Japan's 10-year governance scorecard

Insight: A good time to take stock, perhaps. It has been a decade since Japan launched its Stewardship Code for investors, which was followed by a Corporate Governance Code and, most recently, rules for listed firms on the Tokyo Stock Exchange. According to analysis by UBP, a Swiss private bank with a long track record in Japan, some 70% of the top 500 companies are making serious efforts to improve governance. 

Impact: It started with banks, then insurers and now corporates, but cross shareholdings are being reduced by around 1% a year. That has added to already considerable cash piles, which are fueling share buybacks: these hit a record JPY9.6 trillion (USD 65 billion) last year. Takeovers and the disposal of non-core business lines to private equity are also on the rise. Behind all of this, says UBP, are board level changes, both in terms of hiring more independent directors; and forcing senior managers to hold significant stock in their companies. As companies improve their governance they also need to clearly communicate their new approach.

75%

 The proportion of Korea’s listed companies that published a credible climate transition plan in 2023, according to CDP, a non-for-profit organization that runs a global disclosure system for environmental impacts. Only a few European countries did better, and Japanese companies also performed well, while those in the U.S. and China are lagging.  

Insight: Tanegashima, Japan’s “rocket island” home to the country’s semi-regular aerospace launch tests, is becoming a testbed of another kind as the local government attempts to woo tech startups and entrepreneurs in order to halt the area’s economic and population decline. It’s become crystal clear rocket jobs alone won’t sustain the community, and the area is seeing slow but sure progress as companies like AI startup Village AI set up shop.

Impact: The island, which is closer to Seoul than Tokyo, struggles to retain a stable workforce as young workers choose stable jobs in Japan’s big cities. Startups hoping to call Tanegashima home will need not only government backing and private funding but will likely also need to bring non-Japanese talent on board while simultaneously offering wage packages good enough to attract tech workers from Tokyo. They’ll likely need a complex mix of government, employer branding and communications efforts for a successful lift-off.

Insight: The Senate of the Kingdom of Thailand overwhelmingly approved a marriage equality bill on June 18 that will legalize gay marriage. This makes Thailand the first country in Southeast Asia to formally recognize same-sex marriages, beating many countries generally considered more liberal, such as Japan and Korea, to the punch. The bill will give LGBTQ+ couples the same legal rights and recognitions as heterosexual couples. 

Impact: North Bangkok University conducted a poll this year that found 80% of the Thai public supported marriage equality, marking the issue of gay marriage as largely uncontroversial in the country. Thailand joins a laundry list of wealthy countries outside of Southeast Asia who have recognized marriage equality to some extent, including the entirety of North America, most of South America, the United Kingdom and much of the rest of Europe. As the world progresses on social issues, private companies will be expected to have a stance. There are pitfalls to be avoided, however – businesses need to craft their messages in a way that doesn't shine in one market only to backfire in another. 

The 2023 Statistical Review of World Energy has just been published

Insight:  It’s official: global energy demand reached another record high last year and so did greenhouse gas emissions, which climbed 2% to more than 40 gigatons. Tellingly, 47% of that demand came from Asia Pacific, led by China – as much as Europe, North & South America and Africa combined. 

Impact:  While the pursuit of manufacturing-based growth in Asia is therefore part of the problem when it comes to emissions, the region is also part of the solution as it is rapidly installing clean energy facilities. China alone was responsible for 55% of new renewable generation across the world in 2023. And there is enormous further potential to reduce emissions across Asia Pacific by reducing oil and coal use in coming years. Companies should get ahead of impending regulation and growing stakeholder pressure by laying out and communicating clear transition plans. 

Read the energy report here