
Also assume the following 3 assumptions as future financial information

Future financial information
1. Megatrends to capture as opportunities
2. Long-term vision that generates expectations for growth
3. Corporate action plan to realize Society 5.0
Methodology
Megatrends

Long-term vision

Analysis using Natural Language Processing
1 Step2 StepCompanies fill in theirvision, etc.

Natural language processing

Extract the contents of long-term vision,etc. and expression methods required byinvestors.

Action Plan
Organize various materials
and present an action plan

(1) Companies fill in their long-term vision, etc.
(2) Acquire comments/feedback from randomly
selected investors on company responses(3) Conduct natural language processing on thecontent of (1) and (2) Extract the contents of
the long-term vision, etc. and expression
methods required by investors.
*Analysis based on survey results of 105 companies and 117 investors

51

“Future” Financial Information Showing Companies
Addressing Society 5.0
Companies that generate expectations fortheir future growth and sustainability
20xx1. “Megatrends” that should be turned to opportunities

2. Better “vision”

Ideal

Society 5.0
for SDGS

Whether or not it is acompany promoting
Society

2020
Extensionof
conv entio
nal efforts

Now

3. “Initiatives”

Backcastingthat should be done now

Importance of information

More importantNon-financial information

Information disclosure that shows
companies addressing Society 5.0

Information that represents future
growth and sustainability

Information disclosure and evaluation criteria
based on that disclosure are important in encouraging
investment in companies addressing Society 5.0(companies promoting Society 5.0).

A “company promoting Society 5.0” is considered to
be a “company that can achieve future growth andcontribute to a sustainable society.”
From the perspective of evaluating “companies withhigh expectations for the future” (companies engaged
in expected value-oriented business), it is desirable tofocus on non-financial information rather thanfinancial information, which is the result of past
performance. Daiwa Institute of Research (2019) 12
defines this information as “future financial
information” in the sense that it transforms into
financial information over time.

In the questionnaire survey on companies andinvestors, when investors were asked about the “issues
in promoting investment in companies that advocate
Society 5.0 for SDGs,” 39% cited “promotion of
information
disclosure”
and
27%
cited
the
establishment of “evaluation criteria for Society 5.0 for
SDGs companies.”
Challenges to be addressed to promote investment incompanies advocating Society 5.0 for SDGs
3% 5%
26%

39%

27%



Promotion of information disclosure

Criteria for evaluating companies
promoting Society 5.0

Differences in economic and social
returns based on whether or not it is
a company promoting Society 5.0Enhancement of investment related
products



OthersIn terms of companies that realize “growthpotential” and “sustainability” it is desirable to focus
on their “long-term vision” which is a picture of their
future business, and “megatrends” which are the social
trends behind the vision.
Therefore, we focus on long-term vision andmegatrends among non-financial information, andexplore what points in them will evoke future growthand sustainability for investors.
In addition, various documents have already shownspecific examples of the efforts required of companies
to realize Society 5.0. We will also analyze suchinformation along with the specific direction of
information disclosure, since it helps determine
whether a company is promoting Society 5.0.

Based on the above, in this chapter we focus on theestablishment of standards and guidelines for
information disclosure based on Society 5.0 as a futureissue, and first explore the direction of information
disclosure which indicates the companies promoting
Society 5.0.

12 Daiwa Institute of Research (2019): “Financial Information Is‘Future Financial Information’: A New Perspective in Corporate
Analysis”

52Chapter 4 Direction of Information Disclosure by Companies Promoting Society 5.0

Natural language processing foranalysis of non-financial information
Analysis of non-financial information
using natural language processing

The significance of the survey: nonfinancial information required by investors

Since non-financial information is qualitative
information, quantitative statistical analysis has been
considered difficult.

The significance of this survey is to clarify the
direction of non-financial information disclosure
requested by investors by utilizing CI technology withthe participation of many companies and investors.

In recent years, however, natural language
processing technology has been developed to enable
quantitative analysis of qualitative information. For
example, words in a written sentence can be analyzed
to specify similar written contents for grouping.

As pointed out in Box 4.2 (page 63), the guidelines
for disclosing non-financial information are diverseand do not indicate the direction of uniform disclosurethat investors truly want.
In this context, natural language processing isapplied to the long-term vision and other informationof companies and comments from multiple investors in
response to it, in order to extract information thatinvestors truly respond to among information thatindicates future corporate growth, from an
independent perspective.
The results obtained from this analysis are also asynthesis of the views of various investors, and may beconsidered as a unified view of non-financial
information that investors require to be disclosed.
Therefore, this will be a useful insight in developing
information disclosure guidelines for Society 5.0 in the
future.

Human “impressions” can also be
incorporated into the analysis
On the other hand, since natural language
processing of non-financial information is a method formechanically classifying the descriptive content, theimpression that a human reader receives from thedescriptive content is not included in the analysis
object.

1 StepCompanies fill in theirvision, etc.

However, when investors judge the growthpotential of a company based on non-financial
information, the impression they get from thedescription is important.

Enables analysis of the
future information ofcompanies as linguistic
information

Identify informationthat investors may
potentially respond to

Comments/feedback
from investors(2) Acquire comments/feedback
from randomly selected
investors on company
responses(3) Conduct natural language
processing on the content of(1) and (2) Extract the contentsof the long-term vision, etc.
and expression methods
required by investors.

Extract the contents of the longterm vision, etc. and expression
methods required by investors.

Survey overview
The survey was conducted between November 2019
and February 2020 with the cooperation of thecompanies that belong to the Keidanren Committee on
Financial and Capital Markets, the Committee on
Responsible Business Conduct & SDGs Promotion, andtheCommittee
onStartups,
andinvestors
commissioned by the GPIF. Valid responses werereceived from 105 companies and 117 investors.

This technique is called CI (Consensus Intelligence)technology, and it is possible to derive descriptions
that elicit more response from people (investors in thecase of this study). 13
Consensus building
algorithm(1) Companies fill in their longterm vision, etc.

Natural language processing

In this survey, therefore, we not only collectdescriptions of long-term visions from companies, butalso collect impressions that investors receive fromsuch descriptions, and perform natural language
processing on the two.

Natural language
processing technology

2 StepExcellentvision 1

Excellentvision 2

Excellentelement 1

Goodvision 3

Excellentelement ２

Goodvision 4Goodelement 3

Extracting elements of an
excellent vision for Society 5.0

Direction of information disclosure to
identify companies promoting Society 5.0

13 The CI technology “ideagram” used in the survey is VISITSTechnologies’ proprietary technology.

53

Good
element 4

vision 5

Megatrends to Capture
Keywords of Society 5.0:
“digital transformation” and “sustainability”
Digital transformation and sustainability
are important

Of all investors, 76% believe digitaltransformation is important for corporate
growth, while 92% believe sustainability
is important for such growth.

Before analyzing the long-term vision andmegatrends, we first examined investors’ perceptionsof the importance of the Society 5.0 keywords “digitaltransformation” and “sustainability.” The result
showed that 76% of investors answered that “digitaltransformation” is very important or important for the
medium- to long-term growth of companies.
Digitaltransformation
increases
competitiveness and creates added value

corporate

Specific reasons cited for emphasizing digitaltransformation in terms of corporate growth include“Creating added value and improving cost efficiency
through digital transformation are contributing tocorporate earnings growth in a growing proportion,”“Digital transformation is a key component ofenterprise growth,” and “Digitization could be thecornerstone of competitiveness and survival.”

*

76%

92%

Digitaltransformation

Sustainability

Percentage of investors who answered in the questionnaire
survey on companies and investors that digitaltransformation and sustainability are very important orimportant for the medium- to long-term growth of thecompany

Sustainability means the sustainability of corporate value, stakeholder expectations, and the raison d’être of acompany
As for sustainability, 92% said it was very important or important, and 53% of them said it was very important.
Reasons for this include “The sustainability of the cash flows generated by a company is an important factor in
determining corporate value” and “Sustainability is the what the stakeholders surrounding a company expect, and
it is impossible for a company to achieve sustainable growth without considering this expectation.”Why do investors think “digital transformation” and “sustainability”
as being important of companies’ growth?
Comment

Job title

Location

Department

Because a growing proportion of companies are benefiting from the creation of added value and Sales
cost efficiency through digital transformation

USA

Investment planningdepartment

Although recognizing that digital transformation is not a purpose but a means, it is importantbecause many companies seek to make a profit through digital transformation

Officer

EuropeSales department

I think digital transformation is essential for future corporate growth, irrespective of whether it isrelevant to ESG investment or not

Sales

Japan

Sales department

Because a fundamental change in the traditional business model will be brought about, and it can Analyst
be both an opportunity and a threat to the enterprise

EuropeCorporate research
department

Because of the potential for significant changes in business models

Other

EuropeInvestment planningdepartment

Because ESG is a breakdown of the elements that achieve sustainability

Sales

USA

Sales department

Sustainability should be considered in a maturing society regardless of whether it is relevant to
ESG investment or not

Sales

Japan

Sales department

Because without the creation of social value, there is no creation of corporate value, andsustainability initiatives are an essential element in corporate activities

AnalystEuropeCorporate research
department

Because ESG investment itself is an investment from a long-term perspective, and sustainability Officer
is an essential perspective

Japan

Sales department

Because the sustainability of the business itself is inseparable from the future businessenvironment.

USA

Investment
department

Digital transformation

Sustainability

54

Other

Chapter 4 Direction of Information Disclosure by Companies Promoting Society 5.0

Megatrends to capture: specific challenges
and technologies
Megatrends
Demographic change

Concentration in large
citiesExtension of healthy
life expectancy
Formation of a circular
economyIssues to be captured
for Society 5.0

Formation of a circular
economy

1
0

5

10

Reuse of resources

Waste pollution

Waste disposal

Smart city/smart life

Clean energy

Energy shortages and risks

Climate change anddisaster prevention

Climate change

Climate projection

Disaster relief/response

Drone

Megatrends focused on by investors
On the other hand, when only the responses frominvestors are analyzed, as shown in the figure below,“safe and smart life by utilizing technology” is at the
top of the list, while the ranking of “climate change
and disaster prevention” is relatively high.
As a result, the megatrends that investors arefocusing on are more concentrated on specificmegatrends compared to individuals.
Number of appearances in top
30 corporate visions
Safe and smart life byutilizing technology

11

Demographic change

7

Climate change anddisaster prevention

6

Extension of healthy life
expectancy

1

Other

5
0

3

1

Resource shortage

Safe and smart life byutilizing technology

52

Data security

Translation technology

5

Climate change anddisaster prevention

Preventive medicine

Spread of lifestyle-related diseases

Increase in the number of foreigners

112

Telemedicine

Spread of dementia

Diversification of culture

Number of appearances in
top 30 initiatives

Extension of healthy life
expectancy

Shortage of doctors in rural areas

Various sensor technologies

As shown in the chart below, among the responses
from companies and investors as a whole, demographic
changes, concentration in large cities, and safe andsmart life utilizing technology ranked high.

Diversification ofworking styles

Remote work technology

Pursuit of greater efficiency

In the (2) second step, we analyzed and counted
which of the eight megatrends mentioned in Chapter 2
correspond to the top 30 answers that invoked a highresponse.

Diversification of culture

Robots

Depopulation and weakening ofrural areas

Image recognition, speech
recognition, etc.

First, as described in Chapter 2, in thequestionnaire survey on companies and investors, (1)in the first step, all the questionnaire participants
were asked about the issues they expect to be solved,
and (2) in the second step, the responses collected in
the first step were evaluated mainly to see if otherparticipants can agree with them.

Safe and smart life byutilizing technology

Dangerous driving by the elderly
Labor shortage due to declining birthrate

Decrease in-office working hours

Megatrends that invoke a response

Demographic change

Technologies
Automated driving

Diversification ofworking styles

Below, among the megatrends that need to beaddressed in the future as revealed in thequestionnaire survey on companies and investors, we
examine those that investors found to be particularlyof high priority.

Concentration in large cities

Issues/changes

15

55

5

10

15

Long-Term Vision That Evokes Expectations for Future Growth
Expectations for a longer and more ambitious vision
written “Fink’s letters” to corporate executives aroundthe world, asking them to explain their management
strategies for creating long-term value for constructive
dialogue with them.

Importance of the long-term vision
We then focus on the long-term vision of thecompany. In the questionnaire survey on companies
and investors, 89% of companies said that they had
provided investors with an opportunity to get an
explanation of their long-term vision, and 88% said
that they had received inquiries from investors about
their long-term vision.

In order to make engagement with shareholders
as productive as possible, companies must beable to describe their strategy for long-term
growth. [. . .] We recognize that the market is far
more comfortable with quarterly reports andcolored proxy cards than complex strategy
discussions.

Long-term visions generally assume 3 to
10 years
In analyzing the long-term vision, we first indicate
the number of years the current long-term visions
assume.

But a central reason for the rise of activism—andwasteful proxy fights—is that companies have notbeen explicit enough about their long-term
strategies.

This time, when asked about the number of years
that the long-term vision assumes, about half of the
respondents answered about 3 years, while 16%
answered about 5 years, 28% answered about 10 years,
and 7% answered 10 years or more.

(Fink’s letter 2018)

Creating a longer, more ambitious vision
In light of these developments, companies are
expected to accelerate their efforts to formulate abetter long-term vision for the longer term.

According to the survey on the long-term vision in
the GPIF’s “Report of the 4th survey of Listed
Companies
RegardingInstitutional
Investors’
Stewardship Activities,” long-term visions up to fifteen
years accounted for 93% of the total, showing a similar
result. The majority of Japanese companies, including
member companies of Keidanren, have a long-term
vision of about 10 years or less, and mainly about 3 to
5 years.

Regarding the extension of the period of vision,according to the aforementioned “Report of the 4th
Survey of Listed Companies Regarding Institutional
Investors’ Stewardship Activities,” the number ofcompanies with a vision of 10 years or more increased
by about 5 percentage points in just 1 year.
In the face of digital transformation in particular,some are calling for an ambitious vision that evokes
more growth expectations. Formulating such a vision
will also help realize the Society 5.0 concept.

Years for which companies’ long-term vision isestablished in this survey
30+ years

About 5 years

If you view the long-term vision as part of yourmedium- to long-term management plan andbusiness cycle, it will not match the long-term
vision sought by overseas investors. As digitaltransformation advances and the industrial
structure changes, investors want to know where
the company is going. [. . .] They want an
ambitious vision for future growth.

About 3 years

MIZUNO Hiromichi, Executive Managing Director
and CIO, GPIF

About 20
years
About 10years

Expectations of investors for disclosureof long-term vision and other information
Investors, on the other hand, want a better longterm vision. For example, Larry Fink, CEO ofBlackRock, the world’s largest fund manager, has

56

Chapter 4 Direction of Information Disclosure by Companies Promoting Society 5.0

Low

MiddleHigh

Elements of a Long-Term Vision That Evokes
Expectations for Future Growth
Averagescore

Number of
responses

Consideration based on the responses

Businessdevelopment
based on people

3.5

4Whether it is B2B or B2C, people are the starting point of a business, andfocusing on them can attract expectations in terms of both novelty andscale

Solving global
issues3.4

27

Future-oriented, clearly aware of specific global issues, andaiming to achieve them with numerical targets

Creation of
new markets

3.3

10

Capitalizing on the technologies and strengths of existing businesses tocapture other needs, offering both novelty and robustness and viability

Solving
current issues

3.0

20

Aiming to solve social issues based on the present, andexpectations for the future are weakened a little

Safety,security, and
trust

3.0

5

Safety, security, and trust are permanent issues and areimportant, but have less sense of the future

Creating new
value

2.9

19

Although attractive in terms of direction, slightly lacking in
concreteness and was evaluated poorly

Improvingproductivity
and

2.7

12

Productivity improvement is inevitably considered as notbreaking away from the existing business domain

image of acquiring global markets, and that they set
specific numerical targets.

Seven long-term vision elements andscoring

Regarding the “creation of new markets” visions,many commented that they have robustness,
feasibility, and novelty because they leverage thestrengths of existing businesses.

In the questionnaire survey on companies andinvestors, we performed natural language processing
on the descriptions of the collected long-term visions,and found that the long-term visions contain sevenelements, as shown in the figure above. When
comparing the number of responses that referred toeach element, “solving global issues,” “resolution ofsocial issues,” “creating new value,” and “improving
productivity and profitability” were the most common.

Observation regarding the visions with alow evaluation
On the other hand, “solving current issues,” “safety,
security, and trust,” “creating new value,” and“improving productivity and profitability” were rated
low. The reason is discussed below.

Finally, based on investor feedback on the longterm visions (investors’ scores and comments in termsof whether they evoke growth potential), we identified
highly regarded elements of the long-term visions. As
the elements of the long-term visions highly evaluatedby investors, three elements were listed, namely,“business development based on people,” “solving
global issues,” and “creation of new markets.”

It is considered that because these four elements
were visions that were based on the present rather
than the future, the evaluation of these four elements
was low in terms of expectations for future growth.
For example, it is considered that the score of“solving current issues” was low because the visions
could not convey a concrete picture of the society thatthe companies wanted to realize in the future, eventhough they grasped the current issues.

Observation regarding the visions thathave received high evaluation frominvestors

It is thought that the element of “safety, security,and trust” was regarded as risk averse, while it is also
important, rather than as an indication of future
potential.

This section examines the long-term visions thathave been highly evaluated by investors based on theircomments on the answers.
First, regarding the visions related to “businessdevelopment based on people,” the element with thehighest score, it was found that high expectations wereplaced on the novelty of the business and the
expansion of the market size.

It is considered that the content related to “creating
new value” was regarded as not sufficiently specific,
although it is promising.
“Improving productivity and profitability” is an
important element in business activities, but investors
may have interpreted it as meaning the company isinterested only in extending the existing businessdomains.

Regarding the visions related to “solving global
issues,” many comments evaluated the fact that theyrefer to social issues, which evoked in investors an

57

3 factors highly evaluated by investors
Businessdevelopment
based on people
Aim to develop business basedon people to bring new value topeople by anticipating andutilizing future technologies

Solving global
issuesClarify global issues,
set specific targets,
etc., and aim to resolve
them

Further examination of the three highly evaluatedelements suggests that the following should beconsidered in order to develop a better long-term
vision.

Creation of
new markets

Capitalize on the strengths ofexisting businesses, capture
diverse needs, and aim tocreate new markets

vision not only clearly understood the needs of theworld, but also clearly showed the relationshipbetween their businesses and technologies and theissues of SDGs. As a result, investors were probably
convinced that stable growth could be expected.

Business development based on people

Creation of new markets

In the “business development based on people”
element, which has the highest average score, highly
evaluated visions were those that stated that the age
will come when the meaning of human beings will bestrongly brought into question amid technologicalinnovations such as AI and robots as well as changes
in society. They were also those that, based on suchprojections, work on increasing communication,
creating new enjoyment, and diversifying working andliving styles while making use of technologicaltransformations.

In average score, it was third but the mostinteresting long-term vision element was “creating
new markets.”
The visions with this element were novel in thatthey focused on needs that the company has not beenaddressing in its current business, and sought toactively capture the needs of other industries,
regardless of existing industry barriers.
In addition, they include the perspective of utilizing
the company’s existing business when engaging in new
business, and were evaluated by investors as being
concrete and solid.

Solving global issues
As for the “solving global issues” which was therunner-up in the average score, companies with such a

Business development based on people
Examples of investors’ comments(Summary)

Description (excerpt)
The Company will not only add more technologies and functions to its products, but also
take on the challenge of pursuing “the optimum” for each individual customer bycontinuing to evolve products and services even after they are sold, making full use ofvarious types of data and advanced AI and IoT technologies.

Insatiable adoption of information
technology Create expectations
for growth

As technology evolves, the time will come when we question the meaning of humanbeings. People grow up in loving situations where people interact with each other, while
making good use of new technology.

As technology evolves, the added
value of services that ask abouthuman nature should increase.

We focus on improving the automation of data warehouses and provide an environmentthat enables older workers to perform more organized work, such as training andimproving skills. At the same time, we provide an active program for developing STEM
skills (science, technology, engineering, and mathematics) for the younger generation.
We think that this is necessary to ensure a long-term vision for Japanese industry.

Concrete, original and proactive
responses to Japan’s challenges

Solving global issues
Examples of investors’ comments(Summary)

Description (excerpt)
Since its founding, the Company has always believed that materials can change lives,
true to the fundamental corporate principle of contributing to society. At the Company,
we make it our mission to deliver innovative technologies and advanced materials thatprovide real solutions to the challenges the world faces while balancing development
and sustainability

Each item is highly specific andaddresses major global issues.

Contribute to the creation of an affluent and sustainable society by providing new value
through future-oriented research and development. Contribute to the transition to acircular economy by promoting initiatives aimed at reducing the burden on the global
environment to zero.

Companies that have successfully
responded to these changes are
expected to expand into newstages and accelerate growth58

Chapter 4 Direction of Information Disclosure by Companies Promoting Society 5.0
Creation of new markets
Description (excerpt)

Examples of investors’ comments(Summary)

We are also engaged in research into advanced technologies, such as artificial
intelligence and lasers, to respond quickly to the increasingly sophisticated and diverse
needs of society. [. . .] The Group leverages its comprehensive strengths, broad range ofbusiness fields, and high levels of expertise to engage in a wide range of businesses
that meet the diverse needs of consumers who are end-users, including needs forautomotive parts and energy-related products.

Since we are able to meet thediverse needs of consumers
through “comprehensive strengthsof the Group,” growth can be
expected even in the event ofmajor changes

Not bound by the existing framework, we will pursue our business with flexible ideas thatmeet the needs of the times. [. . .] (Also,) we aim to build a new business model by
combining technologies and systems from our own perspective, even in business areasthat we have not yet entered as developers. [. . .] Aiming to strongly promote ourbusiness in response to the world’s leading Society 5.0, [. . .] we aim to create an
exciting future before 2030

Recognizing the importance ofadvancing business with flexible
ideas that respond to the times.

Box 4.1: Visions with high expectations extracted by web scraping
According to VISITS Technologies (2020), the following visions can be extracted by web scraping (technologythat automatically extracts information from websites) using natural language processing for three factors ofbusiness development based on people, solving global issues, and creating new markets.
Business development based on people
The ANA AVATAR is a new form of instant, physical transportation that will enablehumanity to connect limitlessly. By integrating multiple exponential technologies such as
robotics, haptics, and sensors, real-world Avatar systems will make it possible for anyone tocommunicate, explore, and interact with a remote environment.
ANA HD will be collaborating with partner companies and local governments to create an Avatar
social infrastructure worldwide. This far-reaching plan will change the way that mobility isleveraged to solve social issues, and help create a society that exponentially increases
freedom to learn, share and move.

We, Xiborg, are dreaming we’ll see a Paralympic champion of sprinting finish in a fastertime than the Olympic champion of the same year. In order to make it happen, we aredeveloping running-specific prostheses considering the biomechanics of athletes, andcoaching athletes running with our technology.

Solving global issues
Japan’s agriculture is expanding on a large scale with the aging of farmers. Reducing theworkload and increasing productivity are essential if agriculture is to become a more attractive
industry. Smart agriculture utilizes robotics and ICT to realize labor-saving and high-quality
production. [. . .] We will continue to expand our product lineup to realize smart agriculture for asustainable agriculture in the future.

Global warming countermeasures have become an important issue in recent years [. . .]. In
particular, in the field of fuels, attention is being focused on the development of biofuels[.] We
have been working on research and development of bio-jet fuels based on the fact that it has
been difficult to escape from liquid fuels in aircraft and that there are high needs from the aviationindustry due to the flow of environmental regulations. We focused on the need for development.
Against this background, as we proceeded with discussions with Isuzu Motors, whose vision is thesame as ours, [DeuSEL® project] was born.

Creation of new markets
Toyota, as a “mobility company,” will continue to provide wide-ranging services related
to transportation into the future.

Our concept car “AKXY” showcases a variety of Asahi Kasei’s unique automotive
products and technologies. Discover the many innovations available. Access the Possible.

Photos are from ANA, Xiborg, Kubota, Euglena, Toyota and Asahi Kasei websites.

59Direction of Information Disclosure and Specific Corporate
Initiatives

VisionVision(that evokes
sustainability)(that evokes
growthpotential)

Appropriate
understandin
g of trends

Perspective of information disclosure evaluation
Passing grade level

Excellent level

Highest level

Understand trends

Identify trends

UniquenessSufficient reference
to possible trends in
its own industry＋＋

Clear Goal
It is clear which
SDGs are relevant＋

Have alreadytaken concretemeasures＋

Concreteness＋

Have alreadytaken concretemeasures

Unique point of view basedon the company’s own
business, rather thanordinary ones

Unique advantages

ConcretenessPositioning
The role of thecompany in the
future society is
clear

Prioritized aswell ascoveredShow uniqueadvantages of thecompany
Balance with corporate growth＋

Also contribute to
the growth of thecompany’s businessIn the answers evaluated as being excellent,
concrete examples based on the vision were described.
Furthermore, those evaluated as being of the highest
level also showed their own unique advantage.

Method of describing matters in
information disclosure
Based on the above, we explore the specificdirection of information disclosure. First of all, in order
to disclose company information in a way that evokes a
response in investors, the method of describing(writing) used in the disclosure is important.

The method of writing that evokes
sustainability
As for the references evaluated in answers as thatthey evoke sustainability, those evaluated as having apassing grade clearly indicate which SDGs theirbusiness activities are related to.

This section analyzes the characteristics of themethod of writing about megatrends that investors
evaluated as appropriate and made them able toexpect growth and sustainability.

In addition, those evaluated as being of an excellent
level indicated concrete efforts as well as growthpotential.

The method of describing megatrends
that has been evaluated as appropriate

Those evaluated as being of the highest level
expressed a clear logic that sustainability also
contributes to their business growth.

Of the references to the megatrends assessed as
properly identified, those by companies evaluated ashaving a passing grade in responses were well
documented in terms of references to trends that could
occur in the industry.
In addition, those evaluated as being of an excellent
level identified the megatrends in their industries, aswell as the priorities they were trying to exploit.
Furthermore, those evaluated as being of thehighest level identified megatrends from a uniqueperspective based on their own business.

How to write a vision that evokes growthpotential
Next, when we analyzed how to write a vision thatevokes growth potential, we found that the method of
writing evaluated as being of passing grade clearly
indicates the company’s role in the future society.

60

Chapter 4 Direction of Information Disclosure by Companies Promoting Society 5.0

Specific case studies and initiatives

It will also be important for companies to disclose
specific initiatives to realize Society 5.0.

Diversity/inclusion
The companies promoting Society 5.0 are creating
an environment in which human resources canactively work regardless of nationality, age, or genderin order to respond flexibly to various changes in theworld and continue to create new value.

We have just described the contents of the longterm vision and trends evaluated by investors. The
following is a summary of the activities required now
based on various materials.

Strong innovation ecosystem

Evaluation and management system forcreative work

The companies promoting Society 5.0 are building astrong innovation ecosystem that connects organicallyand autonomously with a variety of stakeholders,
including affiliated companies, university and research
institutions, investors, private NPOs, foundations, andpublic institutions to collaborate on innovation
creation.

The companies promoting Society 5.0 not only
manage the progress of routine work, but also create asystem of added value-based management for creative
work to maximize individual creativity.

Leading the way in solving global issues
through business

Collaboration with start-ups
The companies promoting Society 5.0 are working
with start-ups with innovative technologies, businessmodels, and mobility in complementary and mutually
beneficial ways to create innovations that lead to new
businesses and industries in order to make the most of
their resources.

Anticipating the future sustainable society, thecompanies promoting Society 5.0 are helping toachieve a sustainable society both at home and abroadby taking the lead in solving global and domestic
issues.

Creating an organizational environment
to take on a challenge

The companies promoting Society 5.0 are taking on
the challenge of climate change, which particularly
requires the solidarity of the international community.
For example, against the backdrop of the Keidanren’s“Challenge Zero” Initiative, Japan is taking on thechallenge of creating innovation toward the realizationof a carbon-free society.

Promotion of “Challenge Zero” Initiative

We are delegating authority, responsibility andresources to the younger generation, and through it weare creating an environment to create new businessand value by encouraging bold challenges anddeveloping practical human resources.

Active cooperation with diverse
stakeholders

For example, it is possible to establish a “Dejima”(this was a Dutch trading post in Nagasaki, Japanthat was the only trading post for the West during theEdo period; it refers here to a platform to support
overseas expansion) in which decision-making andevaluation systems are separated from the company
itself.

The companies promoting Society 5.0 understandthat their corporate value comes from relationships oftrust with a variety of stakeholders and are actively
working with them.

Proactive governance
Based on the Corporate Governance Code, thecompanies promoting Society 5.0 have established themost appropriate proactive governance structure todrive innovation.

61

Accelerating information disclosure for Society 5.0
Further evolution of information disclosure anddevelopment of guidelines for Society 5.0

to formulate a vision for medium- to long-term growththat will contribute to the realization of Society 5.0.
One possible approach would be to form an
ambitious vision in cooperation with universities withcomprehensive knowledge from a medium- to longterm perspective.

In order to advance the investment in Society 5.0, it
is necessary to consider the establishment of disclosure
guidelines which show that the company promotes
Society 5.0, referring to the result of this report andother materials.

It is also important to promote information
collaboration among companies, such as by holding
symposiums on long-term visions, in order toformulate better visions.

Promoting the formulation of a vision forSociety 5.0
Based on the three key points of the long-term
vision presented in this report, companies are required

Box 4.2: A wide range of standards for non-financial information disclosure
Japanese and overseas disclosure standards
for non-financial information vary widely,increasing the disclosure burden on companies.

Mapping of domestic and overseas ESG information
disclosure standards, etc.
Mapping of domestic and overseas ESG information disclosure standards, etc.
Unique and proprietary information fromcompanies
Unique and proprietary informationfrom companies(→ understanding
Useful to deepenof(→ Useful to deepenof understanding
individual companies)
individual companies)

International <IR> Framework
International <IR> Framework
GuidanceforCollaborative
Value
Creation Value Creation
Guidance forCollaborative
TCFD Final TCFD
ReportFinal Report
Annual securities report
Annual securities report(non-financial
items)(non-financial
items)

Information
theeconomic,
Informationonon
theeconomic,
environmental,
environmental,and
andsocialsocialimpactimpactofofcompanies
companies

Environmental Reporting
Guidelines 2018
Environmental Reporting
Guidelines 2018
GRI Standards
GRI Standards

Information
relatedto totheInformation
relatedtheimpact
impact on
on the company’s
the company’soperating
operating results
condition
results andandfinancial
financialcondition

Corporate governanceCorporatereport report
governance
SASB standards
SASB standards

As international guidelines, the International<IR> Framework, the GRI Standards, the SASB
standards, and the TCFD final recommendations
are well known, while in Japan the “Guidance forCollaborative Value Creation,” among others, iswell known.
Standards such as the GRI and SASB
standards have items that can be comparedamong multiple companies. For this reason, ESG
rating companies refer to these items for ESG
scores.
On the other hand, the IIRC framework and
the Guidance for Collaborative Value Creation
do not provide guidelines for comparable
information, but provide guidelines on how to
describe and express information when
individual companies disclose information.

Standardized information→ (Quantification:
excellentin scoring
Standardized
informationand comparability)→ (Quantification: excellent inscoring
andInformationcomparability)(Source) Nissay Asset Management (2019): “Studyof ESG
Disclosure”(Source) Nissay Asset Management (2019): “Study of ESG Information Disclosure”

Rating agency B

Rating agency C

Investor A

Investor B

Consensus

Now

Rating agency A

Desirable form

Box 4.3: Creating ESG standards that create a sense of unity

Investor C

There are too many different standards.

Unified standards

Investors are passive participants

Investors are actively involved

Made by someone else, so can beused for negative checks only

Includes your own views and can be used
for positive investment decisions

Given the diversity of disclosure criteria
for non-financial information, it is desirable
to develop comprehensive evaluation items
for non-financial information by ESG
investors.
In the ESG disclosure standards, it will beeasier to reach a consensus on items that canbe specifically compared by multiple
companies through the GRI, SASB, ISO andother standards (e.g., a negative checklist,
which means the minimum standards acompany must adhere to ethically).

On the other hand, it is difficult to standardize the content of future financial information that captures themedium- to long-term growth potential of a company, such as long-term vision, because investors havedifferent viewpoints for evaluating such information. The IIRC framework and the Guidance for Collaborative
Value Creation do not provide content, but rather guidelines on how to write to inform investors.
Against this backdrop, this report is a new attempt to clarify what points in future financial information
investors will respond to and have expectations for growth by using natural language processing technologies.

62

Box 4.4: Examples of excellent description methods
We consider sustainability to be the most important global issue of the 21st
century.
Behind this, an interlinked web of global issues, such as population growth, theaging of society, climate change, water shortages and resource depletion, are posing
ever-graver problems.
Since its founding, the Company has always believed that materials can change
lives, true to the fundamental corporate principle of contributing to society. At theGroup, we make it our mission to deliver innovative technologies and advanced
materials that provide real solutions to the challenges the world faces while balancing
development and sustainability.
We are convinced that we can continue to grow without negatively impacting global
sustainability. By delivering on our corporate philosophy of “contributing to society
through the creation of new value with innovative ideas, technologies and products,”
we will do our utmost to address global issues, including the goals of the Paris
Agreement and the United Nations Sustainable Development Goals (SDGs), whileworking closely with our business partners worldwide.
[A Better World the Group Aims for in 2050](1) A net zero emissions world, where greenhouse gas emissions are completely
offset by absorption(2) A world where resources are sustainably managed(3) A world with a restored natural environment, with clean water and air for
everyone(4) A world where everyone enjoys good health and hygiene
Commitments for 2030 (Base year: FY2013)■Supply 4 times more Green Innovation products (products that help to solve
issues related to the global environment, resources, and energy)
This will cut eight times more CO2 emissions from the value chain.

Understanding
megatrends +prioritizing

Superiority ofbusiness andtechnology
Link businessgrowth andproblem-solving

Concretely
describe the future
vision and theprocess
Uniqueness ofsetting numericaltargets for social
impactBox 4.5: Building a joint corporate and university vision for the future*

Photo: President of the University of Tokyo Gonokami (left), Chairman of Hitachi, Ltd. Nakanishi (right) from H-UTokyo Lab.
website. Photo taken at opening ceremony on August 3, 2016.

The results of this joint study suggest elements of the vision that causes investors to expect future
potential. In the future, companies will be required to formulate a vision for medium- to long-term growth
based on these elements.
In doing so, it is considered necessary to utilize a university which considers the future society from a
medium- to long-term viewpoint. This is an initiative that draws a picture of the sustainable growth of acompany by fusing the contact points with society and experience of the company and the university’s midto long-term perspective and knowledge of technologies that will be the core of the company’s growth in the
future. Specific examples include “H-UTokyo Lab.” by Hitachi, Ltd. and the University of Tokyo, and thecreation of industry–academia collaboration for making air more valuable by Daikin Industries, Ltd. andthe University of Tokyo.

63

5.
Improvement of the Investment
Environment

Summary
In order to promote investment
toward “realization of Society 5.0,” itis essential for companies, investors
and financial institutions, universities,
research institutions and rating
agencies, and the government toimprove the investment environment.
As the investment environment
improves, it is expected that various
stakeholders will participate ininvesting in Society 5.0.

dialoguewithcompanies
andincorporate Society 5.0 into theirinvestment strategies and principles.
In addition, the government should
establish the Society 5.0 for SDGs
Realization Conference and work hardto achieve Society 5.0.
In order to promote investment inuniversities, it is necessary toorganize and disseminate informationon university technology and researchfrom the viewpoint of Society 5.0, andto formulate a joint vision between
industry and academia. In order topromote investment in start-ups, it isnecessary to promote understandingof the social significance of start-ups
and to establish CVC and “Dejima.”

This chapter presents specificrecommendations for improving theinvestment
environment.
First,
fundraisers (companies) are expected
to establish management strategies
that incorporate the realization ofSociety 5.0 into their growth, promote
innovation,anddisseminate
information externally, including toinvestors.

In addition, as concrete ideas forthe investment method (indices, etc.)
on Society 5.0, this chapter proposes
an index utilizing megatrends, anintegrated operation of DX index and
ESG index, and the like.

At the same time, fund providers(investors and financial institutions)are expected to engage in constructive

64

“Society 5.0 is an ambitious attempt to change
our daily lives, regenerate Japan, andultimately achieve the SDGs by creating asociety that serves as a model for the world.
From this viewpoint, we are determined toachieve success.”
HIBINO Takashi,
Vice Chair of the Board of Councillors/Chair of theCommittee on Financial and Capital Markets, Keidanren(Chairman of the Board, Daiwa Securities Group Inc.)“It is important that the ESG and SDGs reports
clearly state the role of start-ups. I hope that if
many people understand the social significanceof start-ups, it will lead to the advancement ofstart-ups in the future.”
TAKAHASHI Makoto,
Chair, Committee on Startups, Keidanren(President, KDDI CORPORATION)“We need to shift the reach of Society 5.0 tosociety as a whole, and the report should also
serve as a banner for creating social
momentum to achieve it together, rather thanconfining it to something shared only bycompanies.”
Fujiwara Kiichi,
Director, Institute for Future Initiatives,
the University of Tokyo“Society 5.0 represents a clear business
opportunity for SDGs, because it is based ontechnology and business. I think that if it iscommunicated well, ESG investors will be able
to invest easily.”
MIZUNO Hiromichi,
Executive Managing Director and CIO,
GPIF

65

Chapter 5: Improvement of the Investment Environment (Overview)
Purpose

Provide specific recommendations for the environment needed toinvest in Society 5.0

Efforts required of each player to improve the investment environment
・Fundraisers (companies)

・Cooperation between fundraisers andfund providers→Promotion of disclosure of information
on Society 5.0, acceleration of
initiatives for Society 5.0 for SDGs bybusinesses, etc.

→Developing guidelines for corporate
information disclosure and investor
investment decisions

・Universities

・Fund providers (investors and financial
institutions)→Examination of impact assessment
methods→ Incorporate Society 5.0 into theinvestment principles, promote
engagement, launch investor
initiatives, and develop indices・Governments and internationalorganization→Establishment of the Society 5.0
Realization Conference

Promoting investment in universities and start-ups
・Toward promoting investment in universities→ Identification of technologies that will contribute to Society 5.0, expansion of theprovision of information on such technologies, formation of a joint vision between
companies and universities, etc. (further promotion of industry–academia joint
research)・Toward accelerating investment in start-ups→Dissemination of their social significance, establishment of CVC, establishment of
Dejima, expansion of matching opportunities with overseas VC, etc.

Formation of investment methods (indices, etc.)
・Index utilizing megatrends
・Integrated operation of DX index and ESG index
・Fund to solve issues through next-generation technology

66

Examples of Initiatives to Improve the Investment
Environment for Society 5.0
Overview of roles required for each player
Banks, institutional
investors, etc.

Financial and capital
markets

Large
corporations
SMEs
Universities

Charitable organizations

Local
governments,
etc.

Fund providers

Fundraisers

Citizens/millennials

Start-ups, etc.
Government/public institutions

Roles of fundraisers••••

Accelerating innovation and R&D
Promotion of initiatives of Society 5.0 for SDGs
Promotion of understanding within thecompany
Communication through the integrated report

Roles of fund providers
•
•
•
•
•

Recognition and understanding of Society 5.0
Incorporating Society 5.0 into the investment principles
Engagement
Promotion of investor initiatives
Formation of investment methods (indices) for Society 5.0

Cooperation between companies and investors• Disclosure of information on Society 5.0 by companies and development ofinvestment decision guidelines for investors

Specific roles of other players in improving the investment environment
Universities, research institutions, and rating
Government
agencies• Establishment of the Society 5.0 Realization• Research on methods of measuring andConference
evaluating the actual social impacts of• Creation of incentive mechanisms and award
products, services, projects, technologies,
systems for companies promoting Society 5.0
etc. related to Society 5.0• Identifying Society 5.0 for SDGs/Green...And others
Budget and issuing government bonds

Role of each player in improving the investment environment to realize
Society 5.0
Facilitating investments for the realization of Society 5.0 requires efforts by fundraisers andfund providers, as well as efforts by the government and other players to improve financial andcapital markets. Here are some examples of the efforts required of each player.

67

Chapter 5 Improvement of the Investment Environment

Fundraisers (companies)
Accelerating innovation and R&D

Publication of the integrated report andcommunication

To realize Society 5.0, companies must aggressively
accelerate R&D and innovation in the medium to longterm.

As analyzed in Chapter 2, Society 5.0 can facilitate
constructive dialogue between companies andinvestors on medium- to long-term management
strategies.

Promotion of activities of Society 5.0
In addition to R&D, companies will also be required
to implement various reforms to realize Society 5.0 for
SDGs. Examples of specific actions can be found in theCharter of Corporate Behavior, the Society 5.0
Comprehensive Recommendation, and “Specific casestudies and initiatives” in Chapter 4 of this report.
Companies should refer to these materials and devise
ways in response to their own circumstances.

Therefore, companies are required to actively
disclose their efforts to realize Society 5.0 by utilizing
the integration report and the like.
For example, a company may make a commitment
to Society 5.0, and describe in an integrated report andthe like its contribution to solving problems throughits business in connection with its own value-creation
story, taking into account Society 5.0. It may also
indicate related opportunities, risks, and actions to betaken, establish KPIs, explain progress, and engage inconstructive dialogue with various stakeholders basedon the disclosed information.

Promotion of understanding within thecompany
Top management and executives of companies
should understand the economic and social importanceof Society 5.0. Then, under the leadership of top
management and executives, it is necessary to ensurethat all employees understand the importance ofSociety 5.0 and take concrete steps to realize it.

In addition to identifying projects related to Society
5.0, it is also a possible idea to establish an in-housecertification and award system for Society 5.0, such as
the in-house SDGs certification system, to promote inhouse activities.

Box 5.1: Inclusion of Society 5.0 in integrated reports, etc.
A growing number of companies,
especially advanced ones, arelinking their activities to Society 5.0.
For example, Hitachi, Ltd.
explains and cites Society 5.0 in its
medium-term management plan andspecial webpage.

(Source) Hitachi, Ltd. website(Source) ANA’s “Annual
Report 2019”

In its annual report, the ANAGroup presents examples of what it
calls the “ANA Group Version ofSociety 5.0” including smarter
airport operation.

Box 5.2: Disclosure of impacts in “Innovation for SDGs”

Preventing malaria in 100 million
people, creating 7,000 local jobs inAfrica70% reduction in CO2 emissions(compared to 1990 levels)

Reduce CO2 emissions in Japan by
3.6 million tons per year

Crime rate falls 27% in Surat, India

Keidanren’s “Innovation for SDGs,” a case study
collection of corporate efforts to achieve SDGs, includes
quantitative descriptions of the economic and social
impacts of such efforts.
Specifically, the companies calculate concrete impact
figures using in-house indicators such as the amount of
reduction of CO2 emissions, the number of local jobs
created, and the introduction rate, and indicate theusefulness of products and services.

68

Fund providers (investors and financial institutions)
Recognition and understanding ofSociety 5.0

engagement based on the knowledge of investors andfinancial institutions are important.

Fund providers are expected to recognize andunderstand that Society 5.0 is a concept of medium- tolong-term value creation which aims at both mediumto long-term value improvement and problem-solving.

In particular, a more meaningful dialogue will bepossible by discussing the value that companies should
create in the future and the risks they should address
under the theme of realizing Society 5.0, which aims toincrease corporate value over the medium to long term.

Commitment to realizing Society 5.0

Promotion of initiatives by investors andfinancial institutions

It is important for them to demonstrate a strong
commitment to the realization of Society 5.0 bydemonstrating internally and externally that Society
5.0 (for SDGs) is included in their ESG investment.

Considering Society 5.0 as an initiative to realize asustainable society in the future, it is conceivable thatinvestors and financial institutions who support it will
work together for its realization.

Incorporating Society 5.0 into theinvestment principles

Development of investment methods(indices, etc.)

Furthermore, in order to promote investments torealize Society 5.0, they are required to clearly state in
the investment principles “Society 5.0 for SDGs” thataims to increase corporate value over the medium tolong term, and to actively invest in companies that tackle
issues through innovation and digital transformation.

In order to expand investment in companies
promoting Society 5.0, it is necessary to establish an
evaluation axis, create an award system, and develop
and manage indices that lead to investment incompanies promoting Society 5.0, in order to makesuch group of companies as clear as possible.

Engagement with companies promoting
Society 5.0
In order to realize Society 5.0, not only providing
investment funds but also constructive dialogue andBox 5.3: GPIF’s Investment Principles, Stewardship Principles, etc.
Increase medium- to long-term investment returns for the insured through avariety of stewardship initiatives (including the consideration of ESG
factors) Investment Principles.

Stewardship Principles(4) ESG Integration into the Investment Process
 GPIF believes that it is vital to integrate environmental, social andgovernance (ESG) factors into the investment process to increase corporate
value and promote the sustainable growth of investee companies and thecapital market as a whole, thereby contributing to long-term investment
returns. Asset managers should consider the materiality of ESG issues in
relevant sectors and the circumstances of individual investees and deal withthose factors accordingly.
 Asset managers should determine which ESG issues they deem to be
critical, specify goals that they would like to achieve as a long-term
investor, and proactively engage with investee companies on these issues.
 Asset managers should become signatories of the Principles for
Responsible Investment (PRI), and participate in other industry ESG
initiatives.

Box 5.4: ESG Investment Initiative

In proceeding with ESG investments, the GPIF
includes “ESG Integration” in its “Investment
Principles” as well as “Stewardship Principles,” thebasic principles of engagement with externalfinancial institutions entrusted with investment.
In addition, as a new initiative, it has adopted the“ESG index” for equities and has begun passive asset
management linked to it. This is “positive screening”
that incorporates stocks with high ratings according
to the standards established by index companies
from the ESG’s point of view, and increases thepercentage of such stocks that are incorporated.
Through these activities, the GPIF aims toincrease corporate value over the medium to longterm and improve the interests of the insured.

Various ESG investment initiatives have been established topromote ESG investment.
The United Nations Principles for Responsible Investment (PRI), forexample, require ESG-conscious investment from investors. There areabout 2,400 signatory investors around the world, and they represent
approximately 6,600 trillion dollars in total assets under management.
Climate Action 100+ and TCFD promote constructive dialogue andcorporate information disclosure on climate change and environmental
issues.
The 30% Club in the UK and Thirty Percent Coalition are initiatives
that seek to increase corporate value by increasing the proportion of
women on the board.

69

Chapter 5 Improvement of the Investment Environment

Fundraisers and fund providers
Development of information disclosure guidelines for Society 5.0
To encourage a constructive dialogue between companies and investors to realize Society 5.0, companies andinvestors could work together to develop information disclosure guidelines for Society 5.0.

Universities, research institutions, and rating agencies
Academic research on impact assessment
Universities are expected to deepen their research on methods to measure and evaluate the actual social impact
of products, services, projects and technologies for Society 5.0 (for SDGs).

Governments and international organizations
Establishment of the Society 5.0 for
SDGs Realization Conference

Raising awareness among individual
investors

In order to demonstrate at home and abroad thatthe government is strongly promoting the realizationof Society 5.0 for SDGs, it is conceivable that the“Society 5.0 for SDGs Realization Conference” will beestablished, taking into account the current bodies ofcouncils and the like, to discuss and advance crosssectoral policies toward the realization of futuresociety.

The realization of Society 5.0 for SDGs will require
not only a change in mindset among large asset
owners, but also raising awareness among individual
investors. Therefore, it is necessary for thegovernment to take the lead in promoting financial
education for the realization of Society 5.0 for SDGs.
For example, with the cooperation of influential
individual investors, it is possible to gain
understanding and response by discussing issues suchas “How to design future society in the era of Society
5.0.”

Creation of an incentive mechanism
The government could offer tax incentives andsubsidies to organizations working to realize Society
5.0 for SDGs, and give preferential treatment toSociety 5.0-eligible projects.

Developing a platform for matching
fundraisers and fund providers

Identifying Society 5.0 for SDGs/Green
Budget and issuing (super-long-term)
government bonds

With the government taking the lead, there needs
to be a matching platform between fundraisers(companies, universities, R&D institutions, etc.) andfund providers (investors and financial institutions) torealize Society 5.0.

In its budget, the government may identify projects
that lead to Society 5.0 for SDGs and issue
government bonds to finance them under a name suchas “Society 5.0 for SDGs Government Bonds” or“Society 5.0 for SDGs Green Government Bonds.”

Creation of an award system forcompanies and projects promoting
Society 5.0

Formation of blended finance

It is necessary to establish a system in which thegovernment and others proactively evaluate companies
and projects working to realize Society 5.0 as well as
the development and utilization of innovativetechnologies, including incorporating Society 5.0 in theselection of companies to receive the Japan SDGs
Award.

Government and international organizations are
required to promote the formation of blended financein order to realize Society 5.0 for SDGs in developing
countries.

70Box 5.5: Investors with diverse risk preferences and their involvement
ImpactTargetSociety 5.0 for SDGs
Investment Group (highreturn, high impact)

ReturnImpactRisk

Traditional investors (banks,
institutional investors, etc.)

Venture capital
Individual investors
Social investors
ReturnGovernments, etc. (growthstrategy)

Philanthropists
Governments, etc. (social policy)
Return(Material) Prepared by Keidanren Secretariat based on PRI, “Portfolio construction and investment
decision-making”(Material) Prepared by Keidanren Secretariat based on materials by NAKA
Hiroshi, Professor, the University of Tokyo

Companies and others contributing to the realization of Society 5.0 for SDGs (“Society 5.0 for SDGs Investment Group”)
are considered to bring about a high return (economic impact) and a large social impact (social impact) in the medium tolong term, according to the questionnaire survey on companies and investors, the results of estimates, and the like. Thus,
Society 5.0 for SDGs Investment Group appears to be in the positive return (+) and positive impact (+) category shown
above.
On the other hand, the degree of positive return and positive impact may vary depending on the risk. In particular, therealization of Society 5.0 for SDGs may result in a positive return in the medium to long term but a negative return in the
short term in some instances, such as the social implementation of innovative technologies in developing countries.
Therefore, in order to realize Society 5.0 for SDGs, it is important to involve a wide range of fund providers with various risk
preferences.
It is also necessary to improve the investment environment in line with the conditions and interests of such fundproviders.

Box 5.6: Investors’ steps towards realizing Society 5.0 for SDGs
Understanding by investors
Establishment of targets and policies by investors

Action and monitoring among investors+ Business circles+ Government+ Academia+ NGOs+ Consumers+ Citizens+ Media

Collaboration with financial world
Collaboration with diverse stakeholders
Achievement of Society 5.0 for SDGs

Investors may take the following steps
toward realizing Society 5.0 for SDGs.
1. Understanding:Investors
understandsignificance of Society 5.0 for SDGs.

the

2. Setting goals and policies: Investors set goals andpolicies to achieve Society 5.0 for SDGs.
3. Action and monitoring (investors): Investors will
invest in Society 5.0 for SDGs to maximize positiveand reduce negative impacts on the economy andsociety.
4. Action and monitoring (financial world): Investors
extend the initiatives in 3 to the financial sector as awhole.
5. Action and monitoring (society): Investors extend theefforts in 3 to a variety of stakeholders.

Box 5.7: Budget and government bonds for Society 5.0 for SDGs
Identify the Society 5.0
for SDGs Budget

Identify key
initiatives coveredby the Society 5.0
for SDGs Budget

Pilot issuance ofSociety 5.0 for SDGs
Government Bonds

Application and development

More and more green bonds are being issued not only by corporations but also by
governments and local governments around the world, and have already been issued bymore than 10 countries including Poland, France, Fiji, Nigeria, and Indonesia. Suchgovernment bonds with a clearly defined use would expand public understanding and,in some cases, the range of investors.
For example, the budget relating to Society 5.0 for SDGs can be classified as the“Society 5.0 for SDGs Budget” and identified according to issues such as environment
and education as “Society 5.0 for SDGs Education Budget” and “Society 5.0 for SDGs
Green Budget.”Issuing “Society 5.0 for SDGs Government Bonds” in accordance with theaforementioned budget is expected to expand social understanding and broaden therange of investors, even if it is small in amount at first, while taking into accountvarious merits and demerits.

71

Chapter 5 Improvement of the Investment Environment

Examples for the Promotion of Investment in Universities
and Start-Ups
Players that need special funding to realize Society 5.0
ReturnNeed to promote universities, start-ups,
and R&D

Particularly underfunded areas torealize Society 5.0 for SDGs

One of the key players in the Innovation Ecosystem
leading to Society 5.0 is universities, start-ups, andR&D-driven companies that seek to develop andimplement innovative technologies from a medium- tolong-term perspective. In addition, these companies
tend to be relatively underfunded, so financial support
is particularly essential.

Universities,
start-ups, R&Ddriven
companies, etc.
Large
corporations

Risk

Toward promoting investment in universities
universities and their medium- to long-term
perspectives, while universities are required tounderstand the organizational structures andeconomic activities of companies.

Role of universities in realizing Society 5.0
As described in Chapter 1, universities are required
to provide cutting-edge knowledge, technology, andhuman resources within the ecosystem, to play aleading role in fostering cutting-edge innovation while
collaborating with other stakeholders, and to lead aparadigm shift to a new model of a knowledgeintensive society through research into the socioeconomic system that supports Society 5.0.

Promotion of joint research bycompanies, universities, investors, andthe like
After forming a joint vision, it is necessary to
promote joint research in order to achieve concreteinnovation toward the realization of that vision. In
doing so, it is important to actively utilize the humanresources, knowledge, goods, funds, and the like,possessed by companies and investors.

In order to promote investment in universities,
which are the main players in realizing Society 5.0,
universities, companies, and investors are required totake the following actions.

Organize technologies from theperspective of Society 5.0/SDGs

Promotion of personnel exchange
In order to promote a joint vision and joint research,
it is a prerequisite for companies and others to
exchange human resources with each other tomutually incorporate viewpoints and knowledge.

First, universities are required to organize andactively disseminate information on leading-edge
technologies that will contribute to the realization ofSociety 5.0/SDGs in order to establish partnerships
with companies and investors.

In addition, both companies and universities are
required to actively engage in each other’s humanresources in business and research and development,in order to go beyond mere formal human resource
exchanges, and to treat their own human resources
based on the experience of personnel exchanges andthe results achieved during the personnel exchange
period.

Forming a joint vision between
companies and universities
It is effective for companies and universities to forma medium- to long-term joint vision for the realizationof Society 5.0. This will enable companies anduniversities to share the same goals, create novel anddisruptive innovations to achieve them, and develop
understanding and support for the basic researchrequired in the process.
For mutual cooperation, companies are required tounderstandthe
cutting-edge
technologiesof72Box 5.8: Current status and challenges of promoting industry–academia
collaboration to utilize the knowledge and technology of the University of Tokyo
Promotion of industry–academia collaboration to utilize the knowledge and technologyof the University of Tokyo: current status and issues
Information
provision andnetworking
UTokyo and Companies
discuss joint vision for
the future (questions toanswer)UTokyo offers
questions to answer
and platform forcollaborative creation
Transfer of UTokyo’s
knowledge andtechnology to theprivate sector• University
Corporate
Relations
Network• Consortium/science technology salon• Industry–academia collaboration agreementwith Daikin Industries and Softbank• H-UTokyo Lab.
• System Design Lab (d. lab: design ofspecialized semiconductor chips)• UTokyo UCR-Proposal• FPIS-TLO• TODAI TLO (technology transfer
incorporating the SDGs perspective)

The University of Tokyo is working
topromoteindustry–academia
collaboration from the following six
perspectives: “information provision(1) Increase Daikin-type agreements (joint research
between organizations rather than between laboratories and networking,” “building a joint
and organizations)vision with companies, “provision of(2) Conversion of the business of Japanese companies toan “expected value-oriented business” based on a long- collaboration platform,” “transfer ofterm vision (promotion of use of integrated reports)knowledge and technology to the
Platform growth
private sector,” “carving out of
URA (The University of Tokyo
university knowledge and humanAccelerate the
Research Administrators): life-cycle
increase of URA
resources,” and “carving out of private
management of joint research
projects
staff
sector personnel and technology.”
Jointresearch/contr
act research

Creating start-ups through collaboration between theuniversity (UTokyo) and private companies under a newframework (review of the Act on Research andDevelopment Partnership concerning Mining andManufacturing Technology)

Carving out UTokyo’s(1) Consideration of mobilizing institutional• UTEC
human resources andinvestors’ fund
• UTokyo IPC
technology: UTokyo(2) Consideration of measures to promote M&A• Incubation facilities
related ventures
by Japanese companies as an exit
Carving out dormant
Areas where private financing is difficult: basic researchhuman resources and(1) Response with long-term, low-interest loans• Carve-out fund (under consideration)technologies in the(2) UTokyo Foundation: increase donations by graduates,
private sector
etc.
Supporting cross-border deployment of SDGs
(1) Cooperation agreement with JICA (feasibility study on business continuity by venture companies after TA)(2) Partnership agreement with JETRO (supporting inbound and outbound expansion of ventures)

For example, in order to carve out
the talent and technology of the
University of Tokyo, the university
approved “UTEC,” a venture capitalwhich invests in excellent start-ups,
asatechnology-transfer-related
business operator.

(Source) The University of Tokyo

Toward accelerating investment in start-ups
Role of start-ups

Haveyouyou
invested
start-ups
withinESG
investment
framework?
Q:Q:Have
invested
in instart-ups
withinthetheESG
investment
framework?

10%
0%

30%

Possibility of investment in start-ups as part of ESG investment
Possibility of investment in start-ups as part of ESG investment
Yes

Start-ups have lofty visions and ambitious ideas, aswell as the enthusiasm, innovation, and mobility tomake them happen. They are required to make themost of their capabilities for success in the innovation
ecosystem.

60%
100%

No, but it is planned to be
There are no plans to consider
YesNo, but it is plannedconsidered
to be considered
There are no plans to consider

Q: Why is the ratio of institutional investors’ investment to VC funds low in Japan?

Challenges in promoting start-up
investment in Japan

Q: Why is the ratio of institutional investors’ investment to VC funds low in Japan?

23%

52%

3%

Investors’ insight is an issue

0%

Investors’ insight is an issueStart-up investments are riskyStart-upalreadyinvestmentsearned
are risky sufficientHave
returns
Have already earned sufficient returns

100%

Here, based on the questionnaire survey oncompanies and investors, we explore issues to promote
investment in Japanese start-ups.

Lack of insight into start-ups
Lack of insight into start-ups
Other
Other

First of all, many start-ups are trying to solve social
problems and play a major role in realizing Society 5.0.
The survey indicates that 40% may invest in start-ups
as part of their ESG investment, and it is expectedthat “evolution of ESG” will increase investments instart-ups as well.

Q: Why is the proportion of foreign investment in Japanese start-ups low?
Q: Why is the proportion of foreign investment in Japanese start-ups low?
16%
24%
51%
0%

is important
start-ups
enhancetheir“attractivenessinvestmentdestination”
destination”
It isItimportantfor forstart-ups
to toenhancetheir“attractivenessasasananinvestment
IR activities are limited to JapanIR activities are limited to Japan
Lack of start-ups to justify investment
Lack of start-ups to justify investment

100%

activities
conducted
in languages
IRIR
activities
arearenotnotconducted
in languages
other than Japaneseother than Japanese

Other

Other

The lack of insight into start-ups was also cited as areason for the lack of institutional investors investing
in VC funds in Japan.

Challenges for start-ups•••

Limited number of promising start-ups that can dobusiness on a global scale compared to the U.S.
Low return on risk
Lack of information dissemination in English

In addition, about half of the Japanese VC funds
received less than 1% foreign investment because
there are not enough start-ups to match theirinvestment.

Challenges for investors••••

Investors’ short-term orientation and lack of experience
Asset owners’ preference for listed stocks, low needs
Domestic VCs are small
Universities and foundations must have the momentum
to invest in VC

In order to promote investment in Japanese startups, both start-ups and investors need to work
together.

Other challenges•••

Japanese society is indifferent to heresy and risk-taking
Requirements for preferential tax treatment should berelaxed and preferential treatment expanded
No information-intensive communities like the U.S. or
China

73

Chapter 5 Improvement of the Investment Environment

Based on these challenges, next we present someconcrete plans to promote investment in start-ups in
the future.

up a corporate venture capital (CVC), it will consider
whether the start-up’s business will contribute toSociety 5.0 for SDGs.

Understanding and communicating thesocial significance of start-ups

It is also important for large companies to workwith start-ups to expand their own business domains.

Rather than focusing only on the short-term risks ofstart-ups, it is necessary for investors to understandthe social significance of driving medium- to long-term
growth by solving issues with new approaches, and it
is also required to instill such understanding
throughout society.

It is also effective to bring together talented people
with a start-up spirit, separate decision-making andevaluation systems from the company itself, andestablish Dejima as an independent organization
separated physically. Active support will be provided
by the company while allowing “Dejima” projects tocompete with its existing businesses.

Venture ecosystem centered onuniversities

Information dissemination from start-ups
Start-ups and unlisted SMEs need to communicate
more financial and non-financial information toinvestors. In addition to Japanese, information
dissemination in multiple languages including English
is also important.

In order to maximize the utilization of start-ups,
which are key to realizing Society 5.0, it is necessary tocreate a “venture ecosystem” that focuses ondeveloping a sound cycle of people, money, andknowledge (intellectual property) between universities,
industry, financial institutions, and start-ups as a newmodel of university-centered industry–academia
collaboration. For example, it is necessary to foster
investment funds for spin-offs and carve-outs fromlarge corporations, and to promote a mechanism that
supplies human resources to the local ecosystem incooperation with local universities and financial
institutions, and encourages establishment of joint
ventures between universities and corporations.

Utilization of private, public, PE, and VC
funds
In order to provide funds to start-ups, it isnecessary to actively utilize public and private funds,
private equity funds, venture capital, and the like,which have the most advanced technology and insight.

Forming a VC platform
In order for Japanese start-ups to growinternationally, they need to, for example, increase
opportunities to connect with overseas venture capital.

Establishment of CVC, and setting up of
Dejima by large companies
When a company decides to invest in a start-up andmake prepara tions for the investment, such as setting

Box 5.9: Companies working on open innovation
０
→１
0→1

１1→10
→１０

Advanced companies are promoting
innovation in their own unique ways.

１ 10→100０→１０For example, in order to realize open innovation,
KDDI has established a “Dejima function with athree-layer structure” consisting of (1) creation of new
businesses (0 → 1), (2) development of businesses (1→ 10), and (3) business expansion throughcooperation with the company’s main body. The
company is making efforts by setting KPIs for eachlevel.

KDDI

オープン
イ
ノベ
ーション
Open
innovation
部門
division

New business
新規ビジネス
development
開発組織
organization
金融

Finance

エンタメEntertainment

数十名

Ｋ ＤCorporation
ＤＩ本体
経営
Management

Commerceコ
マース

Dozens of people

Service
unit
サー
ビスユ
ニtype
ット型
Approx. 1,000 people
約1,000名

企画
Development

開発
Planning

営
業
Sales

open

C
S
CS

業
Main本
business
約20,000名
Approx.
20,000 people

Furthermore, in the area of (1) creation of new
businesses, it has deployed dozens of employees tomaximize the creation of added value throughcollaboration
betweenstart-ups
andlarge
companies.
In April 2018, KDDI established a new CVC,
aiming to invest 20 billion yen over 10 years ininnovative technology fields such as AI and the IoT,
and established the “KDDI Regional Initiatives Fund”
targeting regions with many challenges. KDDI is thus
working to collaborate with local companies, create
new added value, and build sustainable and inclusive
business models.

74

Examples of Investment Methods (Indices, etc.) for Society 5.0
Index utilizing megatrends
History of index
1 Market capitalization index
Indices for thewhole stock
market such as
TOPIX

2 Smart beta index

1 Market capitalization index

Indices composedby focusing on highdividends, high ROE,etc.

3 ESG index

4 Megatrend index

Indices reflecting
investment beliefs
in society

Indices based on
hypotheses of future
economic and social
structural change

2 Smart beta index

3 ESG index
4 Megatrend index (?)

Forward Looking (future-oriented)(Source) Prepared by the secretariat from MSCI’s material

History of index development

Next development: what is a megatrend
index?

Long-term
investment,
especiallypassivemanagement, is a way to acquire returns provided by
the market over the long term. Initially, an index forsuch management was designed as a “market
capitalization index” like TOPIX to obtain returns(equity premium) from stock price increases in theentire market.

In addition, an index utilizing megatrends is
considered as the next development of the index(“megatrend index” hereinafter).14
Like ESG, the megatrend index is an index basedon the future-oriented concept that companies
achieving growth in the future are those envisioning
and working toward the future of society.

Later, in order to achieve returns above the market
capitalization index, smart beta indices, which arecomposed of stocks focusing on specific factors, such as
return on equity (ROE) and dividends, emerged,
expanding the range of passive investment.
Representative smart beta indices include the “JPXNikkei Index 400” which focuses on ROE, and major
investors such as the GPIF purchase these stocks.

In other words, the megatrend index is an index
based on an idea that companies seizing various
structural changes in the future as an opportunity willachieve an increase in corporate value over the
medium to long term.

Index of capturing structural changes insociety as an opportunity

Common characteristics of these passive indicesinclude performance independent of investor skills,
low cost, and high transparency.

A specific method for selecting stocks for a
megatrend index is to first predict future structuralchanges and set them as “megatrends” (e.g.,demographic change, climate change, and disasterprevention). Next, a theme (e.g., next-generationenergy,smart
mobility,
andnext-generation
healthcare) that will grow under the megatrends is
identified, and stocks are selected under these themes.

Emergence of ESG index
In addition, the ESG index, which consists ofcompanies highly regarded from the ESG point of view,
appeared.
Internationally famous ESG indices include the
Dow Jones Sustainability Index (DJSI), MSCI ESG
Indexes, and the FTSE4Good Index Series. In addition
to improving stock prices, inclusion in these wellknown ESG indices is also expected to improve thecorporate brand.

14 MSCI’s

material notes that the usage cases of such index
have been increasing mainly in exchange traded funds (ETFs)
since around 2018.

75

Chapter 5 Improvement of the Investment Environment

Demographic change
Concentration in large
citiesExtension of healthy
life expectancy

Example ofSociety 5.0
for SDGs
index

Formation of a circular
economyIssues/changes

Technologies

Dangerous driving by the elderly

Automated driving

Labor shortage due to declining birthrate

Robots

Depopulation and weakening ofrural areas

Remote work technology

Shortage of doctors in rural areas

Telemedicine

Spread of dementia

Preventive medicine

Spread of lifestyle-related diseases

Data security

Resource shortage

Reuse of resources

Waste pollution

Waste disposal

Diversification ofworking styles

Decrease in-office working hours

Image recognition, speech
recognition, etc.

Pursuit of greater efficiency

Various sensor technologies

Diversification of culture

Increase in the number of foreigners

Translation technology

Safe and smart life byutilizing technology

Smart city/smart life

Clean energy

Energy shortages and risks

Climate change anddisaster prevention

Climate change

Climate projection

Disaster relief/response

Drone

index

has

the

(1) Businessdevelopment basedon people(2) Solving global
issues(3) Creating newmarkets

Organizational
structure to
realize a visionand promote DX

Addressed
appropriately
to ESG
challenges

Other

Society 5.0 can be viewed as a “megamegatrend” index built from multiple
mega-trend indices

Characteristics of the megatrend index
The megatrend
characteristics.

Good long-term
visionNatural language processing analysis

Megatrends

Company

Theme

Mega-megatrends

following

If we look at Society 5.0 for SDGs as a “megamegatrend” consisting of multiple megatrends, we canconstruct an index for Society 5.0 using multiple
megatrend indices.

Enables rule-based index management
By setting megatrends and themes based on them,companies can automatically select stocks based on
their business operations through natural language
processing.

The chart above illustrates the formation of anindex for Society 5.0 for SDGs based on the eight
megatrends identified in the questionnaire survey oncompanies and investors.

A single megatrend index is risky, but multiple
sets provide stable returns
In the megatrend index, for example, “demographic
change” is defined as a megatrend, and nextgeneration healthcare and new leisure experiences are
selected as themes based on the megatrend.

Furthermore, an index created by multiple
megatrends is expected to be less industry-specificthan a single megatrend index and to reduce activerisk.

Since these megatrend indices are based on
forecasts of future changes in economic and social
structures, they can also be considered as passive
investments based on the active risk of futureforecasts (quasi-active investment).

Various issues remain to be addressed in the actual
formulation of the index, such as how to determine thenumber of themes and whether the themes can be
agreed upon by both companies and investors.

Box 5.10: World Benchmarking Alliance’s “megatrend” index
An international initiative World Benchmarking Alliance,
launched in September 2018 with the participation of the United
Nations Foundation and the governments of the Netherlands, theUnited Kingdom, and Denmark, will develop sectoral SDGs impact
assessment indices for enterprise initiatives and make themavailable free of charge.
In developing the index, the WBA selects seven key areas forachieving a sustainable society and chooses companies that willcontribute to changes in these areas. First, the relevant companies
will be selected in January 2020, and the ranking will beannounced by 2023 after receiving feedback from the companies.

(Source) World Benchmarking AllianceThis WBA index development approach has a lot in common
with the concept of megatrend index formation introduced in thisjoint research, and we hope that it will be one of the suggestions for
future index formation of Society 5.0 for SDGs.

76

Integrated operation of DX index and ESG index
strategic and proactive IT investments that will utilize
IT to enhance corporate value and enhancecompetitiveness over the medium to long term.
Competitive IT Strategy Company Stocks are selectedby looking at 5 major items and asking about 40
questions, and the focus is mainly put on the
management process for improving corporate value.

Integrated operation of DX index and
ESG index
One possible way to develop an index for Society 5.0
is to integrate and operate the DX and ESG indices.
While various organizations have already developed
their ESG index, the DX index is still in the process ofdevelopment. Some examples are introduced here.

DX index

In addition, since 2019, in order to support efforts
toward DX that will contribute to strengthening
corporate competitiveness, the two bodies have beencollecting DX promotion best practices and selecting
and publishing the DX Grand Prix, which will serve asa reference for the DX index.

ESG index

DX Promotion Indices
And others

In addition to the “Competitive IT Strategy
Company Stocks,” the Ministry of Economy, Trade andIndustry has developed “DX Promotion Indices” toencourage companies’ digital management reform.
These indices are positioned as a self-diagnosis tool forcompanies to carry out management reforms, but they
can also be a management index for companies topromote DX, so they can be used as a reference for the
DX index.

And others

Digital transformation stocks
Since 2015, the Ministry of Economy, Trade andIndustry and the Tokyo Stock Exchange have selected
and announced the “Competitive IT Strategy Company
Stocks” (which will be renamed as “Digital
Transformation Stocks” or “DX Stocks” from 2020, andthe selection criteria will also be changed) to support

Utilization of funds
making the most of innovations such as digitaltransformation.” In doing so, it is conceivable topromote investment through a fund (an investment
fund and the investment trusts it provides) with a high“insight” (example: Box 5.11).

Fund to solve issues through nextgeneration technology
The realization of Society 5.0 will require theproper selection of companies promoting Society 5.0, in
other words, “companies that seek to solve problems by

Box 5.11: Investment in innovative technologies and ventures aspart of ESG investments
Some financial institutions are investing in innovative technologies
and ventures as part of their ESG investments.
For example, Amundi Asset Management has created an investment
trust “Mirai Medical” to invest in next-generation medical technology
companies in response to the megatrend of aging in developed countries.
Furthermore, by explicitly showing that this investment trust willcontribute to achieving SDG 3: Good health and well-being, the company
is disseminating information that encourages investors to achieve SDGs
through innovation.
Photo courtesy of Integral Geometry Science

Dai-ichi Life invested in Integral
Geometry Science, a Kobe Universityoriginated venture that is developing theworld’s first high-precision breast cancer
visualizing system.

As part of its ESG investment, Dai-ichi Life has been making impact
investments (an investment method that aims to achieve both investment
income and social impact) since 2017, focusing on investments in venturecompanies that develop innovative technologies to solve social issues.
Specifically, it is investing in companies that are developing newgeneration biomaterials and treatment apps, smart childcare using theInternet of Things, and InsurTech.

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Conclusion*Photo: GPIF President Takahashi (left), Keidanren Chairman Nakanishi (middle), and the University of Tokyo President
Gonokami (right) (March 26, 2020)

The key message of this report “Evolve ESG Investment and Connect It to Society 5.0 to
Achieve SDGs Swiftly and Reliably” requires further research and behavioral evolution.
Based on this recognition, Keidanren, the University of Tokyo and the GPIF present an
action plan to be taken by the three parties in the future.

Joint Research Task Force
Keidanren: KUNIBE Takeshi, Vice Chair/Chair, Committee on Financial and Capital Markets
HIBINO Takashi, Vice Chair of the Board of Councillors/Chair of the Committee
on Financial and Capital Markets
FUTAMIYA Masaya, Chair, Committee on Responsible Business Conduct &SDGs Promotion
TAKAHASHI Makoto, Chair, Committee on Startups
The University of Tokyo: Fujiwara Kiichi, Director, Institute for Future Initiatives
NAKA Hiroshi, Professor, Institute for Future Initiatives

Government Pension Investment Fund:MIZUNO Hiromichi, Executive Managing Director and CIO
In addition, Project Professor YUYAMA Tomonori of the Graduate School of Public
Policy, the University of Tokyo, and many other relevant persons from Keidanren, theUniversity of Tokyo, and the GPIF provided valuable opinions and suggestions.

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Action plan of Keidanren, UTokyo and GPIF torealize Society 5.0 for SDGs
The three parties of the Japan Business Federation (“Keidanren” hereinafter), the University ofTokyo (“UTokyo” hereinafter), and the Government Pension Investment Fund (“GPIF” hereinafter)
hereby declare that they will implement the following action plan to realize “Society 5.0 for SDGs.” Thisis a concept originating in Japan which seizes current changes such as the imminent development ofdigital transformation (DX), changing socioeconomic structure, increasing sense of crisis regarding
global environmental issues, and shifting people’s mindsets as an opportunity to achieve mid- to longterm economic growth (“Society 5.0” hereinafter).
Actions to be implemented by all parties
Improving recognition and understanding ofSociety 5.0• Publicizing Society 5.0 at home and abroad• Promoting incorporation of Society 5.0 into thestewardship principles for companies andinvestors at home and abroad
Keidanren
Encouraging companies and initiatives to achieve
Society 5.0• Promoting the action plan for corporatetransformation as outlined in Keidanren’s
recommendations on Society 5.0 and theCharter of Corporate Behavior• Further promoting initiatives to solve problems
through innovation (e.g., “Challenge Zero”
Initiative)• Promoting matching of ESG investors withcompanies promoting Society 5.0• Promoting initiatives for the evolution of theventure ecosystem• Fostering investment through corporate pension
and promoting stewardship activities to realize
Society 5.0• Promoting development and dissemination offinancial products (investment trust, etc.) related
to Society 5.0
Further consideration to realize Society 5.0• Presenting the industrial structure of Society
5.0 and the action plan for corporatetransformation through the council on Digital
Transformation• Engaging with various stakeholders including thegovernment to realize Society 5.0 through eachcommittee
UTokyo• Conducting
researchonthedesirablesocioeconomic system that supports Society 5.0
and the strategy to steer the current system inthat direction, including research on global
commons in both physical and cyberspace• Cultivating talented people to lead Society 5.0
as professionals and entrepreneurs withknowledge• Accelerating efforts to create industryacademia collaboration, including the creationof a venture ecosystem model centered onuniversities, in cooperation with relevantorganizations• Developing institutional and framework
research and investment methods to encourage
investment in companies and other entities
that will lead the realization of Society 5.0 for
SDGs, including research on optimal ways ofassessing social impacts
GPIF
The GPIF will consider the following initiatives
in light of the view that sustainable growth of
the investment portfolio and the market as awhole is necessary for a greater long-term
investment return on invested assets in the
management of reserve funds.
• Consideration of incorporating Society 5.0 and
SDGs into its Investment Principles and thelike• Encouraging information disclosure on Society
5.0 with a view to promoting ESG investment• Collaborating with various stakeholders,
including fund managers, to evolve ESG
investment• Promoting constructive
engagement
andconducting research on appropriate evaluation
methods to connect ESG with Society 5.0• Conducting ongoing research into the long-term
performance of companies that will help to realize
Society 5.0• Leveraging ESG investors’ insights to develop
and spread Society 5.0-related financial
products

March 26, 2020
In the hope of growth and problem-solving for Japan and the world,
NAKANISHI Hiroaki
Chairman, Keidanren

GONOKAMI Makoto
President, UTokyo

TAKAHASHI Norihiro
President, GPIF

Toward the Evolution of ESG Investment, Realization of Society 5.0, and Achievement of SDGs
—Promotion of Investment in Problem-Solving Innovation

Keidanren (Japan Business Federation)
1-3-2, Otemachi, Chiyoda-ku, Tokyo 100-8188
Tel: +81-3-6741-(Social Communication Bureau)
URL: https://www.keidanren.co.jp/
The University of Tokyo
URL: https://www.u-tokyo.ac.jp/ja/index.html
Government Pension Investment Fund
Toranomon Hills Mori Tower, 7th floor, 1-23-1, Minato-ku, Tokyo 105-6377
Tel: +81-3-3502-2480 (Representative)
URL: https://www.gpif.go.jp/©2020 KEIDANREN (Japan Business Federation)©2020 University of Tokyo©2020 Government Pension Investment Fund