EXECUTIVE
SUMMARY

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

“Society 5.0 is a sustainable, human-centered society
in which the physical and cyber worlds are highly

integrated by digital transformation, no one is left
behind, and everyone works together to create safe andcomfortable lives and new growth opportunities. ”(From the analysis results of this report)

1Background

We are facing a time of great change, as exemplified by the development
of digital transformation (DX), an increasing sense of crisis regarding
global environmental issues, changes in the socioeconomic structure,and shifts in people’s mindsets.

To seize these major changes as an opportunity to achieve medium- tolong-term economic growth and build a sustainable, human-centeredsociety, the realization of “Society 5.0 for SDGs”—Japan’s national
strategy—holds the key.



Therefore, joint research on Society 5.0 for SDGs was conducted by
Keidanren; the University of Tokyo, which represents Japan’s diverse
knowledge; and the GPIF, which is Japan’s leading investor.



Based on this report, the three parties will make efforts to disseminate
information globally and take concrete actions toward the realization ofSociety 5.0 for SDGs, which is the driving force for economic growth andproblem-solving in Japan and the world.

2

Purpose and Overview
Research 4 strategies to “evolve ESG investment* and achieve Society 5.0”
* promotion of investment in problem-solving innovation

Companies, universities,
etc. promoting Society 5.0

Society 5.0
ESG investors

Strategy 4: Improving the Investment Environment to Realize Society 5.0
Strategy 3: Direction of Information Disclosure by Companies Promoting Society 5.0
Strategy 2: Economic and Social Impacts of Society 5.0
Strategy 1: Current Status of the Understanding of Society 5.0 and Measures to Improve It

 In order to achieve “Society 5.0 for SDGs,” it is essential that medium- to long-term stable funding
be channeled to a variety of players which promote problem-solving innovation, including
companies and universities, and that the innovation ecosystem itself evolves autonomously.
 Therefore, we identify the current trend in ESG investment that is expanding globally, and evolve
ESG investment (accelerate investment in problem-solving innovation) for the realization of Society 5.0 andthe swift and reliable achievement of SDGs. To that end, we examine 4 strategies.

3

Strategy 1: Current Status of the Understanding of Society 5.0 and Measures to Improve It (1)Current statusA questionnaire survey of companies and investors showsthat Society 5.0 is less recognized than ESG or SDGs.

SDGs(→ See “Reference” on page 13)
ESG +Society 5.0
for SDGs

ESG forSDGs

On the other hand, when Society 5.0 is incorporated into
ESG investment, investors perceive that it will
(1) give higher returns(2) solve broader issues,

ESG

SocietySociety 5.0
5.0(3) increase various types of corporate value(4) promote forward-looking, constructive dialogue between
companies and investors on management.

Improving understanding of Society 5.0 is critical to the evolution of ESG investment.
Therefore, 4 concrete measures are presented to improve understanding.

Concrete measure (1): Identifying more comprehensible phrases
Improving the understanding of Society 5.0 requires a short, more comprehensible explanation and wording that callfor empathy. The results obtained from the questionnaire survey and natural language analysis are as follows.
Empathy elements
A society where
everyone can live
safely andcomfortably

Utilization of AI andother science andtechnology
Integration of virtualand real space

3 specific points
Elimination of anxiety about
the future
Pursuit of “what only
humans can do: creation”

Technologies integrating
reality and virtual reality are“blue ocean”

Analysis results

Society 5.0 isa sustainable, human-centered society in which the physical andcyber worlds are highly integrated by digital transformation, no
one is left behind, and everyone works together to create safe andcomfortable lives and new growth opportunities.
* Short version:a sustainable, human-centered society created through digital transformation

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Strategy 1: Current Status of the Understanding of Society 5.0 and Measures to Improve It (2)Concrete measure (2): Priority issues and technologies expected to be resolved in Society 5.0
Issues/changes

Technologies

Dangerous driving by theelderly

Automated driving

Shortage of doctors in rural areas

RobotsTelemedicine

Labor shortage due to declining
birthrate
Spread of lifestyle-relateddiseases
Increase in the number offoreigners

Translation technology

Resource shortage

Reuse of resources

Data security

Show concrete examples of Society 5.0, and, in order toimprove understanding, search for issues expected to besolved in Society 5.0 and technologies expected to be
implemented in society.

As part of this effort, we conducted a questionnaire survey
on companies and investors regarding issues expected tobe solved in Society 5.0, technologies expected to be
implemented in society in the future, and the like.

*The figure above shows some of the results

Concrete measure (3): Tools to improve understanding of Society 5.0
Create a PR video about Society 5.0, establish a Society 5.0 platform (“Theater 5.0, https://wwww.theater5-0.com/”).

Concrete measure (4): Approach to influential institutions
Business and economic
organizations
 B20 (economic organizations of 20 major
developed countries)
 WEF (World Economic Forum) WBCSD (World Business Council for
Sustainable Development) Economic organizations around the world,
including the International Criminal Court (ICC)

Investors
 Investor initiatives such as Principles for Responsible
Investment (PRI) and Task Force on Climate-related
Financial Disclosures (TCFD)
 World Benchmark Alliance, GRI, and ESG rating agencies

Governments and internationalorganizations
 Governments, ministries, andinternational organizations
such as the UN, UNDP, theWorld Bank, and IUCN

Universities and research institutions


Universities and research institutes in Japan andoverseas, such as the Brookings Institution, as
well as international initiatives in the academic
world including Future Earth

In addition, young people,
future generations, etc.

5Strategy 2: Economic and Social Impacts of Society 5.0 (1)Summary

 Show the economic and social impacts of Society 5.0 andwhy they are realized, as well as the estimation results
Reasons why social and economic impacts are generated in Society 5.0
 Solving individual limitations and resolvingsocial issues

 Substitution of markets through new
products and services

Economic
impacts

 Enabling approach to potential demand Cost reduction by drastic reduction of
production input

Socialimpacts

 Solve all challenges simultaneously andoptimally
 Inclusive growth Respect for various ethical standards

 Acceleration of economic transactions

Economic impacts of realizing Society 5.0 (by category: quantitative analysis)
Industrial sector (excerpt)

Growth opportunities (2030)(Market size (2030))

Next-generation healthcare

36.2(95.1)

Digitization of manufacturing

28.5(108.0)Smart mobility

21.3(64.4)

Smart living

18.9(46.0)

Next-generation energy

19.3(37.4)

FinTech/InsurTech

14.5(35.1)

Cybersecurity

4.4(15.9)

Smart agriculture

7.0(15.1)

Digital entertainment

2.8

(6.8)

(Source: Estimation results by Koji Nomura, Project Leader, the 21st Century Public Policy Institute and Professor, Keio University, from (Nomura (2020))

6Strategy 2: Economic and Social Impacts of Society 5.0 (2)Economic impacts of realizing Society 5.0 (macro: quantitative analysis)
New areas ofbusiness(technology)

Next-generation
healthcare

Smart mobility

Next-generationenergyIncrease ininvestment

Image of theoveralleconomic cycle

Increase inincomeSmart home

Socialimplementation oftechnology

FinTech/InsurTech…

Solvingissues/creating value

Increase in
consumption

Production
increase

If all the new technologies envisioned in the model are implemented in 2030

Image of theJapanese
economyIn the accumulation of fields

In the accumulation of fields

Growth opportunities

250 trillion yen

Nominal GDP

The cumulative amount ofinvestment required

900 trillion yen (Note)

844 trillion yen(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)(Market size)(760 trillion yen)(Source) Nomura (2020)

Economic impacts of realizing Society 5.0 (quantitative analysis)
Wage ratio between men and womenSociety 5.0 realization
case

Environment (society where people can coexist in harmony with nature) Realize significant improvement in energy efficiency throughthe introduction of next-generation energy technologies

Society (society in which everyone can demonstrate diverse talents)

Baseline caseNarrow wage gap between men and women
Increase the number of employed people aged 65 or older by 1
million*Wage ratio of women when the wage of men is 1

(Source: Estimation results by Koji Nomura, Project Leader, the 21st Century Public Policy Institute and Professor, Keio University, from (Nomura (2020))

7Strategy 3: Direction of Information Disclosure by Companies Promoting Society 5.0 (1)SummaryDisclosure of information that facilitates constructive dialogue between companies and investors isessential to expand investments in companies working with Society 5.0.

Therefore, conduct natural language processing of “future” financial information such as long-term
visions (disclosures that promise the company’s future growth) and investors’ comments/feedback on it,
and analyze the content and expression method of long-term visions and the like required by investors.

Analytical method

1 StepCompanies fill in theirvision, etc.

2 Step1.

Companies fill in their long-term vision, etc.

2.

Comments/feedback
fromrandomly
selected investors on company responses

3.

Conduct natural language processing of thecontent of (1.) and (2.) Extract the contents
of long-term vision, etc. and expression
methods required by investors.

Comments/feedback
from investors

Natural language processing

Extract the contents of long-term vision, etc. andexpression methods required by investors.
*Analysis based on survey results of 105 companies and 117 investors

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Strategy 3: Direction of Information Disclosure by Companies Promoting Society 5.0 (2)Society 5.0 keywords that investors focus on

76%

92%

Digitaltransformation

Sustainability

For future growth of companies, investors are focusing on

Investors pay attention to the following 8 trends
Demographic change

Safe and smart life byutilizing technology

Climate change and disasterprevention

Concentration in large cities

Extension of healthy life
expectancy

Formation of a recyclingbased society

Diversification of working
stylesDiversification of culture

3 elements of the long-term vision of companies that investors expect to grow in the future

Business development
based on people
Aim to develop business based on people tobring new value to people by anticipating andutilizing future technologies

Solving global issues

Clarify global issues, set specifictargets, etc., and aim to resolve them

Creation of newmarkets
Capitalize on the strengths of existing
businesses, capture diverse needs,
and aim to create new markets

Key points about how to make information disclosure that investors value
Understanding trends• Reference to trends occurring in the industry• Complete understanding and presentation of
the priorities• Unique perspective based on own business

Viewpoint that promises “growth potential”• Clarification of the company’s role in
the future society• Implementation of specific initiatives• Explanation of unique advantages

Viewpoint that promises “sustainability”• Clarification of goals and relationships
with SDGs• Implementation of specific initiatives• Explanation of compatibility with own
business growth9Strategy 4: Improving the Investment Environment to Realize Society 5.0 (1)Specific examples of the roles of each player in improving the investment environment for the realization of Society 5.0 are as follows:
Banks, institutional
investors, etc.

Financial and capital
markets
large
corporations

Social impact investors
Venture capital/
private equity funds

SMEs
Universities
Local
governments, etc.

Charitableorganizations
Fund providers

Fundraisers

Start-ups, etc.

Government/public
institutions

Roles of fund providers

Roles of fundraisers••••

Citizens/millennials

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

•
•
•
•
•

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
Government
Universities, research and rating 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,
systems for companies promoting Society 5.0
technologies, etc. related to Society 5.0,
• Identifying Society 5.0 for SDGs/Green Budgetetc.
and issuing government bonds

10Strategy 4: Improving the Investment Environment to Realize Society 5.0 (2)Concrete examples for the promotion of investment in universities and startups[University][Start-ups]

Identification of technologies that will contributeto Society 5.0, expansion of the provision of
information on such technologies, formation of a
joint vision between companies and universities(further promotion of industry-academia joint
research), etc.

Promotionofunderstandingofsocialsignificance of start-ups, establishment of CVC,
establishmentofDejima-likeorganization(Dejima was a Dutch trading post in Nagasaki
and was the only trading point for the West in the
Edoperiod),expansionofmatching
opportunities with overseas VC, etc.

Challenges on facilitating startup investment raised by investors
Challenges for investors

Challenges for start-ups• Limited number of promising start-ups that can dobusiness on a global scale compared to the U.S.
• Lack of information dissemination in English• Investors’ short-term orientation, lack of experience, asset
owners’ preference for listed stocks, and low needs

Other challenges• Japanese society is indifferent to heresy and risk-taking.

Concrete examples for the investment methods (formation of indices) for Society 5.0•

Index utilizing megatrends•

Integrated operation of DX
index and ESG index•

Establishment of a problemsolving fundIndex utilizing megatrends
Identify multiple
trendsto capture asopportunities inSociety 5.0

Identify specific issues
that arise in each trend,
and the businesses,
technologies, etc. thatwill solve them

Identify
companies
engaging in suchbusinesses andtechnologies inall trends.

Integrate
all of them11Conclusion: The Action Plan of Keidanren, the University of Tokyo, and the GPIF
Action plan

Party responsible
Actions to be implemented
by all parties

 Improving recognition and understanding of Society 5.0 (publicizing Society 5.0 at home and abroad, promoting
incorporation of Society 5.0 into the stewardship principles for companies and investors at home and abroad)
Encouraging companies and initiatives to achieve Society 5.0• Promoting the action plan for corporate transformation as outlined in Keidanren’s recommendations on Society 5.0
and the Charter of Corporate Behavior• Further promoting initiatives to solve problems through innovation (e.g., “Challenge Zero” Initiative)• Promoting matching of ESG investors with companies promoting Society 5.0• Promoting initiatives for the evolution of the venture ecosystem• Fostering investment through corporate pension and promoting stewardship activities to realize Society 5.0• Promoting development and dissemination of financial 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 corporate transformation through theDigital Transformation (DX) Conference• Engaging with various stakeholders including the government to realize Society 5.0 through each committee• Conducting research on the desirable socioeconomic system that supports Society 5.0 and the strategy to steer thecurrent system in that direction, including research on global commons in both physical and cyberspace• Cultivating talented people to lead Society 5.0 as knowledge professionals and knowledge entrepreneurs• Accelerating efforts to create industry-academia collaboration, including the creation of a venture ecosystem model
centered on universities, in cooperation with relevant institutions• Developing institutional and framework research and investment methods to encourage investment in companies andother entities that will lead the realization of Society 5.0 for SDGs, including research on optimal ways of assessing
social impact
 The GPIF will consider the following initiatives in light of the view that sustainable growth of the investment portfolio and themarket as a whole 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 the like
• 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 and conducting research on appropriate evaluation methods to connect ESG to Society 5.0• Conducting ongoing research into the long-term performance of companies that will lead the realization of Society 5.0• Leveraging ESG investors’ insights to develop and spread Society 5.0-related financial products

12Reference: Questionnaire Survey of Companies and InvestorsResponses were received from 102 out of 408 companies of the Keidanren Committee on Financial and Capital Markets, Committee on
Responsible Business Conduct & SDGs Promotion, and the Committee on Startups, and from 117 investors out of 34 fund managers of
the GPIF (Japanese: 66%, American: 23%, European: 9%; sales departments: 39%, operations departments: 32%).

Q: Do you know about each of Society 5.0/ESG/SDGs?
I don’t know at all.

Companies

47%

29%

15%

10%

Investors

30%

22%

21%

28%

Generalpublic

3%

13%

27%

57%

Companies

70%

23%

4%

4%

Investors

95%

5%

0%

0%

Companies

75%

21%

2%

2%

Investors

79%

20%

0%

1%

Generalpublic

12%

26%

25%

37%

Q: (Investors only) How will the following investments change
perceptions of your current ESG investments?

Q: (Investors only) Issues that have high affinity with Society
5.0/ESG120

2% 19%

52%

3%

Issues addressed by Society 5.0

100

24%

Issues addressed by your ESG

80

21%
ESG investment
contributing to Society
5.0 for SDGs

11%

60
40

26%

32%

4%

28%

20

Higher returns are expected for ESG investment contributing to Society 5.0 for SDGs

Society 5.0 expands the scope of ESG investment’s problem-solving

Partnership

Peace/justiceLife on landLife below water

Climate change

Circular economy

Sustainable cities

Inequalities

Industry/innovation

100%

Work and economic

50%

Energy37%

Water and sanitation

0%

Higher returns can be expected
Both higher returns and social responsibility can be expected
Place more emphasis on social responsibility
More risk avert
No change

Gender equality

0-20

Poverty

ESG investment
contributing to SDGs

Education

SDGs

I have heard the word, but I don’t know its
content.

Healthcare

ESG

I know about its content to some extent.

HungerSociety 5.0

I know about its content.

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Theater 5.0