NEEDS/CHALLENGES

In the ESG investment category, we are calling for measures taken by financial institutions to promote ESG investment (ESG investment subcategory), and SDGs management that is practiced by businesses (SDGs subcategory). The best and unique activities will be chosen and presented their award.

It is possible to apply for both subcategories (e.g., financial institutions can apply for both the ESG investment subcategory and SDGs subcategory).

Around three businesses will be awarded in ESG Ivestment Category (ESG investment subcategory and SDGs subcategory).(Please check here for evaluation outline.)

【ESG investment subcategory】  【SDGs subcategory】

 

ESG investment subcategory

Themes of ESG investment subcategory

Up to 5 activities can be submitted under the ESG investment subcategory.

For each activity, select up to 3 themes from the 8 themes (E・S・G) below.  

  • Climate Change(Global warming, CO2 emissions, Energy efficiency, Environmental pollution)
  • Natural Resources(Destruction of nature, Water resources, Land use, Biodiversity, Recycling)
  • Environmental Market Opportunities(Clean technology, Renewable energy)
  • Human Resources(Labor management, Promotion of women’s participation, Diversity, Development of human resources)
  • Health and Safety / Human Rights(Product safety, Quality control, Privacy&data security)
  • Consideration for Others(supplier consideration, Local community consideration)
  • Corporate Governance(Separation of supervision and execution, organization for board of directors(utilization of outside directors etc.))
  • Corporate Behavior(Corporate Ethics contributes to social contribution, There is no record of forgery, tampering, corruption etc., Promote fair competition)

Please refer to each archive page (2019, 2018) for the survey results conducted in the past years for the Tokyo residents regarding the degree of interest in the above themes.

Opinions about issues of ESG investment promotion

We conducted hearing form experts and listed up the opinions about issues of ESG investment promotion.

The following are just examples, but if there are points that contribute to their opinions in the activities described in your application, please highlight it and describe it concretely. We also appreciate your understanding in ahead, the opinions below are for reference and will not be evaluated based on the opinions but evaluated based on the points stated in the submission guidelines, etc.

  • There are few asset managers making ESG investments that contribute to solving issues that are unique to/originate in Japan and exporting them overseas. In addition, it would be good if investee companies highly evaluated in Japan can be encouraged to be evaluated overseas as well.
  • Upon disclosing non-financial information (management philosophy, management strategy/ business plan, governance information, risks and business opportunities, response to issues related to sustainability, etc.), many companies take the challenge to disclose and explain non-financial information through future corporate values, but only a few asset managers work to solve the challenge (new efforts that go beyond dialogue).
  • ESG investment tends to be long-term, yet there is difficulty convincing investors that “a return can be expected after 10 years”. Asset managers should take measures to correctly analyze and evaluate an investment’s future potential at the initial stage, and explain to investors whether a 10-year future return can be expected.
  • The goal of engagement is to increase the corporate value of the investee, but results of the engagement takes time, through changes in management awareness and organization. On the other hand, quantitatively measuring the results of engagement only by the numbers of engagements cannot evaluated in terms of whether the goal has been achieved or not. As such, not many asset managers consider what kind of items should be analyzed, in order to evaluate the engagement results, during the period of corporate value improvement.
  • Since ESG items are used as factors for investment decisions, many products that claim to be ESG investments have already been sold, but few investees are truly investing to help solve social issues.
  • Until recently, E (environment) has been the main activity in terms of ESG investment, but there are growing calls in the society for work environment improvements such as the introduction of home-based work, due to COVID-19 situation, and efforts focused on S (society) will be attracting more attention.
  • ESG investment is mainly stock investment, but it would be better if more products could be invested in unlisted companies such as SMEs and startups.
  • In ESG investment, few financial institutions generate returns by analyzing and evaluating non-financial information using technology.
  • It would be good if rating agencies can evaluate companies, companies that are still in transition for ESG yet expected to make significant improvements in the future, as well as companies that are currently excellent in ESG.
  • Currently, ESG data has various standards depending on the data vendor, and few companies work to establish appropriate standards for ESG data disclosure of individual companies and methods for investors to make appropriate investment decisions.
  • There are issues in SDGs opportunity on the corporate value of the entire company, such as the small scale of impact, and the difference between investment time axis (short) and business time axis (quite long for SDGs). It would be good to have investment funds that match the business timeline of the SDGs (funds that have taken short-termism correction measures, such as not monitoring short-term returns).
  • It would be good for asset managers to increase opportunities for companies to get to know investors’ ideas (dialogue with investors), as it is a good opportunity to learn the merits of ESG information disclosure as the live voice of investors.
  • In recent years, information disclosure in line with the “Final Reports” of Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB) has increased among Japanese companies, but still limited between listed companies. As many companies carry a vague anxiety that TCFD data may be taken out of context and influence investor evaluation in some manner, it may be good for asset managers to engage in constructive dialogue about corporate concerns and promote mutual understanding.
  • Negative screening and ESG integration are the mainstream investment method for ESG investments, but in the future it would be good to diversify investment methods, including impact investment.

 

Please click here for entry by financial institutions promoting ESG investments!

SDGs subcategory

Themes of SDGs subcategory

Only one activity can be submitted under the SDGs subcategory.

For each activity, select up to 3 from the 17 goals below.  

Source: UN HP

Goal 1.End poverty in all its forms everywhere
Goal 2.End hunger, achieve food security and improved nutrition and promote sustainable agriculture
Goal 3.Ensure healthy lives and promote well-being for all at all ages
Goal 4.Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Goal 5.Achieve gender equality and empower all women and girls
Goal 6.Ensure availability and sustainable management of water and sanitation for all
Goal 7.Ensure access to affordable, reliable, sustainable and modern energy for all
Goal 8.Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Goal 9.Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Goal 10.Reduce inequality within and among countries
Goal 11.Make cities and human settlements inclusive, safe, resilient and sustainable
Goal 12.Ensure sustainable consumption and production patterns
Goal 13.Take urgent action to combat climate change and its impacts
Goal 14.Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Goal 15.Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
Goal 16.Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Goal 17.Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development

Source: UN HP

Opinions about issues of SDGs management

We conducted hearing form experts and listed up the opinions about issues of SDGs management.

The following are just examples, but if there are points that contribute to their opinions in the activities described in your application, please highlight it and describe it concretely. We also appreciate your understanding in ahead, the opinions below are for reference and will not be evaluated based on the opinions but evaluated based on the points stated in the submission guidelines, etc.

  • There are some cases where, employee benefit plans are generous, the attitude of valuing human resources is publicized, and excellent human resources are acquired. However, few companies produce results that lead to corporate value improvement indirectly, with SDG initiatives such as human resource acquisition, product added value improvement, and new customer acquisition. It would be good if management could analyze and evaluate the results of the indirect corporate value improvement.
  • There are few companies that can quantitatively evaluate whether SDGs efforts are contributing to solving social issues by using social impact assessment methods, etc., and disclose information in an easy-to-understand manner for Tokyo residents and financial institutions, rather than simply branding or linking existing products with SDGs goals.
  • When it comes to SDGs, the efforts of large companies tend to attract attention, but it is good for small and medium-sized enterprises to have SDGs management efforts that are successful and produce results that are unique to SMEs.
  • In response to the expansion of the new COVID-19, there are many companies looking for sustainable management and SDGs management that responds to changes in the external environment and will start initiatives in the near future.
  • It is difficult to gain in-house consensus in promoting SDGs management efforts within large companies as it is necessary to break down currently successful business models.
    There are generally two patterns of successful companies: promotion through a different company or a subsidiary to promote entities, or following the passion of the founder/manager’s philosophy. Either way, there are few companies that gain internal consensus to promote SDGs management efforts.
  • There are cases where companies are facing pressure to transform their existing business models, and there is a growing number of such companies.

 

Please click here for entry  SDGs activities by businesses!