The current state of ESG investment: Interviews with European and American commentators and corporate officials
The pros and cons of ESG (environmental, social, and corporate governance) investment, which has continued to expand, swirl. Both opinions promoting decarbonization and human rights protection and criticism of abandoning the pursuit of profit are growing. We asked Western commentators and corporate officials about the current and future vision of ESG investment, including its impact on corporate management.
Tsutomu IgakiWorked at OMRON since 2013 after working for a foreign consulting company and Coca-Cola Japan. He has been in charge of investor relations since 2017
OMRON sees three social issues for the next 10 years: "realization of carbon neutrality," "realization of a digital society," and "extension of healthy life expectancy." Solving these sustainability-related issues and business strategy are in line, and ESG is the way to convey the strategy to investors.
In other words, ESG is a way of thinking that focuses on the capital market, and the disclosure of non-financial information such as the environment, society, and governance leads to an increase in corporate value in terms of market capitalization. The way of thinking was established in 2017, when the company revised its corporate philosophy in 2015 and created the previous medium-term plan based on it. ESG briefings have also been held since this year.
Non-financial value, which is market capitalization minus net assets (financial value), approximately doubled from the end of December 2017 to the end of December 2021. Compared to the growth in sales and profits during this period, the increase in non-financial value is greater. It shows that communication with the stock market from the perspective of ESG is creating value.
A company is a public entity. That is why I hope that the best investors who can evaluate the company from a medium- to long-term perspective will hold the shares.
It is often said that listed companies cannot choose their shareholders. But you can make an effort to choose. If we continue to disseminate information on ESG, we will be able to invest in pension funds that find value in it. If improved stock price performance leads to improved pension investment performance, benefits will go to individual pension recipients. In this respect as well, companies can fulfill their responsibilities as public institutions.
Unfortunately, international interest in Japanese stocks as a whole is not necessarily high. Individual companies must be selected and efforts must be made to secure a stock price premium. ESG can be an effective tool for that purpose.
Going forward, the creation of a global standard for ESG information disclosure will proceed. Others warn that the disclosure burden is likely to increase. However, if we improve the disclosure of non-financial information that is internationally accepted, we may be able to get investors who are not yet reachable to own shares.
