von | Jun 20, 2017

Japan’s Ministry of Economy, Trade and Industry publishes guidance for company-investor disclosure and dialogue

METI outlines Japan’s framework for long-term Stewardship.

by Elena K. Johansson | June 20th, 2017

Kunio Ito, Chair of METI Study Group

Japan’s Ministry of Economy, Trade and Industry (METI) has published guidance for companies and investors that aims to support the disclosure of corporate information and set parameters for value-enhancing collaboration; essentially providing the framework for Japanese investors and corporations to carry out long-term Stewardship.

The report was issued by the Study Group on Long-term Investment toward Sustainable Growth, established by METI in August 2016. It found that while the importance of non-financial information is increasing in regard to understanding risks and assessing corporate value, ESG information is still wrongly assessed and not sufficiently disclosed, blocking constructive company-investor dialogues and hindering long-term investment.

To establish a “common language” between investors and corporates and promote mid- to long-term corporate value and sustainable growth, METI has compiled the guidelines in Japanese, titled: “Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation”. An English version of the guidelines is planned.

METI sees the “common language” the framework seeks to establish as the pre-requisite to how information disclosure should be made and how corporates and investors engage to fulfil their corporate governance and stewardship responsibilities. It represents a basic framework that it says will allow high quality information disclosure. It is proposed as a voluntary guide.

The guidelines span six items of company information: value, business models, sustainability/growth, strategies, performance and KPIs (key performance indicators), and governance.

As business owners disclose information on their management philosophies and business models, etc. in line with the guidelines, it says investors will obtain the mid- to long-term information needed to assess them, make related investment decisions and fulfil their stewardship responsibilities and fiduciary duties.

METI says that the guidelines are its first step to promote an ‘integrated’ disclosure of company information. It also plans to create a forum for companies and investors where discussions can take place, experiences exchanged and disclosures improved.

METI says the guidelines were created by taking into account international debates and related frameworks. It is seeking feedback from both domestic and foreign stakeholders on the guidance.

The Chairman of the Study Group toward sustainable growth is Kunio Ito, professor at Hitotsubashi University. Other members in the group include: Toshio Arima, United Nations Global Compact board member and executive advisor at Fuji Xerox; Satoshi Ando, managing executive officer, chief IR & communication officer at OMRON Corporation; George Iguchi general manager of equity investment department and head of Corporate Governance at Nissay Asset Management; and Yuko Ichikawa, general manager, investor relations department, Rakuten.