Building on the Practical Handbook for ESG Disclosure that was released in March, Japan Exchange Group will launch the "JPX ESG Knowledge Hub" within its website in late November. This will provide listed companies with up-to-date information and guidance on ESG disclosure on an ongoing basis, with content provided by institutional investors, listed companies, ESG disclosure framework organizations, regulators, and ESG ratings agencies, among others. This article introduces the background to and objectives of the new website and its main contents.

In March 2020, Japan Exchange Group (JPX) and Tokyo Stock Exchange jointly published a "Practical Handbook for ESG Disclosure" to provide helpful reference material for companies wanting to improve their mid- to long-term corporate value through disclosure of ESG information and dialogue with investors using that information (https://investmentjapan.jp/esg/1206/).  Now, building on the contents of the Handbook, JPX's Sustainability Committee is launching the "JPX ESG Knowledge Hub" within the JPX website to provide listed companies with up-to-date information and guidance on ESG disclosure on an ongoing basis.  This column will introduce the background to and objectives of the JPX ESG Knowledge Hub and its main contents.

The Practical Handbook for ESG Disclosure brought together issues that listed companies face when starting ESG disclosure and split them into four Steps that companies could use as needed depending on their current situation.  It incorporated investors' point of view, introduced the main existing ESG disclosure standards and frameworks such as TCFD and SASB, and included actual cases of disclosure from companies.  However, the format of a single Handbook limited the amount and depth of information that we were able to include.  The JPX ESG Knowledge Hub aims to provide deeper insights and more hands-on guidance in relation to the issues that the Handbook introduced, and to update these as new information and resources become available.

At the time of launch in late November, the JPX ESG Knowledge Hub will contain the following contents (Japanese language only):

  • "Practical Seminars for ESG Disclosure" webinar series and other ESG-related seminars
  • Examples of ESG disclosure from listed companies
  • Introductions to ESG disclosure frameworks
  • Information on ESG investment from institutional investors
  • Introductions to ESG ratings agencies

Firstly, "Practical Seminars for ESG Disclosure" is a series of short on-demand webinars provided by a variety of representatives from investment institutions, listed companies, the Japanese government and other related parties.  These each look deeper into one of the issues introduced in the Practical Handbook for ESG Disclosure, covering all four Steps.  Topics include the current regulatory background to ESG disclosure, what kind of ESG information investors are looking for from listed companies, how investors use that information, how listed companies are preparing for and carrying out ESG disclosure in practice, and other helpful information.

Next, the website will collate examples of ESG disclosure from listed companies which are already disclosing.  These will be published with each company's name and mostly focus on a particular aspect of that company's ESG activity and their disclosure in relation to that, for example materiality analysis.  They will also include insights into the issues that the company faced in relation to the activity/disclosure in question and how they were solved, which will give other companies real practical guidance into the processes that they may need to go through. 

To help listed companies work out which ESG disclosure frameworks are most suitable for them to use, the website will devote a page to each of the major ESG disclosure frameworks from Japan and abroad, such as SASB, TCFD, and the Japanese government’s Guidance for Collaborative Value Creation.  Building on the information provided in the Handbook, these pages will provide summaries of each framework and links to all the (where possible) Japanese-language resources and information that each one provides.  They will be updated as and when new information becomes available.

In response to calls from both listed companies and investors for better communication on ESG disclosure, the JPX ESG Knowledge Hub will provide a platform for institutional investors to communicate to listed companies.  Each investor will write about what information they want to see from companies and how this information is utilized in practice to inform investment decisions and carry out engagement activities.  This will give listed companies a much clearer idea of what is needed to help investors evaluate them on ESG performance.

Lastly (for now), the website will collate Japanese-language information, where possible, from ESG ratings agencies such as FTSE Russell and MSCI, to help companies understand the different focuses of each one and the methodologies behind their ratings.  We hope to provide information here which has not previously been published in Japanese.

The JPX ESG Knowledge Hub will be available on the JPX website for anyone to access, but listed company representatives who wish to receive information on updates to the website and related announcements can sign up to a mailing list.  In addition, institutional investors, ESG ratings agencies, ESG disclosure framework organizations, government departments and other related organizations which provide information to the JPX ESG Knowledge Hub are encouraged to become official Supporters, which will enable them to use the listed company mailing list (at JPX's discretion) to announce any new ESG disclosure-related initiatives or resources.

We will be building up this website further over the next months and years, following trends both overseas and within Japan.  We believe that providing information in Japanese that is as hands-on as possible can clear some of the confusion surrounding ESG disclosure and encourage all listed companies, including smaller ones, to aim for corporate value improvement through ESG disclosure and engagement.  We would welcome any institutional investors which would like to be involved in the JPX ESG Knowledge Hub, in particular to introduce their own ESG investment activity to Japanese listed companies, to contact us using the below details.

 

JPX ESG Knowledge Hub (Sustainability Committee), E-mail: esgknowledgehub@jpx.co.jp