Welcome to Manifest-I

Welcome to Manifest-I the blog of Manifest Information Services Ltd. Here we take a wide ranging view of topical governance and stewardship issues. Please feel free to add your comments and join the debate. Sign up to receive free weekly updates.

Manifest is a signatory of the Best Practice Principles for Shareholder Voting Research

Delivering Diverse Viewpoints

In the pursuit of secure investment returns, diverse viewpoints based on high-quality data and varied information are critical for portfolio construction. We believe that share ownership is no different. Manifest intelligently navigates the complexities of global governance and voting delivering actionable and defensible stewardship insights.

Manifest: showing, not telling

Get in touch to find out more about Manifest's governance research, data and advisory services

Japan: sustainability reporting needs improvement

JPIF Headquarters

JPIF has high hopes of sustainability reporting

The Japanese Government Pension Investment Fund (GPIF) recenlty tweeted about the “excellent” integrated reporting of some of the country’s firms. However, Manifest’s analysis shows that sustainability reporting in Japan is falling short of many investors expectations.

Based on analysis of the Japanese companies reviewed for Manifest’s Say on Sustainability project during the 2016 reporting season, the average percentage score awarded was only 32% – a low grade D – only just above the grade E boundary of 30%. This compares with   EU – C/53%; UK – D/40%; and US – D/40% and Australia – D/37%.

Japanese reporting – few high achievers

Although Mitsubishi and MHI were rated as “excellent” by GPIF, no Japanese companies achieved the top A grade, and only three companies (6% of the sample) have achieved a B.

Company Say on Sustainability
% Score
JSR B 65%
Sony B 65%
Toshiba B 67%
Mitsubishi Heavy Industries C 47%
Mitsubishi D 31%

Out of date disclosure a systemic problem for Japan

Just as investors depend on up to date disclosure of core financial metrics, many investors expect to see sustainability reporting to also be published in a timely way. The majority of the companies in Manifest’s sample produced a separate sustainability report (91%),  however all of these reports are produced late – that is not published within 6 months of the relevant year-end. Very worryingly, a significant proportion of the reports are two or three years out of date (26% of the entire of sample and 29% of late reporters). However, this may not be entirely surprising given that the financial statements and annual reports of the majority were also not up to date with the financial year at time of assessment (80%) with a similar of proportion of websites being out of date (78%).

Poor carbon emission disclosure

Most of the companies analysed (61%) do audit their work to some extent. In terms of carbon disclosure the largest group (22 companies/41%) disclosure just their total emissions while 11 companies (20%) provide a breakdown of emissions. However, nine companies (17%) do not disclose their emissions at all.

Manifest’s research also found that only 12 companies (22%) disclose on their political donations or their policy on this and only five (9% of all companies, 42% of those that do disclose) of these are clear about their policy.

GPIF has highlighted its commitment to sustainability and good stewardship by joining the 30% Club in the UK and the Thirty Percent Coalition in the US. GPIF said it believes that integration of environment, social and governance (ESG) factors into the  investment process mitigates investment risk. It stated that it believes that gender diversity is regarded as one of major ESG factors.

For more information about the Manifest Say on Sustainability framework and data sets, email sustainability@manifest.info

What do you think?