SX Brands to be Established

1. Process until now

Japanese enterprises' capital efficiency and investment for long-term growth has been sluggish, and over 40% of the companies in the TOPIX 500 have a PBR (price book-value ratio) of less than 1. 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).

In addition, as sustainability issues such as climate change and geopolitical risks become increasingly complex, they have had a significant impact on the sustainability of corporate activities, and it has become even more difficult for corporate management to achieve long-term and sustainable value creation.

Under these circumstances, METI established a study group consisting of companies, investors, and experts (the SX Study Group) in May 2021, following the discussions held by the Study Group on Approaches to Making More Substantial the Dialogues for Creation of Sustainable Corporate Value. The TSE also participated as an observer and discussed ways to improve long-term and sustainable corporate value. The results of these discussions were compiled and published in August 2022 in the Ito Review SX Edition (Ito Review 3.0) and Guidance for Collaborative Value Creation 2.0.

The report communicated the message that management transformation with SX as the keyword is essential for future management in order to improve long-term and sustainable corporate value.

2. Establishment of the SX Brands

In order for many Japanese enterprises to promote value creation in the future through business restructuring and new investments from the perspective of SX, it is important to promote efforts for that purpose throughout the entire investment chain, including investors.

With this issue in mind, METI and the TSE will begin a project to encourage reevaluations and the formation of new expectations in the market regarding Japanese enterprises that are making progress in reforms by selecting and awarding progressive enterprises that are promoting long-term and sustainable creation of corporate value by engaging in constructive dialogues with investors and other parties, incorporating society's sustainability issues and needs into their own growth, restructuring businesses, and investing in new businesses. These enterprises will be selected and awarded as the Sustainability Transformation Brands (SX Brands).

Through the publication of the SX Brands, it is expected (1) to encourage corporate managers to change their way of thinking and reform management through dialogues and engagement with investors, and (2) to inform investors in Japan and abroad of the directions Japanese enterprises are taking with their reforms, thereby making the investors reevaluate and form new expectations of Japanese stocks in the future.

3. Future plans

The SX Brand Evaluation Committee, which is scheduled to be established in the near future, will formulate details such as examination standards for the SX Brands. A public call for the SX Brands will begin around this July, and the selection results are scheduled to be announced in spring of 2024. We are considering publicizing the SX Brands widely in Japan and abroad afterward.

Details of the public call and selection will be announced on the METI and TSE websites.

4. Related links

• Ito Review English version (released August 2014)(PDF:1,341KB)
• Ito Review 2.0 (released October 2017) (in Japanese)(PDF:2,285KB)
• Interim Report by the Study Group on Approaches to Making More Substantial the Dialogues for Creation of Sustainable Corporate Value (released August 2020) (in Japanese)(PDF:8,077KB)
• Ito Review SX Edition (Ito Review 3.0) English version (released August 2022)(PDF:3,762KB)
• Guidance for Collaborative Value Creation 2.0 English version(PDF:2,519KB)

Division in Charge

Industrial Finance Division, Economic and Industrial Policy Bureau