ITO Review 3.0 (ITO Review SX Edition) and Guidance for Collaborative Value Creation 2.0 Compiled

1. Background

Japanese enterprises' capital efficiency and investment for long-term growth has been sluggish, and there is now an urgent need to improve their long-term corporate value and "earning power"—an issue since the first ITO Review (released in 2014).
Meanwhile, looking at international trends, the landscape of the sustainability issue has a significant impact on the sustainability of corporate activities, and addressing sustainability is becoming a core element of corporate management toward long-term and sustainable value creation.
Given these circumstances, METI inaugurated the SX Study Group in May 2021, and has since held eight meetings to flesh out efforts required of enterprises and investors toward achieving SX.

 METI also established the Working Group (WG) for the Revision of the Guidance for Collaborative Value Creation in November last year. Since then, the WG held two meetings to deepen discussions aiming to revise the Guidance for Collaborative Value Creation as a framework for stronger business management to achieve SX, effective information disclosure, and constructive dialogues while taking into account the discussions by the SX Study Group.
The above discussions culminated in the ITO Review 3.0 (ITO Review SX Edition) and the Guidance for Collaborative Value Creation 2.0.

2. Outline of the ITO Review 3.0 (ITO Review SX Edition)

Compiled as a report of the SX Study Group, the ITO Review 3.0 (ITO Review SX Edition) describes how important it is to practice SX, and organizes concrete efforts to achieve it.
The key points of the Review are as follows:

1. The stagnant investment by Japanese enterprises for long-term growth and the fact that addressing sustainability is becoming a core element for long-term business management on an international scale are challenges facing the entire investment chain including Japanese companies and investors, but on the other hand, present opportunities for them as well.
2. Practicing SX will become the mainstream "way to earn" for future Japanese businesses.
3. Companies must speed up discontinuous transformations that are not the extension of conventional corporate activities through constructive dialogues with investors.
4. Achieving SX requires the following three concrete efforts:
   1. Clarifying the vision to pursue based on the sustainability of society
   2. Developing strategies for long-term value creation based on the vision
   3. KPI and governance to effectively promote long-term value creation, and further refinement through substantial dialogues
5. It is necessary to promote SX effectively throughout Japan, including the entire value chain (including SMEs and startups) and various players in the investment chain (including investment institutions, asset owners, securities analysts, and ESG evaluation organizations).

3. Overview of the Guidance for Collaborative Value Creation 2.0

METI decided to revise the current Guidance for Collaborative Value Creation to the Guidance for Collaborative Value Creation 2.0 in order to update it as a framework for stronger business management to achieve SX, effective information disclosure, and constructive dialogues.

The main points of the revision are as follows:

1. In all sections of the guidance, clearly stated the importance of companies providing long-term and sustainable value to create a sustainable society and the direction of actions based on it
2. Added the new section "Long-Term Strategy"
3. Ensured consistency with the disclosure structure of governance, strategy, risk management, and metrics and targets in the TCFD recommendations
4. In the "Execution Strategy (Medium-Term Management Strategy, etc.)" section, reorganized the structure to emphasize the importance of human capital investment and human resources strategy
5. Created the new section "Substantial Dialogues and Engagement"

4. Related materials

• ITO Review 3.0 (ITO Review SX Edition)(PDF:3,762KB) *The English version of the report was posted on November 29, 2022.
• Guidance for Collaborative Value Creation 2.0(PDF:2,519KB) *The English version of the report was posted on November 29, 2022.
• Reference: Guidance for Collaborative Value Creation 2.0 (with changes from the current version) (in Japanese)(PDF:2,011KB)
• Reference: Outline of the ITO Review 3.0 and Guidance for Collaborative Value Creation 2.0(PDF:2,128KB) *The English version of the report was posted on November 29, 2022.

5. Related links

• ITO Review (released August 2014)(PDF:1,341KB)
• ITO Review 2.0 (released October 2017) (in Japanese)(PDF:2,285KB)
• Outline of the Interim Report by the Study Group on Approaches to Making More Substantial the Dialogues for Creation of Sustainable Corporate Value (released August 2020)(PDF:135KB)

Division in Charge

 Corporate Accounting, Disclosure and CSR Policy Office, Economic and Industrial Policy Bureau