Part 1: Why is Sustainability Information Disclosure Required Now? ~Its Background and Significance~

Hello everyone.
I am Sachiyo Aoki, a director at the Saitama Sustainable Management Research Institute.
Starting with this issue, I will provide a five-part series detailing the impact on small and medium-sized enterprises (SMEs) of the mandatory sustainability information disclosure for large companies scheduled for fiscal year 2027.

◆ Introduction

When you heard the news about the mandatory sustainability information disclosure starting in fiscal year 2027, what did you think? You might have had reactions like, 'Is this another new regulation?' or 'Is this irrelevant to my company?'
However, this mandate is not just a formal procedure. It is an important signal indicating that the environment surrounding businesses is changing significantly.

◆ Why is sustainability information disclosure required now?

1. Changes in consumer awareness
In recent years, consumer awareness regarding environmental issues and social contribution has been rising steadily. As problems such as global warming and resource depletion become more serious, companies are required not only to pursue profits but also to contribute to the sustainability of society as a whole.
When purchasing products or services, consumers have come to place greater importance on a company's sustainability initiatives, tending to choose products with lower environmental impact or those produced ethically.
2. Changes in investor perspectives
ESG investing, which emphasizes the aspects of Environment, Social, and Governance, is spreading globally. Investors position sustainability information as a key factor in evaluating a company's long-term growth and stability.
Companies that do not disclose sustainability information are highly likely to be excluded from ESG investment targets, which could lead to difficulties in raising capital.
3. International trends
International standards for sustainability are being established, and the mandatory disclosure of information is progressing in various countries. In Japan as well, disclosing information in line with international standards is essential to survive in global competition.

◆ The significance of sustainability information disclosure

Disclosing sustainability information is not just an obligation for companies; it brings the following benefits:

1. Improvement of corporate value
By actively disclosing sustainability initiatives, you can improve your corporate image and gain the trust of investors and customers.
2. Risk management
By identifying sustainability-related risks in advance and taking countermeasures, you can reduce management risks.
3. Promotion of innovation
Through sustainability initiatives, you can create new business opportunities.
4. Strengthening relationships with stakeholders
You can strengthen relationships with various stakeholders, such as employees, the local community, and customers, and fulfill your corporate social responsibility.

◆ Summary

Sustainability information disclosure is an important trend indicating that the environment surrounding companies is changing significantly. To respond to this change, companies need to deeply understand the impact their business activities have on the environment and society and actively disclose information.
Sustainability information disclosure can be said to be not just an obligation, but a new opportunity for corporate growth and development.

[Next Issue Preview]
In the next newsletter, I will introduce the SSBJ and ISSB, which are major organizations involved in sustainability information disclosure, and explain what sustainability information disclosure specifically refers to.

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