Japanese Firms’ Approach for Strengthening SDGs/ESG Using Climate Change Adaptation

Abstract

In recent years, an increasing number of companies in Japan have been taking steps to address the Sustainable Development Goals set forth by the United Nations and ESG investment as a means of realizing these goals. According to the “Corporate Awareness Survey on SDGs (2021)” conducted by Teikoku Databank, 39.7% of companies responded that they are “actively working on SDGs,” indicating that about 40% of companies are aware of and are actively responding to the SDGs. As for the latter, 90% of the TOPIX100 constituents have published integrated reports, which include ESG and financial information, indicating that corporate interest in ESG is very high. On the contrary, SDGs is often said that only large companies have the financial and human resources to actively engage in ESG-related information disclosure. Meanwhile, the “adaptation business,” in which companies participate in climate change adaptation, is attracting attention, since some companies in Japan, which is vulnerable to natural disasters, have accumulated knowledge and technology from the past, used as a business opportunity. By qualitative analysis using literature review and scrutinizing online information, the paper shows how corporate awareness of climate change adaptation is changing in a region where manufacturing accounts for nearly 40% of total output and introduces examples of how product development with climate change adaptation increased small and medium-sized corporate’s performance as an innovation driver and decreased the customers’ carbon dioxide emission.