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METI Compiles “Four Principles” and “Four Actions” for Disclosure and Dialogues between Companies and Investors For promoting integrated corporate disclosure and ESG dialogue and investment to enhance value creation in Japanese companies

In December 2017, the Ministry of Economy, Trade and Industry (METI) established a Forum for Integrated Corporate Disclosure and ESG Dialogue (hereinafter referred to as the “forum”). On May 18, 2018, METI publishes a report containing the summary of discussions and future actions.
Note: The term “ESG” is an acronym of Environment, Social and Governance.

1. Background to the forum

1. Corporate governance and capital market reforms

In order to enhance Japanese companies’ mid- to long term corporate value, promote sustainable growth and enhance the entire investment chain, (i.e., the various paths and processes of capital flowing from its providers to where companies deploy it towards their business activities), the Japanese government has been undertaking a series of policy initiatives for enhancing corporate governance and capital market reforms.

2. Changes in circumstances after “Ito Review”

The Ito Review, released in 2014, showed challenges facing Japan and proposed future directions and policy recommendations, including a series of measures for advancing corporate governance and capital market reforms. Since the publication, circumstances surrounding companies and investors have been changing as seen by the introduction of the Corporate Governance Code, an overall review of disclosure systems, and rising public interest in ESG investment and the Sustainable Development Goals (SDGs).
Note: SDGs are international goals that member countries of the United Nations should achieve between 2016 and 2030, set in the 2030 Agenda for Sustainable Development, which was adopted at the UN Sustainable Development Summit held in September 2015.

3. METI’s policy initiatives

In response to these changes, METI released the Guidance for Collaborative Value Creation (hereinafter referred to as the “Guidance”)* and the Ito Review 2.0. Following this, METI established the forum and has been deploying actions to encourage companies to promote disclosure to and dialogue with investors.
*Note: The Guidance for Collaborative Value Creation is an abbreviation of the “Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation: ESG integration, Non-Financial Information Disclosure and Intangible Assets into Investment,” formulated by METI in May 2017.

2. Recommendations by the forum

Through meetings of the forum, representatives of companies, investors and experts explained/reviewed their efforts for improving disclosure and dialogues and discussed related issues. The forum summarized the results and insights of the discussion and compiled them into a report including “Four Principles for Promoting Corporate Disclosure and Dialogues between Companies and Investors.”

Four Principles for Promoting Corporate Disclosure and Dialogues between Companies and Investors
  1. Understand the meaning of “purposeful dialogues”
  2. Make use of shared languages
  3. Promote dialogues within organizations
  4. Encourage investors to explain their evaluation processes

3. Future actions

To encourage companies and investors to improve their disclosures and dialogues,” METI will carry out the following “Four Actions.”

Four Actions
  1. Support companies that proactively disclose their information (e.g., introduction of the “Logo” for indicating use of the Guidance in formulating corporate reports)
  2. Encourage mutual understanding between companies and investors through promoting explanations/declarations/announcements by institutional investors (e.g., “The Declaration of Active Fund Managers”)
  3. Enhance the usefulness of the guidance across different industries and fields (e.g., sector-specific guidance and harmonization with relevant guidelines)
  4. Encourage improvement of quality and efficiency in disclosure and dialogue of small- and mid-cap companies (e.g., Kansai Subcommittee)

The report also includes future actions by various organizations, including the Securities Analysts Association of Japan, the Japan Investor Relations Association, the Japan Innovation Network, the KEIZAI DOYUKAI, the Japanese Institute of Certified Public Accountants, the Stock Research Center, the Tokyo Stock Exchange and the WICI. METI will strive to advance activities in collaboration with these organizations.

4. Report released by the forum

5. References

Related News Releases

For details of the logo for the Guidance for Collaborative Value Creation, visit the following website (in Japanese).

Release date

May 18, 2018

Division in Charge

Industrial Finance Division, Economic and Industrial Policy Bureau

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
Copyright Ministry of Economy, Trade and Industry. All Rights Reserved.