SDGs and Business in the ESG era: Actions by Companies and Organisations in Japan

Policy Report
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Global Compact Network Japan (GCNJ) and the Institute for Global Environmental Strategies (IGES) launched of a report “SDGs and Business in the ESG era: Actions by Companies and Organisations in Japan”.* This latest report includes the results of the questionnaire survey as well as how both financial  institutions and companies address ESG finance. Main findings of this report are seen as follows.

- The results of the 2019 survey showed that the level of awareness of the SDGs among top management rose from 59% the previous year to 77%, equal to awareness level among CSR staff. In addition to this, more companies now consider the SDGs to be a genuine management issue.

- Companies with a high ESG rating had not only set long-term goals, but had also committed to the Task Force on Climate-related Financial Disclosures (TCFD) and set targets based on Science Based Targets(SBT) at an early stage, and were making efforts to indicate pathways consistent with scientific knowledge. These companies are creating a cycle for skillful utilisation of information disclosure and engagement leading to improved sustainability management in their companies, and they are striving to strengthen ties between business units and employees or between suppliers and consumers within these processes.

- When companies' objectives are ambitious and the roadmaps to achieve them are indicated in a way that is consistent with scientific knowledge, ESG investment and financing and increase of sustainable financial products will be facilitated.

- While the expansion of ESG financing and sustainable financial products are on the rise, caution should be exercised to avoid the expansion of market or financial products becoming an objective in itself. A distinction must be made between consideration of SDGs in a decision-making process for investment and financing and the level of contribution to the SDGs. Relevant to this concern, expectations are high that impact assessment will be actively considered in investment and financing decision-making to contribute to realising the goals of the Paris Agreement and the SDGs.

- Going forward, the relationship between ESG and the SDGs must be further strengthened and linked to ambitious initiatives with a sense of urgency that will produce high returns in multiple meanings of the term.

The appendices of the report contain a number of interviews with CEOs and executives talking about SDGs.

*This is the English translated version of the Japanese Report published in March 2020.