Rewarding ESG disclosures

Post 2023 PRI in Person, which took place in Tokyo, seven Japanese public pensions are PRI signatories, bringing the total of Japanese signatories to 140.

Along with more public commitment to sustainable investment, more companies are disclosing their ESG data. The disclosed data presents a mixed story with environmental scores being more readily disclosed by Japanese companies than Social or Governance metrics.

The latest Japanese ESG indices and passive investment report, written in collaboration with SGX

Each quarter, we review the development of Japan’s sustainability standards, the ESG performance of Japanese listed companies compared to the broad-market index, and the growth of index-linked SGX FTSE Blossom Japan Index Future.

Our latest edition of the Japanese sustainable investment and futures report explores the connection between increased disclosure and investment.

Key highlights from this quarter’s analysis:

• The gap between the ESG performance of Japan and European companies (as measured by the FTSE Russell ESG Score) has narrowed, and the Environmental score is approaching parity
• However, the disclosure rate of Japan companies in the Social and Governance domain lag behind Europe, and issues remain
• Both Blossom Japan and Blossom Sector Relative Indices reported quarterly underperformance relative to their benchmark FTSE Japan All Cap Index, largely caused by the negative contribution from the ESG factor
• The SGX FTSE Blossom Japan Index Futures continues to remain the global leader amongst Japan ESG derivatives, with market share of 99% (in terms of Open Interest in USD notional)