Within the year, the Ministry of Economy, Trade and Industry (METI) will launch a system to introduce companies that emphasize “ESG investment” to institutional investors who give priority to the environment and social contributions in their selection of investment destinations. Japan trails foreign rivals in facilitating ESG investment. The government aims to get advice from investors by holding dialogue with them and encourage Japanese firms to meet global standards.

“ESG” stands for the “environment, society and governance.” Many European and U.S. firms incorporate the ESG concept in their management visions in the belief that companies that lack environmental considerations are not sustainable.

METI has already formulated guidelines that call on Japanese firms to hold active dialogue with investors. It has also clearly indicated how to build ties with stakeholders and urges companies to set forth corporate principles and mid- and long-term visions for outsiders as well as their employees.

METI will soon announce a logo for firms that adopt these guidelines to use in their investor relations documents. Meanwhile it will encourage institutional investors to identify themselves as “active fund managers” and express their intention to engage in dialogue with companies that follow the guidelines. Arrangements are underway to enlist support from BlackRock, Sparx Asset Management, and several other asset management firms. (Abridged)