An Ideas-Based Online Magazine of the Global Network for Advanced Management

After COP21: The Japanese Strategy

Two years ago, representatives of more than 190 countries signed the Paris Climate Accord at COP21. Global Network Perspectives asked experts across the network about the policies that their countries are implementing in order to meet the commitments made in the agreement—and the challenges that remain.

The Japanese Climate Change Policy was agreed in 2016 to meet the COP21 commitment The Japanese government is promoting both the concept of Environmental, Social, and Governance investing (ESG) and sustainable development goals.

The financial market in Japan has started to pay special attention to the sustainability dimensions. GPIF, the biggest fund in Japan, has also declared that they started an ESG fund of 1 trillion yen.

In the latest Dow Jones Sustainability Index, published in September 2017, 32 Japanese companies are selected among total 319 companies, increasing from 26 companies of last year. Japanese companies with high ranking in ESG metrics, such as Daikin and Omron, have been enjoying higher valuation in the stock market.

The leading Japanese companies, e.g., Toyota and Panasonic, have published their Sustainability Report targeting zero CO2 emission by 2050. To achieve such targets, many Japanese companies have been accelerating their innovation efforts including development of bio fuel/plastics, fuel-cell engines, zero-emission buildings and houses. Many ventures have also emerged with new business models around sharing and circular economies. The Japanese government has been encouraging those innovations providing tax incentives, deregulating old rules and practices and setting special zones.

The CSV (Creating Shared Value) concept has also caught a lot of attentions from the Japanese companies. I have been organizing CSV Forum in Japan since 2013 where 30 Japanese companies get together every month to learn the CSV best practices around the world and in Japan and explore paths to develop the model into the next level (CSV 2.0).

The biggest challenges facing the country include:

  1. Whether/how to expand nuclear power plants in Japan.
  2. How to decrease total costs and increase scale of renewable energy.
  3. How to encourage mid- and small-size companies (which constitute more than 95% of the number of the total companies in Japan) to invest in sustainability.