The Secret to Japan's Leading ESG Management Companies is 'E.T.H.I.C'

[Asia Economy Reporter Suyeon Woo] The Federation of Korean Industries (FKI) investigated and analyzed Japan's exemplary cases of ESG (Environment, Social, Governance) and presented the key keywords as ‘E.T.H.I.C’.

On the 18th, FKI announced this in a report titled 'Exemplary Cases of Japanese Companies with Excellent ESG Ratings.' The main keywords suggested by FKI are summarized as ▲Ethics ▲Tech Awards ▲Health & Safety ▲Info Security ▲Carbon Emissions.

First, Sony Group was introduced as an exemplary case in the field of corporate ethics. The Corporate Ethics Hotline is a reporting center that operates 24/7, 365 days a year, and supports communication in 27 languages, enabling reporting from any of Sony’s global branches.

The reporting center staff consists of a third-party service provider unrelated to Sony, and all calls are anonymized and secured to the extent permitted by law, without being recorded or tracked. In 2019, Sony’s Corporate Ethics Hotline received 440 reports, of which 39% led to actual investigations, and necessary actions were taken based on the investigation results. The reporting outcomes and statistics are reported to senior management and the audit committee.

Fujitsu, an information and communication technology company, received an excellent rating in the field of clean technology development. Notably, they introduced an internal award system to promote eco-friendly technology development within the company. Fujitsu has held an Environmental Contribution Awards ceremony since 1995 and has operated a Sustainable Development Goals Awards program since 2019.

The Kumagaya Center, which won an award in 2019, introduced and began operating a solid oxide fuel cell (SOFC) eco-friendly power generation system from January last year to supply the power needed for 24/7 operations such as the retail store help desk service. Compared to procuring all required electricity from power companies, CO2 emissions are expected to decrease by about 35% compared to 2018. Fujitsu has promoted the development of eco-friendly technologies such as Building Energy Management Systems (BEMS) through its award system.

Itochu Corporation received an excellent evaluation in health and safety. They established a system to manage employee health through specific goal setting and quantifiable indicators. Their action plan includes a 100% health checkup rate, establishment of an in-house clinic, support for long-term treatment, provision of healthy meals in the company cafeteria, and support for smoking cessation treatment costs, with performance monitored through measurable indicators. To quantify employees’ health status, they used BMI index, worker stress index tests, and resignation rates due to long-term illness.

Japanese mobile carrier KDDI earned an excellent rating in personal information and data protection. KDDI’s efforts in information security are evident in the establishment and operation of an Information Security Committee. The committee develops and applies measures to prevent data leaks and unauthorized external access company-wide. They also maintain a management framework for data security and personal information protection, recognize risks and opportunities, and disclose these in reports.

Sumitomo Chemical was the only Japanese company with an AAA ESG rating to receive an excellent rating in carbon emissions management. Sumitomo clearly states its strategy and policies for carbon neutrality by 2050 in its group ESG report. Through renewable energy, energy efficiency improvements, and hydrogen technology development, they plan to achieve a power generation mix of 20% coal, 50% gas, and 30% renewable energy by 2035. They also plan not to participate in new coal-fired power projects, and for private power generation projects, aim to reduce CO2 emissions by more than 60% by 2035 and to terminate all coal-fired power projects by 2040.

FKI stated, "It is necessary to actively refer to Japan’s cases, which are advancing a step ahead in ESG management through Society 5.0 and the implementation of the UN Sustainable Development Goals," and added, "We will continue to investigate and share best practices of global ESG model companies."