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Report of the SDG Management / ESG Investment Study Group Compiled

For promoting ESG investments by taking advantage of SDG business management

June 28, 2019

From the viewpoint of sustainably improving corporate value, it is considered an important challenge for companies to take appropriate approaches toward integrating SDGs* into their management and attracting ESG investments.**

In November 2018, the Ministry of Economy, Trade and Industry (METI) inaugurated the SDG Management / ESG Investment Study Group. Since then, the study group held 6 meetings, bringing together CEOs of large companies and venture businesses representing Japan, investors and a head of a university as well as heads of international organizations, and held in-depth discussions. METI hereby announces that the study group compiled a Report of the SDG Management / ESG Investment Study Group as an outcome of its discussions.

1. Background

Since the United Nations (UN) stipulated the Principles for Responsible Investment (UNPRI)*** in 2006, global society has been rapidly and dramatically committing to ESG investment which is placing weight on sustainability. Against this backdrop, the UN Sustainable Development Summit 2015 adopted the Sustainable Development Goals (SDGs), international goals to overcome global social challenges and achieve a sustainable world.


Amid the current trend in which companies worldwide are proactively committed to integrating SDGs into management so as to attract ESG investment, many large companies and venture businesses in Japan appear to be embarking on cutting-edge efforts to enhance corporate value by connecting SDGs to management.

In light of this trend, the Sustainable Development Goals Promotion Headquarters (Director-General: the Prime Minister) of the government of Japan set the Initiative for Promoting SDG Management  as a pillar of the SDGs Action Plan (2018-2019), setting goals for encouraging companies to integrate SDGs into their management strategies.

2. SDG Management / ESG Investment Study Group

In response to this trend, in November 2018, METI inaugurated the SDG Management / ESG Investment Study Group. Since then, the study group held 6 meetings, bringing together CEOs of large companies and venture businesses representing Japan, investors and a head of a university as members as well as heads of international organizations, and held in-depth discussions. Under the leadership of the government, the study group is the first attempt to hold discussions on SDG business management and ESG investments, bringing together top-level stakeholders in a variety of fields, and this shows a new ideal approach to industry-government-academia dialogues.

Specifically, the study group focused on successful cases of SDG business management inside and outside Japan and held in-depth discussions from a variety of standpoints concerning approaches that companies should take in integrating SDGs into their management and viewpoints that investors may take in assessing such companies’ management.

3. Contents of the report and outline of the policy recommendations therein

Based on the discussion of the study group, Chapter 1 of the report streamlined meanings of SDGs for stakeholders, such as companies and investors, and Chapter 2 provides well-organized key points of which companies, investors and other stakeholders should be aware in order to implement SDG business management. These chapters are supplementary sections for the Guide for SDG Business Management.


Chapter 3 offers policy recommendations; in particular, it presents six challenges that the study group found through their discussions: [i] conveying international messages, [ii] promoting business management from a long-term perspective; [iii] encouraging investors to implement long-term investment; [iv] cultivating new markets through SDGs; [v] international rule-making; and [vi] disseminating scientific and logical evaluation. Following this, this chapter proposes measures for overcoming these challenges.

Overviews of the policy recommendations

1. Conveying international messages

1.1 Formulation of the Guide for SDG Business Management and conveyance thereof (conveying the guide taking a variety of opportunities, e.g., G20 and other international events; conveying the guide in collaboration with domestic and overseas related organizations)
1.2 “Data Free Flow with Trust (DFFT)”

2. Promoting business management from a long-term perspective

2.1 Efforts for co-creation of innovations (promoting innovation-based management; toward new industry-government-academia collaboration; expanding scale of long-term supply of risk money)
2.2 Promoting investment in human resources and promoting health and productivity management or diversity management
2.3 Long-term promotion of R&D investment as a source of radical research

3. Encouraging investors to implement long-term investment

3.2 Examining and streamlining ESG investment performance
3.3 Review toward the creation of market structures stimulating long-term investment

4. Cultivating new markets through SDGs (studying potentials of support measures; collaboration between this measure and the measures for encouraging businesses to cultivate new markets in Asia and Africa)

5. International rule-making

5.1 Surveys and analysis of international trends related to investment and inputs therefor
5.2 International development of the framework of the Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation

6. Disseminating scientific and logical evaluation

6.1. Thorough scientific and logical evaluation and disseminating thereof
6.2 Analyzing and streamlining approaches taken by investors and rating companies
6.3 Actions for international standardization

Notes:

*1. The Sustainable Development Goals (SDGs) are international goals to achieve a sustainable world.
**2. ESG investing takes into consideration not only financial information of target companies but also information on target companies’ efforts for the environment, society and governance.
***3. The Principles for Responsible Investment (PRI) are principles that offer actions for incorporating ESG issues into decision-making processes of institutional investors and aim to improve long-term results brought about by investments for beneficiaries.

Related Documents

Links to the information shown in Appendices 2 and 3 (websites for respective meetings of the SDG Management / ESG Investment Study Group):

Division in Charge

Industrial Finance Division, Economic and Industrial Policy Bureau