Ministry of Economy, Trade and Industry
Font Size Change

METI to Establish the Study Group on Investment for Sustainable Value Creation

The Ministry of Economy, Trade and Industry (METI) is to establish the Study Group on Investment for Sustainable Value Creation to comprehensively deliberate the ideal states of company management and investment for the sustainable creation of corporate value, considering the environmental, social and governance (ESG), human capital, intellectual capital, and other kinds of capitals.

1. Background and purpose

As Japan faces changes in its environment such as changes in the global competitive environment and a declining population, it is essential for Japanese companies, who are supposed to play leading roles, to improve their profitability and capital efficiency and aggressively make long-term, strategic investments in order to sustainably create value so that the Japanese economy will be on a course toward sustainable growth. It is also a great challenge to realize virtuous cycles and sustainable growth in Japan’s economy by having the economy’s investment chain, which is a mechanism through which those who contribute funds can get long-term returns, function as a whole.

The Japanese government is making various efforts under the Japan Revitalization Strategy. Japan’s Stewardship Code and the Corporate Governance Code were formulated as institutional frameworks which require the establishment of corporate governance, responsibility to be taken by institutional investors, and productive dialogues for such purposes from companies and institutional investors for the sake of the sustainable creation of value. In addition, there are ongoing discussions about frameworks such as systems including those for information disclosure that can drive dialogues between companies and investors and the ideal state of shareholder meetings and boards of directors.

The challenge for the future is to fulfill the requirements defined in such frameworks by preventing companies and investors from sticking to merely superficial responses and by having them incorporate such requirements into the ways that they conduct their business such as their mid- to long-term strategies, basic policies, investment plans, and business judgment.

As for the overseas situation, when global institutional investors and other entities evaluate long-term corporate value and make decisions on whether to make investments, they seem to tend to consider non-financial factors including matters related to ESG (environmental, social and governance). Meanwhile, also in Japan, the Government Pension Investment Fund (GPIF), which is the largest-scale pension fund in the world, has become a signatory to the United Nation’s Principles for Responsible Investment (UN-PRI) and announced that it would appropriately take ESG into consideration when investing pension reserves; ESG is drawing the attention of both companies and institutional investors. In response to such trends, it is necessary to conduct comprehensive deliberations by considering not only ESG in a narrow sense (environmental, social and governance) but also human capital, intellectual capital, and manufactured capital (as defined in the concept of the six capitals, advocated by the International Integrated Reporting Council (IIRC), for example). It is important for companies and investors to act according to some common foundations regarding how to make long-term investments using these limited capitals and effectively combine these limited capitals in order to create corporate value so that long-term investment for the future will be promoted.

The goal of this Study Group is to discuss ESG, human capital, management including that of intangible assets such as intellectual capital, investment (by companies and investors), and the current and ideal states of dialogues while gaining an understanding of global trends and discussions and, subsequently, to discuss the ideal environment for driving better action.

2. Themes for discussions (examples)

What measures should companies (managers, etc.) take to effectively utilize various kinds of capital and make decisions on investments for the future for the sake of the sustainable creation of value?

  • How to make investment decisions to improve long-term corporate value (The ideal state of companies’ long-term investments)
  • How should companies efficiently allocate, combine, and recombine various kinds of capital in order for them to generate innovations to sustainably create value? (Effective use of capital)

What kinds of perspectives and evaluation items should investors use when evaluating long-term corporate value? What kinds of ideal information and dialogue are required to satisfy investors for their evaluations?

  • What factors should be considered for the precise evaluation of companies’ long-term value? (ESG, human capital, and intellectual capital, in addition to non-financial factors, intangible assets, etc.)
  • How can companies and investors provide or receive the information required for their decisions regarding these factors and their evaluations of these factors? (Including relationships with rating agencies and information vendors)

3. Schedule

The first meeting of the Study Group will be held on February 9 (Tue.), 2016. The second meeting is to be held on February 25 (Thu.), and the third meeting on March 10 (Thu.), 2016.
The meetings of the Study Group will not be open to the public, in order to ensure that every member can engage in the exchange of opinions in a frank and unfettered manner, but the materials and meeting minutes will be released.

List of participants

See the attachment.(PDF:35KB) PDF File

Release date

February 9, 2016

Division in charge

Industrial Finance Division, Economic and Industrial Policy Bureau

Related Information

Industrial Finance

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