The trend of CSR in Japan
November 2019

Masao Seki
Steering Committee Chairman, CBCC

Agenda1. Introduction of CBCC
2. The trend of CSR in Japan①

Expansion of ESG investment②

Deepening recognition and commitments to SDGs③

Business and Human rights

Key Findings of Questionnaire Survey in this material is from Keidanren’s survey 2018
Survey targets： 1,373 Keidanren member companies,Survey period: March 2018 through June 20181

Respondents： 302,

Response rate：22.0 %1. Introduction of CBCC

2

About CBCC
Council for Better Corporate Citizenship(http://www.keidanren.or.jp/cbcc )Founded : September 1989 by Keidanren
Mission : To promote Japanese companies’
CSR and to support their CSR initiatives
Chairman : Mr. Masaya Futamiya(Chair, Committee on Responsible Business Conduct & SDGs Promotion, Keidanren
Chairman and Director, Sompo Japan Nipponkoa Insurance Inc.)
Members : 85 companies
Sompo Japan Nipponkoa Insurance Inc., Sony Corporation, ANA HOLDINGS INC.,
ASAHI GROUP HOLDINGS, LTD., Hitachi, Ltd., Kirin Holdings Company, Limited,Nomura Holdings, Inc, Sumitomo Life Insurance Company, NEC Corporation, and so on
KEIDANREN (Japan Business Federation) is a comprehensiveeconomic organization with a membership comprised of 1,412
representative companies of Japan, 109 nationwide industrial
associations and 47 regional economic organizations (as of April 2019)3

CBCC’s major activities
1. Hosting meetings and seminars on CSR
2. Dispatching the CSR Dialogue Mission overseas tostudy CSR situation overseas and to gain
understanding of Japanese CSR
3. Collecting and disseminating information on CSR

4. Having dialogues with various stakeholders andrelated entities both in Japan and abroad
5. Supporting Japanese companies’ donations to theCBCC International Contribution Projects throughtax incentives
4Meetings recently hosted by CBCC
DateNameTheme

5 Mar. 2018

Mr. Andy Hall(Migrant Worker Rights Specialist)
Dr. Rainer Matthes(CIO, Metzler Asset Management)
Mr. Stan Dupre(CEO, 2℃ Investment Initiative)
Mr. Nathan Fabian(Director of Policy and Research, PRI)
Mr. Aron Cramer(President and CEO, BSR)
Ms. Stephanie Venuti(Policy Advisor - RBC, International
Investment Division, Directorate for Financialand Enterprise Affairs, OECD)
Mr. Matthias Thorns(Deputy Secretary-General, IOE)
Mr. Manjit Jus(Executive Director, Head of ESG Ratings,RobecoSAM)Mr. Gefei Yin(Founder and Chief Expert of GoldenBee)

Migrant Workers' Human
Rights in Southeast Asia
ESG investment

13 Apr.
10 Jul.

22 Oct.
26 Feb. 201913 Mar.

5 Jul.
4 Sep.

5

Sustainable Finance andCorporate Reporting
Current trend of CSR
OECD RBC Due Diligence
Guidance
Business and Human
RightsESG Investment
Latest Development andTrends of CSR in China

CBCC’s Global Network
1.
2.
3.
4.

CSR Europe (Europe)
BSR (Business for Social Responsibility) （USA）
WBCSD (Geneva)
Development Center of Chinese CSR, WTO Tribune(China)
5. CSR Asia (Hong Kong）
6. GRI (Global Reporting Initiative) (Netherland)
7. ASEAN CSR Network (Singapore)
8. China Committee of Corporate Citizenship (China)
9. China Enterprise Confederation /CBCSD(China)
10. TBCSD(Thailand)
6

CBCC CSR Dialogue Mission to Europe 2018

Brussels

Geneva7

2. The trend of CSR in Japan① Expansion of ESG investment and disclosure

8Growth of Sustainable Investing Assets by Region
2014-2018（billion $）
14075
11995

16000

12040

14000

12000

10775

8723

JAPAN10000

8000

6572
2180

6000

1699
734

4000

1086

474
2000

7729

148

0Europe

9United StatesJapanCanada2018

516

2016
2014

Australia/NewZealandData Source： 2018 Global Sustainable Investment Review , GSIA

Dialogue with Investors
Constructive and purposeful dialogue arestrongly encouraged between companies
and institutional investors, seeking
sustainable corporate growth and increased
corporate value over the mid-to-long term.

Japan’s Stewardship Code - April 2014

Japan’s Corporate Governance Code - June 2018
Revised Corporate Governance Code in 2018 clearly states that
non-financial information includes the ESG one.

10

World’s Major Pension Funds signed UN-PRI
Government Pension Investment FundJapanTotal
Asset
1,163

Government Pension Fund Global

Norway865

Y

Federal Retirement Thrift

USA443

YNational Pension

Korea

435

Y

ABPNetherland

384

YNational Social Security

China

294

California Public Employees

USA285Central Provident FundSingapore

211

Canada Pension

Canada201

PFZW

Netherland

186

ERAFP

France22Pension Fundsource : Towers Watson, UN-PRI

11Country(billion US$)

PRI

Y

Y
Y

Y

GPIF’s initiatives
1. Revision of theInvestment Principles
2. Adoption of ESG Indicesand RFP for Global
Environmental StockIndices
3. Collaboration with theWorld Bank Group
regarding ESG in Fixed
Income Investments
4. Measuring the Impactsof ESG Activities
12

ESG indices adopted by GPIFTypeName of index

Broad index

FTSE Blossom Japan Index

Broad index

MSCI Japan ESG Select Leaders Index

Thematic/Social

MSCI Japan Empowering Women Index(nickname: WIN)

Thematic/Environment S&P/JPX Carbon Efficient Index
Thematic/Environment

13

S&P Global Ex-Japan LargeMid Carbon
Efficient Index

Source: GPIF Website

Principle 3 in Charter of Corporate Behavior(Fair disclosure of information and constructive dialogue with stakeholders)

3. Disclose corporate information actively, effectively and fairly andengage in constructive dialogue with a wide range of stakeholders,with a purpose of enhancing corporate value.
[How to do]
1. Promote communication with shareholders
and investors through general shareholders
meetings and investor-relation andshareholder-relation activities.
2. Make efforts to prevent insider trading
3. Disclose information to stakeholders in a timely andappropriate manner

4. Gain the trust through constructive dialogue with a wide rangeof stakeholders
14

Reasons for the disclosure of environmental, social, and governance(ESG) information
 Although ESG information is primarily intended for investors and credit-rating
agencies, it is also recognized to be a tool for communication with a diverse
range of stakeholders.
(1) To engage with investors and credit-rating agencies(2) For employee recruitment activities(3) In response to requests from business partners(4) To satisfy the consuming public(5) To improve corporate value and brand image(6) To work with NPOs and NGOs
(7) To promote efforts for a sustainable society(8) For communication with local community(9) For communication with employees(10) Other reasons(11) ESG information not disclosed◎Most important reason○Applicable reasons

15

ESG disclosure and dialogue for boosting corporate value From 50 to 60 % stated that they explain their ESG disclosures in association
with their business strategies, medium- and long-term business plans, andmaterialities in the interest of boosting their corporate value.
 12 % indicated that they are unable to engage in ESG disclosures that leadto the creation of their corporate value.

(1) Explained in association
with business strategies(2) Explained in association
with medium- and long-termbusiness plans(3) Explained in association
with priority challenges(4) Unable to engage in ESG
disclosures leading to thecreation of corporate value(5) Other reasons

1616(%, cases)

Dialogue with shareholders and investors onthemes concerning ESG investments and SDGs
 Briefings at IR meetings were the largest share as the form of dialogue withshareholders and investors to discuss their ESG investments and SDGrelated initiatives.
 Being inspired by the shareholders and investors, the rapid progress is being
made in this area.
(1) Briefings at General meeting ofshareholders(2) Briefings at IR meetings(3) Presentations on ESG andSDGs(4) Briefings on ESG and SDGs inprivate meetings(5) Other forms of dialogue

1717(6) No dialogue(%, cases)

2. The trend of CSR in Japan② Deepening recognition and commitments
to the SDGs

18

Expectation for Business Role in 2030 agenda
transformative change is neededand leadership of business is the key“Private business activity, investment andinnovation are major drivers of productivity,inclusive economic growth and job creation.
We call on all businesses to apply their creativityand innovation to solving sustainable development
challenges.”
Source: “TRANSFORMING OUR WORLD: THE 2030 AGENDA FOR SUSTAINABLE DEVELOPMENT”

19

Q: Which sector is most influential in promoting SDGs?

Business
Investor
Consumer
Government
Local governmentNGO
Academia
UN organizations
All Sectors
OthersDon't Know
20

2015
10%
0%
4%
58%
ー
5%
1%
ー
16%
0%
5%

2016
12%
7%
16%
41%
ー
3%
0%
ー
15%
1%
5%

2017
13%
12%
17%
35%
1%
1%
0%
ー
15%
1%
4%

2018
19%
12%
16%
24%
1%
1%
1%
3%
21%
2%
1%

Source: UNGC-Network Japan Research Report (February 2019)20

Q: To which level is the recognition of SDGs established?

2015

2016

2017

2018

CSR department

61%

84%

86%84%

Board members

20%

28%

36%

59%

Middle management

4%

5%

9%

18%

Employeeーー8%17%Group companies

ー3%

2%

4%

Don't know

15%

12%

7%

3%

21

Source: UNGC-Network Japan Research Report (February 2019)21

New Principle 1 of Charter of Corporate Behavior

Delivering on the SDGs through the Realization of Society 5.0[Sustainable economic growth and the resolution of social issues]
1. Develop and provide socially beneficial and safe goods andservices through innovation, and strive for sustainable economic
growth and the resolution of social issues.

222. The trend of CSR in Japan③ Business and Human Rights

23

Principle 4 in Charter of Corporate Behavior(Respect for human rights)

4. Conduct business that respects the human rights of allpersons.
[How to do]
1. Understand and Respect theinternationally-accepted humanrights ⇒ international norms
2. Define companies’ own policyof respecting human rights andconducting business.

⇒ Due Diligence3. Contribute to build an inclusive society through supporting
vulnerable people by the collaboration with stakeholders⇒ promotion of human rights
24

Policies on respect for human rights and implementation ofpolicies (1)No response

Studying
Planning

25

Already have

70 % already havepolicies that
promote respectfor human rights

Policies on respect for human rights and implementation ofpolicies (2) About half replied that they had adequately addressed humanrights-related issues in their own companies and/or within theirvalue chains. Nevertheless, their responses underlined a trend
toward stronger efforts to address all issues.
(%, cases)(1) Work environments and work safety(2) Elimination of employment- and occupation-related
discrimination(3) Effective recognition of and respect for freedom ofassociation and right to collective bargaining(4) Prohibition of forced labor in all forms(5) Effective elimination of child labor(6) Protection of privacy(7) Respect for consumer rights(8) Respect for rights of local residents

26

Adequately addressed
Addressed but plan to take stronger action

Plan to address
No plans to address

Not directly relevant to us
No response

Introduction of mechanisms that promote respect forhuman rights
 Measures in education, training, and framework development have made headway
as mechanisms that foster respect for human rights.
 Only about 30 % stated that they were engaged in efforts to address topics ofrelevance to human rights due diligence. Japanese companies will need to do morein this area.
(%, cases)(1) Establish company-wide systems to human rights issues(2) Establishes officer position and functional division for human rights(3) Identify human rights risks from business operations(4) Analyze and assess the level of impact from specific risks(5) Apply findings to internal processes, including business decision-making,budget formulation, and audits(6) Prevent and counter high-priority human rights risks(7) Continually assess and improve outcomes of actions taken against risks(8) Establish opportunities for feedback from within and outside the company(9) Publicly disclose and report on actions taken(10) Open channels for counseling on human rights-related issues(11) Develop mechanisms to process and settle complaints(12) Implement education and training programs on human rights topics(13) Other measures

27(14) None

Topics relevant tohuman rights
due diligenceNational Action Plan in Japan6.
1. Commitment

Considering how to
reduce the gap

First Draft

5.

8.

Identification of a gap
between ideal and reality

Stakeholder
Meeting

4.

9.

Understanding of thecurrent situation

Complete2.
Establishmentof Committee
on Stakeholder
Engagement
3.
Planning

7.

The Japanese Government is formulating the National Action Plan on
Business and Human Rights. It established a multi-stakeholder roundtable
28 where Keidanren actively joined.

Tokyo 2020 – Olympic and Paralympic -29

Tokyo 2020 – Olympic and Paralympic United Nations
Guiding Principles
on Business andHuman Rights

The 2020 Olympic and Paralympic games in Tokyodeclared the adoption of UNGP voluntarilyfor the first time in the Olympic history
30

Dialogues with stakeholders on Business and Human Rights
Symposium co-hosted by Keidanren / ILO / OECD
"Responsible Business Conduct -- How should JapaneseCompanies engage with their Supply chain in Asia?

31

HQ of Human Rights Watch in NY
13 July, 2018

Ms. Sara Phung, Ms. Folke Kayser
German Institute for Human Rights

Business Leadership for Human Rights
Japanese version was launched by Keidanren in October 201932

Thank you very much!
http://www.keidanren.or.jp/CBCC/en/index.html
mail to : cbcc@keidanren.or.jp