ESG roundup: Japanese governance, Forest Footprint Disclosure
GLOBAL - The founding partners of J-Eurus Investor Relations and European consultancy Sodali have developed a new corporate governance programme for Japanese companies.
The programme includes the following services:
• Corporate governance benchmarking and perception studies based on global and local best practice and legal standards
• Board evaluation
• Research and strategic consultation on corporate governance, director responsibilities and shareholder rights
• Institutional investor outreach, engagement and road shows
• Preparation and conduct of annual meetings
• Disclosure policy and communication with shareholders, proxy advisory firms and activist investors
• Information agent services related to mergers and acquisitions, takeovers and other extraordinary transactions
Yoshiko Iwata, president and founding partner of J-Eurus IR, said many of her company's clients had been asking for governance advice in response to reforms introduced by Japan's ministry of finance and the Tokyo Stock Exchange in recent years.
She added: "In addition to these regulatory pressures, many of our clients are concerned about the decline in cross-shareholdings among Japanese companies and the growing scepticism among global institutional investors about Japanese equities."
Yoshiko Takayama, J-Eurus managing director and founding partner, said problems involving a few high-profile companies had a broad negative impact on the Japanese financial market and had increased foreign investors' fears about risk and fraud.
She said: "Japanese companies must work aggressively to restore global confidence."
The new governance programme differs from J-Eurus's traditional investor relations and communication activities by bringing new information relating to environmental practices, social policy and corporate governance into financial communications.
It also expands the targeted investor audience to include decision-makers responsible for governance, share voting and stewardship and ESG investors in addition to securities analysts and portfolio managers.
Iwata said Japanese companies had always supported voluntary, private sector initiatives rather than legislation or regulation to improve market practices.
"Japanese companies prefer to work quietly out of the limelight," she said.
Meanwhile, in the UK, the Forest Footprint Disclosure Project (FFD) has called on more companies to disclose their forest footprint.
Despite the extreme weather conditions that have already affected commodity prices this year, many companies are still ignoring the potential operational, reputational and regulatory risks in their supply chain that forest risk commodities represent, it said.
One of the few causes for optimism from the Rio +20 Earth Summit, according to the FFD, was the commitment from the business and investment communities to work on managing corporate use of natural resources by signing up to the Natural Capital Declaration.
But James Hulse, director of FFD, said there was still much to do.
"We really welcome the business community standing up at Rio, and those companies that have committed to disclosing to date - including new commitments from companies representing a market cap of almost $300bn (€246bn) - are ahead of the game," he said.
"We are especially pleased by the response from the retailing sector this year, with several new companies joining the project.
"But there is a long way to go, and many more companies need to disclose to ensure they don not get left behind."
FFD, which recently announced an alliance with the Carbon Disclosure Project, works with companies to improve global supply chains and identify opportunities that arise from improved business practices in forest-risk commodities such as timber, palm oil and soy.