November 18, 2020
As part of the effort for encouraging Japanese companies to strategically utilize IT, the Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TSE) have jointly been conducting the Competitive IT Strategy Company Stock Selection program since 2015 to select outstanding companies that are engaged in efforts for proactive IT utilization which contributes to improving innovations in management, earnings and productivity, in order to improve corporate value and fortify competitiveness on a mid- to long-term basis.
From the 2020 program, METI and the TSE have started selecting the stocks of outstanding companies that are engaged in digital transformation (DX), a digital shift that, on the premise of using digital technologies, dramatically changes business models and leads to new growth and enhanced competitiveness, and promoting these stocks as “Digital Transformation Stocks (DX Stocks).”
As a preparatory effort for selecting such stocks, METI will conduct the 2021 Questionnaire Survey on Digital Transformation (“DX Survey”) from November 25 (Wed.), 2020, to January 13 (Wed.), 2021, targeting domestic TSE-listed companies, i.e., those listed in the first and second sections of the TSE, Mothers or JASDAQ.
1. Objective for selecting DX Stocks
From among TSE-listed companies, METI and the TSE select, by industrial category, outstanding companies which have established internal systems for promoting DX, which is an approach that contributes to improving corporate value, and which have achieved outstanding digital utilization, and they introduce the selected companies to investors as “DX Stocks.” Companies which are considered to be promoting DX are those that not only have introduced exceptional information systems and that are utilizing data but also those that are boldly taking on efforts for changing core business models and transforming management on the premise of using digital technologies. Moreover, they are expected to further play a leading role in a variety of industries.
In addition, METI has compiled “digital governance codes,” or a collection of fundamental items which businesses should refer to in formulating management goals and having dialogues with stakeholders taking into consideration social reform brought about by digital technologies, as an effort for encouraging companies to voluntarily embrace DX efforts. Furthermore, METI has positioned the DX Stocks as a measure that complements the “digital governance codes” within the framework of effective DX efforts. For details of the “digital governance codes”, visit the website below.
For the overview of the DX Stock 2021, the method for selecting DX Stocks, and other information, visit the website below. METI also releases related materials and other detailed information on the website.
2. Selecting a winner of the DX Grand Prix as well as companies as Noteworthy DX Companies
Following on from the FY2020 program, from among the selected companies chosen as outstanding stocks in the 2021 program, METI and the TSE will select a leading company that is engaged in the best practices for advancing DX in the new digital era as the DX Grand Prix winner. Moreover, from among other companies, METI and the TSE will select companies that have been praised by the members of the stock examination committee for the characteristics they exhibit that are in line with the purpose of the stock selection as “Noteworthy DX Companies.”
3. Conducting the DX Survey 2021
METI will conduct a questionnaire survey targeting all TSE-listed companies, i.e., those listed in the first and second sections of the TSE, Mothers or JASDAQ in order to determine which companies can be considered outstanding candidates as DX Stocks, the DX Grand Prize Winner, or Noteworthy DX Companies. To the companies that have submitted a completed response sheet, METI will send feedback and provide information that may help the companies further advance their DX efforts.
METI strongly recommends that targeted companies submit the response sheets even if some questions are not answered, since METI and the TSE may select such companies as Noteworthy DX Companies if they are seriously engaged in DX efforts, and for the companies which have not been selected, the feedback may trigger their recognition of the challenges they are facing in this digital era.
Moreover, in principle, METI will promote the companies that have participated in the survey as companies proactively facilitating DX efforts (except those that have declined such promotion).
Following on from the 2020 initiative, the survey will be conducted via the website that is operated exclusively for this purpose. On November 20 (Fri.), 2020, METI will send guidelines for the survey, including an ID and a password for accessing the site, to the personnel in charge of investor relations (IR) of the respective target companies. The response period of the survey is from November 25 (Wed.), 2020, to January 13 (Wed.), 2021. Please note that the response must be submitted by 18:00 on the closing date.
For details of the survey, visit the METI website above or contact the Information-technology Promotion Agency, Japan (IPA), the secretariat of the survey.
Inquiries about the survey:
Secretariat of the DX Survey, IPA
4. Collaboration between the DX Recognition Program and DX Stocks
The DX Recognition Program is an initiative in which, under the Act on Facilitation of Information Processing, the government recognizes companies that satisfy the basic requirements stipulated in the “digital governance codes”. If companies wish to be selected as a “DX Stock,” a “DX Grand Prix winner,” or a “Noteworthy DX Company,” they are required to file an application for the DX Recognition Program during the response period of the survey (please note that even if you do not file this application, you can simply submit a survey response sheet). For details, visit the METI website above. For details of the DX Recognition Program, visit the IPA website below.
Division in Charge
IT Innovation Division, Commerce and Information Policy Bureau