WEBVTT - How Japan’s Governance Code Reshapes the Market

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<v Speaker 1>ESG is constantly evolving over the years. He it is

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<v Speaker 1>shifted from socially responsible investing to impact to sustainable finance.

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<v Speaker 1>While the terminology continues to change, what hasn't changed are

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<v Speaker 1>the underlying science market pressures, tangible physical and financial impacts

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<v Speaker 1>of the climate crisis, as well as increasing regulatory scrutiny

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<v Speaker 1>and rising consumer expectations. We aim to filter out the

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<v Speaker 1>noise by speaking with industry experts to identify what is

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<v Speaker 1>really driving value. Welcome to ESG Currents, brought to you

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<v Speaker 1>by Bloomberg Intelligence.

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<v Speaker 2>Hello everyone, and welcome. I'm Homa ESG strategist and I'll

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<v Speaker 2>be a host for today's episode. Today it will be

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<v Speaker 2>discussing corporate governance in Japan. Since the original Corporate Governance

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<v Speaker 2>Code was introduced in twenty fifteen, it has been revised

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<v Speaker 2>several times to strength and shareholder value and hence invest

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<v Speaker 2>engage meant protect minority shareholder rights and promote gender diversity.

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<v Speaker 2>Another revision is expected in twenty twenty six, which is

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<v Speaker 2>likely to further accelelate progress in these areas. The Japanese

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<v Speaker 2>Exchange Group, which operates Tokyos Exchange, also plays an important

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<v Speaker 2>role in shaping corporate governance. It has been focusing on

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<v Speaker 2>improving communication between investors and listed companies with the aim

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<v Speaker 2>of fostering a better mutual understanding of corporate strategies and

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<v Speaker 2>how companies can enhance their valuations. As a result, we've

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<v Speaker 2>seen an increase in shareholder proposals, including from activisty investors,

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<v Speaker 2>covering topics such as diffidend increases, share by box, gender diversity,

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<v Speaker 2>and environmental issues. With that in mind, I'm pleased to

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<v Speaker 2>be joined by Yasunori Takeuchi, CEO and the representative director

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<v Speaker 2>of Corporate Action Japan. We'll be discussing what the organization does,

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<v Speaker 2>how it supports equity Issue Werk, and how it encourages

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<v Speaker 2>both companies and investors to move toward zero society. Thank

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<v Speaker 2>thank you very much for joining us today.

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<v Speaker 3>Thank you Homazon having me today.

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<v Speaker 2>Thank you to start. Could you tell us a bit

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<v Speaker 2>about your organization. What is Corporate Action Japan and what

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<v Speaker 2>role does it play?

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<v Speaker 3>Yes, Corproduction Japan is a climate to relate. It a

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<v Speaker 3>non profit organization which aims to promote the realization of

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<v Speaker 3>the sustainable global environment for the public good. Our mission

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<v Speaker 3>is to drive impactful actions across Japanese companies to address

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<v Speaker 3>climate crisis with a vision of an envisioned Japan as

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<v Speaker 3>a leader in climate solutions for the people and the

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<v Speaker 3>planet to thrive. CJA itself is a shareholder, while our

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<v Speaker 3>holding is just a minority shares. Our approach is that

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<v Speaker 3>through engagement with the Japanese company in collaboration with the

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<v Speaker 3>institutional investors, we seek credible transition to net zero from

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<v Speaker 3>the perspective of increasing a corporate value over the medium

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<v Speaker 3>to long term. In particular, we focus on those companies

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<v Speaker 3>in high emitting sectors to take tangible actions to decarbonize

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<v Speaker 3>from supply chain perspective. We also engage with the policy

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<v Speaker 3>makers to help and enable companies to accelerate the effort

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<v Speaker 3>with economic viability. The members of the CAJA consist of

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<v Speaker 3>the seasoned professionals of finance and asset management, including myself.

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<v Speaker 3>We have to solve the challenges of a climate change

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<v Speaker 3>from a perspective of business and economic rationality, not just

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<v Speaker 3>for environment. Different from the consultant firms which provide advice

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<v Speaker 3>in response to the company's request on fee basis, j

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<v Speaker 3>works from neutral standpoints. As an independent nonprofit organization. We

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<v Speaker 3>encourage companies to address climate change not only compliance perspective,

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<v Speaker 3>but to demonstrate leadership during that transition to a net

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<v Speaker 3>zero society as an opportunity to enhance corporate value.

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<v Speaker 2>Great, thank you for that overview. Let's turn to the

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<v Speaker 2>Corporate Governance Code, which could have a significant impact on

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<v Speaker 2>the Japanese equity market. The upcoming revision is expected to

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<v Speaker 2>father strength and investor engagement sustainability initiatives. How do you

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<v Speaker 2>see this revision influencing the market?

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<v Speaker 3>Thank you. The Corporate Governance Code was introduced in Japan

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<v Speaker 3>in twenty fifteen. It has been revised twice so far,

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<v Speaker 3>in twenty eighteen in the twenty twenty one. This revision

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<v Speaker 3>in twenty twenty six is the third revision. In this revision,

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<v Speaker 3>stream raining and simplifying the code and the redisseminate the

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<v Speaker 3>purpose of the principle based and a comply or explain

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<v Speaker 3>approach are the key directions. The direction was set out

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<v Speaker 3>in the Action Program twenty twenty five, which was published

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<v Speaker 3>by the Japan FSA as an outcome of preparation work.

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<v Speaker 3>The purpose of this revision is to materialize corporate governance.

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<v Speaker 3>The proposed draft is a simpler structure than the current

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<v Speaker 3>corporate Governance Code. By the implication of the supplementary principle

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<v Speaker 3>and the establishment of the new forward. It is a

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<v Speaker 3>commendable that the revised Code set out the substantive implementation

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<v Speaker 3>of a corporate governance through aggressive governance, not just a

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<v Speaker 3>defensive governance which is limited to formality. Strengthening the function

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<v Speaker 3>of the Board of Director's Secretary art and the substantiating

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<v Speaker 3>of the independent outside directors are required in addition to

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<v Speaker 3>appropriate allocation of the management resources and strengthen the function

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<v Speaker 3>of the Board of Directors in order to realize substantive

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<v Speaker 3>corporate governance under the revised Code. We believe that the

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<v Speaker 3>dialog with the investors based on the trust relationship with

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<v Speaker 3>the tenth is essential. Meaningful dialog with the investor will

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<v Speaker 3>truly contribute to the sustainable growth of the company and

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<v Speaker 3>the enhancement of the corporate value over the medium to

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<v Speaker 3>long term is important. CJA places a great importance on

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<v Speaker 3>dialog with the directors on sustainability issues related to climate change.

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<v Speaker 3>We hope that the revision of the Corporate Governance Code

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<v Speaker 3>we have strengthen the function of the independent outside directors.

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<v Speaker 3>As a result, we expect that the discussion on the

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<v Speaker 3>sustainability at the board of directors will be more.

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<v Speaker 2>Active, wonderful or merva follow up question, do you expect

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<v Speaker 2>both of directors have knowledge on austainability issues on top

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<v Speaker 2>of general corporate management?

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<v Speaker 3>Well, both of directors expected to have a knowledge that

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<v Speaker 3>topics such as finance and the accounting and their business strategy. First,

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<v Speaker 3>disclose your information on the climate change and the human

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<v Speaker 3>resources sometimes called non financial information, but I think it

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<v Speaker 3>should be yet to be financial information or future financial information.

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<v Speaker 3>Accounting for Sustainability or a FOS. In the UK which

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<v Speaker 3>was established by King Charles when he was Prince, the

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<v Speaker 3>concept of integrated reporting was introduced. There is an integrating

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<v Speaker 3>ESG element into a financial decision and the reporting and

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<v Speaker 3>the contributing to the resilience and the growth of the

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<v Speaker 3>business of the medium to long term. CJ has been

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<v Speaker 3>working with the FOS to support its activity in Japan

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<v Speaker 3>for three years and it provides various opportunity for discussion

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<v Speaker 3>for companies and the investors. I think this kind of

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<v Speaker 3>a new concept of the financial reporting of financial disclosure

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<v Speaker 3>is important to the board of director and also climate

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<v Speaker 3>change is a medium to long term risk and it

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<v Speaker 3>is important to understand the physical and the transition risks

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<v Speaker 3>from the long term perspective, not just a three years term,

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<v Speaker 3>which is a typical term of the mid term strategy

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<v Speaker 3>by many Japanese companies. As McConney pointed out in his

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<v Speaker 3>speech titled The Tragedy of Horizon, it must be said

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<v Speaker 3>that it is difficult to respond appropriety to sustainabrity as

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<v Speaker 3>long as the dicsion makers remain in a short term perspective.

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<v Speaker 3>This is another skill set for the board of director

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<v Speaker 3>to be expected. It is appropriate for the board of

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<v Speaker 3>director to thoroughly discuss these important business matters related to

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<v Speaker 3>climate change. Independent outside directors who are appointed by shareholders

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<v Speaker 3>are expected to supervise management independently from business execution and

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<v Speaker 3>as a representative of the common interest of the shareholders.

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<v Speaker 3>In the UK, Chapter Zero Alliance has published its guiding

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<v Speaker 3>Principle on Climate Governance. CJA is working to spread this

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<v Speaker 3>principle as an effective tool to strength the climate governance. So,

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<v Speaker 3>in answer to your question, I think the bord of directors,

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<v Speaker 3>especially outside directors, expected to hold the various skill sets

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<v Speaker 3>and the activate the discussion at the boardroom.

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<v Speaker 2>Great, thank you, let's move on. We've seen major banks

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<v Speaker 2>such as the mets BCU Financial Group, Misuhole Financial Group

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<v Speaker 2>and submitle MIDSI Financial Group, as well as power companies

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<v Speaker 2>receive shareholder proposals on climate change here after year. How

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<v Speaker 2>do you view these proposals and what are your expectations

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<v Speaker 2>for the upcoming shareholder meetings this year?

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<v Speaker 3>Thank you. At CJ Co Production Japan, we focus on

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<v Speaker 3>high emitting sectors which are so called how to avate

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<v Speaker 3>industry sectors. We are not engaging with the financial sectors,

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<v Speaker 3>but we understand that the financial sector has an important

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<v Speaker 3>role to play to realize transition to net zero. In

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<v Speaker 3>that sense, we welcome the progress of a climate action

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<v Speaker 3>by Japanese banks if they take a voluntary or in

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<v Speaker 3>response to the shareholder proposal. In our engagement work at

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<v Speaker 3>the CEJA, shareholder resolution is an escalation option when engagement

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<v Speaker 3>dialog gets stuck or not progressing as we expect it.

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<v Speaker 3>Our focus is to bring out outcome as a result

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<v Speaker 3>of the engagement work. We pter significant importance on constructive

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<v Speaker 3>dialog and we try to look into every other option

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<v Speaker 3>before escalating to shareholder proposal. As for contents of a

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<v Speaker 3>climate change related shareholder proposal in Japan. It has been

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<v Speaker 3>mainly related to the disclosure such as disclosure of a

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<v Speaker 3>reduction target, disclosure of the action plan in line of

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<v Speaker 3>the Parsagreement, disclosure of the lobbying activities, et cetera. Last

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<v Speaker 3>year there was a proposal focusing on the competency of

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<v Speaker 3>the Directors for Climate Change. In the recent years in Japan,

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<v Speaker 3>there have been poor CY advancement such as a mandatory

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<v Speaker 3>disclosure of the SSBJ sustain repety information disclosure and the

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<v Speaker 3>launch of the GXTS which is japan Budgie on the

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<v Speaker 3>carbon price. This poor c requires the further disclosure, so

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<v Speaker 3>I think many Japanese company will make a progress in

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<v Speaker 3>the area of the disclosure. Against this backdrop, we believe

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<v Speaker 3>that there will be more discussion on the actions such

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<v Speaker 3>as implementation aspect of the net zero credibility of the

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<v Speaker 3>transition plan, integration of the risk assessment and the financial planning,

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<v Speaker 3>and the climate relay did a governance including incentives and

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<v Speaker 3>the accountability system. When I attend the International Conference on

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<v Speaker 3>the Climate Change recently, I feel that a key message

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<v Speaker 3>such as from disclosure to action or from commitment to

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<v Speaker 3>action stands out. Although the number of the companies and

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<v Speaker 3>the institution that's about. The TCFD in Japan was almost

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<v Speaker 3>about oney five hundred, which account for nearly one third

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<v Speaker 3>of the award's total number. It is not necessarily in

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<v Speaker 3>astiation that Japan is leading the world in actual emission

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<v Speaker 3>reduction or the carbonization in the future. I think those

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<v Speaker 3>companies that have made a promise and the commitment and

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<v Speaker 3>a disclosure but do not take action will be regarded

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<v Speaker 3>more strictly than ever. At COJA, when we engage with

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<v Speaker 3>the company in Japan high making sector, we do not

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<v Speaker 3>simply encourage disclosure, but we also discuss spisk transition plans

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<v Speaker 3>and there are tangible actions including a capture locasion based

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<v Speaker 3>on the steation and the strategy of the individual companies.

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<v Speaker 2>Thank you, that's wonderful. Let's move on to government policy.

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<v Speaker 2>Under the current administration, there is a push to restart

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<v Speaker 2>nuclear power generation and invest in new technologies such as

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<v Speaker 2>peroviskuid sol ourselves. The government is also planning to fully

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<v Speaker 2>implement a gxts W Green Trust Information Emission treating system

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<v Speaker 2>this fiscal year. As you just touched upon, what are

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<v Speaker 2>your thoughts on these policies and the Japan's approach to

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<v Speaker 2>achieving net zero emissions. Do you think these airports are sufficient?

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<v Speaker 3>Thank you that TA page Cabinets Economic Growth Strategy published

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<v Speaker 3>recentry is based on the two pillars, which are crisis

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<v Speaker 3>management investment and the growth investment. It focuses on investment

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<v Speaker 3>in seventeen strategic areas, but the priorities for each sector

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<v Speaker 3>and the expected time schedule for the economic impact in

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<v Speaker 3>each area are not necessarily clear. Japan pays twenty to

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<v Speaker 3>thirty yen annuary for the import of a fossil fuel.

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<v Speaker 3>More than ninety percent of the crude oil is dependent

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<v Speaker 3>on Midile East. Concerning that these points are currently a

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<v Speaker 3>severe chockpoint for Japanese economy, the development of their technology

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<v Speaker 3>that contribute to the elimination of a fossil fuel is

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<v Speaker 3>the most important strategic area that will greatly contribute to

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<v Speaker 3>the Japan's national interest. Among them, I believe that new

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<v Speaker 3>the governors technology such as the nuclear technology and the

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<v Speaker 3>peruble skite solar cell just as you mentioned, the area

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<v Speaker 3>in which Japan can take a leading position. This is

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<v Speaker 3>also in line with the basic energy policy by the

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<v Speaker 3>MET Minister of Economy, Trade and the Industry, which is

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<v Speaker 3>called the s plus three E memory, safety, energy security,

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<v Speaker 3>economic efficiency and the environment. Important thing is the speed

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<v Speaker 3>and a scale up in implementation to industry. Japan was

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<v Speaker 3>a leading technological or department in various fields such as

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<v Speaker 3>a solar panel and a storage battery in the past,

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<v Speaker 3>but Japan does a leading position to China in the

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<v Speaker 3>phase of the implementation and the commerceization. Reflecting the background,

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<v Speaker 3>it is a important to promote advanced technology into operation

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<v Speaker 3>with a commercial scale, not just the research and the development.

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<v Speaker 3>We are entering into an era in which tariffs and

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<v Speaker 3>the critical mineral are openly used as a strategic card

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<v Speaker 3>in the trade and the economic negotiation. We need to

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<v Speaker 3>be conscious of the risk of the supply chain disruption

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<v Speaker 3>which may affect economic and the industry system. At the

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<v Speaker 3>national rebel, strategic autonomy and the strategy indispensability are emphasized

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<v Speaker 3>in the context of the geoeconomics. Given that the outstanding

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<v Speaker 3>government debt as a percentage of the GDP continue to

0:17:43.920 --> 0:17:48.480
<v Speaker 3>exceed two hundred percent, and that that long term interest

0:17:48.560 --> 0:17:53.840
<v Speaker 3>rate of Japanese yen have been rising recently, there will

0:17:53.840 --> 0:17:57.679
<v Speaker 3>be a limit of Japan's ability to provide a comprehensive

0:17:57.760 --> 0:18:03.560
<v Speaker 3>physical support even if governments intend to promote economic laws.

0:18:04.400 --> 0:18:08.040
<v Speaker 3>In addition, considering the trend of the weakening of the

0:18:08.119 --> 0:18:11.840
<v Speaker 3>Japanese m in foreign exchange market and the rise of

0:18:11.880 --> 0:18:16.760
<v Speaker 3>their living costs, immediate strategic priority should be given to

0:18:16.960 --> 0:18:22.879
<v Speaker 3>the areas such as an input substitution or export an expansion.

0:18:23.320 --> 0:18:28.639
<v Speaker 3>As a national economic strategy. Gx ETS, which is a

0:18:28.720 --> 0:18:32.399
<v Speaker 3>japan burgion of the carbon price, had just launched in

0:18:32.520 --> 0:18:37.120
<v Speaker 3>April twenty twenty six. It remained to be seen how

0:18:37.200 --> 0:18:40.680
<v Speaker 3>effective it would be in reduction of the carbon emission.

0:18:42.000 --> 0:18:46.240
<v Speaker 3>While individual company make an effort to reduce a carbon emission,

0:18:47.119 --> 0:18:51.520
<v Speaker 3>there are situations where barriers cannot be overcome by the

0:18:51.560 --> 0:18:56.960
<v Speaker 3>effort of an individual company alone. For example, even if

0:18:57.359 --> 0:19:01.560
<v Speaker 3>company want to invest in manufacturing a green products, it

0:19:01.640 --> 0:19:04.000
<v Speaker 3>may not pay off because of the lack of the

0:19:04.000 --> 0:19:08.680
<v Speaker 3>reception to demand at the reasonable cost premium. We see

0:19:08.880 --> 0:19:13.040
<v Speaker 3>this kind of a chicken and xetation in various levels

0:19:13.040 --> 0:19:17.760
<v Speaker 3>of the supply chain. This is an area where pricingmakers

0:19:17.800 --> 0:19:21.840
<v Speaker 3>can step in to promote creation of the green products market.

0:19:22.680 --> 0:19:26.480
<v Speaker 3>Considering the fossil fuel elimination and the decogonization or in

0:19:26.600 --> 0:19:31.520
<v Speaker 3>Japan's national interest, it can be said that those companies

0:19:32.080 --> 0:19:38.800
<v Speaker 3>adopting strategies of our optimization rather than suboptimal strategy will

0:19:38.880 --> 0:19:44.480
<v Speaker 3>lead to accelerating the transition to the carbonization industry system.

0:19:44.880 --> 0:19:48.120
<v Speaker 3>It will also bring benefit to the Japanese economy as

0:19:48.160 --> 0:19:53.560
<v Speaker 3>a whole, in the sense prisymakers can do more not

0:19:53.640 --> 0:19:58.959
<v Speaker 3>only list up gross strategy in the respective seventeen individual areas,

0:19:59.480 --> 0:20:03.840
<v Speaker 3>but to go further to the industry system level as

0:20:03.840 --> 0:20:09.119
<v Speaker 3>a whore. I believe that enhancing the strategic autonomy of

0:20:09.160 --> 0:20:12.320
<v Speaker 3>the economy through that the commendation should be a peer

0:20:12.640 --> 0:20:17.399
<v Speaker 3>of the economic laws strategy. Specifically, it is possible to

0:20:17.440 --> 0:20:22.200
<v Speaker 3>support effort to corporate on the combondation in supply chain

0:20:22.880 --> 0:20:26.600
<v Speaker 3>so that the collectible action such as a joint purchasing

0:20:26.640 --> 0:20:30.520
<v Speaker 3>of the green products can create green products market.

0:20:31.960 --> 0:20:36.159
<v Speaker 2>Thank you understood. So I also like to get your

0:20:36.280 --> 0:20:39.880
<v Speaker 2>perspective on investors. What do you think are the most

0:20:39.960 --> 0:20:45.240
<v Speaker 2>important considerations for investors aiming to support the zero transition?

0:20:45.920 --> 0:20:50.000
<v Speaker 2>Should they prioritize companies that are already making strong progress

0:20:50.119 --> 0:20:54.800
<v Speaker 2>on decombanization or those with higher emissions that are actively

0:20:55.200 --> 0:20:56.800
<v Speaker 2>working to reduce them now.

0:20:57.760 --> 0:21:01.760
<v Speaker 3>Thank you. I believe that both asset managers and the

0:21:01.840 --> 0:21:05.960
<v Speaker 3>asset owners should focus on the maximum interests of the

0:21:06.040 --> 0:21:10.280
<v Speaker 3>ultimate benefitaries which are people and the indevidutors and the

0:21:10.480 --> 0:21:16.840
<v Speaker 3>artimate investors. To answer your question whether investors should prioritie

0:21:17.400 --> 0:21:20.120
<v Speaker 3>that are already making a strong progress on the carbonization

0:21:20.960 --> 0:21:24.760
<v Speaker 3>or those with higher emission that are actively working to

0:21:24.840 --> 0:21:29.280
<v Speaker 3>reduce them, we believe that it is reasonable to invest

0:21:29.560 --> 0:21:33.359
<v Speaker 3>not only the current station of the emission reduction, but

0:21:33.400 --> 0:21:38.600
<v Speaker 3>also in how each initiative will lead to the increase

0:21:38.640 --> 0:21:41.720
<v Speaker 3>of the corporate value in the medium to long term

0:21:42.080 --> 0:21:47.520
<v Speaker 3>in the future. In both example, some companies are using

0:21:47.520 --> 0:21:53.160
<v Speaker 3>the combonization as a business opportunity, while some others are

0:21:53.280 --> 0:21:56.360
<v Speaker 3>at risks of the stranded asset due to the lack

0:21:56.400 --> 0:21:59.720
<v Speaker 3>of the alignment to enhancement of the corporate value. On

0:21:59.760 --> 0:22:03.639
<v Speaker 3>top of that, I believe it is more important to

0:22:03.680 --> 0:22:08.560
<v Speaker 3>engage investee companies so that they can improve their corporate

0:22:08.640 --> 0:22:12.520
<v Speaker 3>value through the carbon relagion effort. So not just a

0:22:12.600 --> 0:22:16.879
<v Speaker 3>selection of the investee company, but the engagement through the

0:22:17.320 --> 0:22:23.119
<v Speaker 3>dialog is very important. This is so called engagement to alpha,

0:22:24.200 --> 0:22:29.760
<v Speaker 3>aiming the access revenue of the individual companies in addition

0:22:29.800 --> 0:22:32.800
<v Speaker 3>to the enhancement of the corporate value on a specific

0:22:32.880 --> 0:22:38.760
<v Speaker 3>investee companies. It is also important to enhance total value

0:22:38.800 --> 0:22:42.760
<v Speaker 3>of the entire portfolio in the medium to long term,

0:22:43.040 --> 0:22:46.159
<v Speaker 3>which is directly related to the interest of the end

0:22:46.160 --> 0:22:50.439
<v Speaker 3>the investors such as the public and the individual. For

0:22:50.680 --> 0:22:56.119
<v Speaker 3>universal investors who diversify their investment across many stocks, it

0:22:56.240 --> 0:23:00.680
<v Speaker 3>is neither practical nor effective to engage with the old

0:23:00.720 --> 0:23:05.400
<v Speaker 3>investing companies equally, but it will be a practical in

0:23:05.440 --> 0:23:10.119
<v Speaker 3>the effective to focus on the companies which the conversation

0:23:10.280 --> 0:23:14.919
<v Speaker 3>effort have a broader impact through supply chain and the

0:23:15.119 --> 0:23:19.280
<v Speaker 3>enhancement of the corporate varrie as a portfolio is expected.

0:23:20.600 --> 0:23:23.880
<v Speaker 3>This is an appl cover as well for passive investors

0:23:24.320 --> 0:23:29.680
<v Speaker 3>whose portfolio is linked to the market index. This is

0:23:30.320 --> 0:23:34.320
<v Speaker 3>so called the better engagement aiming at the rising the

0:23:34.440 --> 0:23:40.399
<v Speaker 3>value of the over market. CJA believe that accelerating the

0:23:40.520 --> 0:23:44.520
<v Speaker 3>transition to net zero through their supply chain by concrete

0:23:44.600 --> 0:23:49.040
<v Speaker 3>effort to reduce carbon emission by company in high emitting

0:23:49.119 --> 0:23:54.560
<v Speaker 3>sectors is critically important. It will reduce the risk of

0:23:54.600 --> 0:23:58.479
<v Speaker 3>the climate change and the enhance their resilience of supply

0:23:58.600 --> 0:24:03.960
<v Speaker 3>chain by increasing a corporate value and the transforming the

0:24:04.200 --> 0:24:08.640
<v Speaker 3>Japan's industrial system in the medium to long term. As

0:24:08.640 --> 0:24:14.200
<v Speaker 3>a result, we believe that this will contribute to improving

0:24:14.240 --> 0:24:17.240
<v Speaker 3>the overall performance of the investor's portfolio.

0:24:18.160 --> 0:24:22.920
<v Speaker 2>Excellent, Thank you so much. Finally, let's look at the US.

0:24:23.280 --> 0:24:26.840
<v Speaker 2>The Trump administration has moved away from the Paris Agreement,

0:24:27.160 --> 0:24:31.320
<v Speaker 2>which contrasts with the direction taken in other regions. Given

0:24:31.359 --> 0:24:36.840
<v Speaker 2>this divergence, how should Japan government, work, corporations and investors respond,

0:24:37.000 --> 0:24:40.480
<v Speaker 2>particularly in the context of global decabalization airport.

0:24:42.480 --> 0:24:46.600
<v Speaker 3>Since Trump two point zero started last year, it is

0:24:46.680 --> 0:24:50.119
<v Speaker 3>certain that there has been a backlash which affect to

0:24:50.160 --> 0:24:54.440
<v Speaker 3>the transition to net zero. US government has withdrawn from

0:24:54.520 --> 0:25:01.200
<v Speaker 3>the Paris Agreement, many banks, insurance companies have left Defense Initiative,

0:25:01.880 --> 0:25:07.800
<v Speaker 3>and ESG related activities blagerly disappeared. This is not the

0:25:07.880 --> 0:25:12.239
<v Speaker 3>first time, as we have seen the same movement in

0:25:12.320 --> 0:25:17.000
<v Speaker 3>Trump one point zero, which started in twenty sixteen. We

0:25:17.040 --> 0:25:20.680
<v Speaker 3>should understand that these movements are based on the good

0:25:20.720 --> 0:25:25.119
<v Speaker 3>business reason, such as avoiding the risks of being sued

0:25:25.640 --> 0:25:29.920
<v Speaker 3>for anti trust viration, avoiding the risk of the being

0:25:30.000 --> 0:25:34.159
<v Speaker 3>excluded from doing business with the public sectors. It's et cetera.

0:25:35.600 --> 0:25:40.240
<v Speaker 3>But we should notice these movements are rooted in the

0:25:40.560 --> 0:25:46.560
<v Speaker 3>American political system in which various issues become political issues.

0:25:47.720 --> 0:25:51.680
<v Speaker 3>It is uncertain whether this trend will continue in the future.

0:25:53.080 --> 0:25:57.239
<v Speaker 3>Regardless of this trends, there are many voices saying that

0:25:57.320 --> 0:26:02.760
<v Speaker 3>the decobs national effort are proceeding as before. In the US,

0:26:03.200 --> 0:26:06.480
<v Speaker 3>there is a non federal climate coalition called the America

0:26:06.600 --> 0:26:11.000
<v Speaker 3>Is All In. This is a coalition formed by merging

0:26:11.040 --> 0:26:13.800
<v Speaker 3>the Climate Action Coalition called that We Are Still In

0:26:14.920 --> 0:26:19.480
<v Speaker 3>and the Climate Action Initiative called the America's Pledge, which

0:26:19.600 --> 0:26:23.400
<v Speaker 3>was formed when the United States announced its withdrawal from

0:26:23.400 --> 0:26:28.320
<v Speaker 3>Paris Agreement during that Trump one point zero America Is

0:26:28.320 --> 0:26:33.440
<v Speaker 3>All In has thousands of members, consists of the non

0:26:33.480 --> 0:26:43.639
<v Speaker 3>federal organization including state governments, municipalities, tribal governments, corporation, university,

0:26:44.119 --> 0:26:50.040
<v Speaker 3>medical institutions, cultural institutions, and the regous organization, et cetera.

0:26:51.560 --> 0:26:56.120
<v Speaker 3>It accounts for approcasmetry sixty five percent of the population

0:26:57.280 --> 0:27:01.560
<v Speaker 3>and the sixty eight percent of the GDP in US.

0:27:02.440 --> 0:27:06.640
<v Speaker 3>It covers about half of the greenhouse gas emission from

0:27:06.680 --> 0:27:12.040
<v Speaker 3>the entire US. This is the scale at to which

0:27:12.359 --> 0:27:16.480
<v Speaker 3>the United States as a whore can advance its climate

0:27:16.520 --> 0:27:22.440
<v Speaker 3>goals without a federal government moving In fact, America is

0:27:22.520 --> 0:27:27.000
<v Speaker 3>all ring is based on the Blueprint twenty thirty or

0:27:27.040 --> 0:27:32.720
<v Speaker 3>in climate strategy, and as a practical level, they do

0:27:32.840 --> 0:27:41.119
<v Speaker 3>initiative such as an introduction of their renewable energy in municipalities, school, district, hospital,

0:27:42.119 --> 0:27:48.080
<v Speaker 3>creating a clean energy job, strengthening their regional resilience through

0:27:48.119 --> 0:27:53.760
<v Speaker 3>flood and the heat wave countermeasures, and supporting the implementation

0:27:53.840 --> 0:27:58.240
<v Speaker 3>of the federal subsidies such as the IRA in local areas.

0:27:59.440 --> 0:28:02.600
<v Speaker 3>If you look at the headline and the social media

0:28:03.040 --> 0:28:07.680
<v Speaker 3>that convey that Trump administrations and narratives, I think there

0:28:07.720 --> 0:28:11.880
<v Speaker 3>is a risk of misunderstanding the movements of the US

0:28:12.080 --> 0:28:17.119
<v Speaker 3>as a whole. Global warming is a global program and

0:28:17.280 --> 0:28:20.320
<v Speaker 3>it is a problem that can already be dealt with

0:28:20.680 --> 0:28:26.480
<v Speaker 3>through mitigation or adaptation apart from the policies of the

0:28:26.640 --> 0:28:32.280
<v Speaker 3>current to government. To achieve this, it is reasonable and

0:28:32.440 --> 0:28:36.600
<v Speaker 3>effective for various takeholders to share awareness of a climate

0:28:36.680 --> 0:28:42.040
<v Speaker 3>change risks and work together to respond to them. In Japan,

0:28:42.880 --> 0:28:48.200
<v Speaker 3>extreme weather such as extreme heat, super typhoons and a

0:28:48.240 --> 0:28:52.280
<v Speaker 3>record of breaking a heavy rain already becoming very common

0:28:52.880 --> 0:28:58.360
<v Speaker 3>and getting severer and more frequent. The impact by those

0:28:58.640 --> 0:29:04.040
<v Speaker 3>extreme weather on the economy, society and the health is

0:29:04.080 --> 0:29:10.040
<v Speaker 3>becoming significant. According to the World Economic Forums Global Risk

0:29:10.160 --> 0:29:15.640
<v Speaker 3>Report twenty twenty six, global rebusiness leaders rank extreme weather

0:29:16.160 --> 0:29:20.640
<v Speaker 3>as the top ten risks for the next decades and

0:29:20.760 --> 0:29:25.600
<v Speaker 3>how the top ten environment risk such as a climate change.

0:29:26.280 --> 0:29:31.520
<v Speaker 3>Under these circumstances, I believe it is important for Japanese government,

0:29:32.200 --> 0:29:36.800
<v Speaker 3>companies and investors to steady advanced effort to add the

0:29:36.880 --> 0:29:42.240
<v Speaker 3>net trrot by integrating environment and economic various from mid

0:29:42.320 --> 0:29:47.120
<v Speaker 3>to long term perspective, regardless of the current political movement

0:29:47.760 --> 0:29:54.000
<v Speaker 3>in some market. Although some companies adjusting their strategy in

0:29:54.040 --> 0:29:59.440
<v Speaker 3>response to the change of the current stitation I mean backlash,

0:29:59.680 --> 0:30:02.880
<v Speaker 3>we have the impression that most of the Japanese company

0:30:03.680 --> 0:30:07.480
<v Speaker 3>keeps their long term goal and the proceeding with the

0:30:07.720 --> 0:30:12.200
<v Speaker 3>effort in a steady manner. As a geopolitical risks of

0:30:12.280 --> 0:30:16.600
<v Speaker 3>becoming apparent in various regions including a Midiley East, it

0:30:16.680 --> 0:30:21.200
<v Speaker 3>may be the great chance for Japan to transform its

0:30:21.240 --> 0:30:26.600
<v Speaker 3>economy and the industrial structure more self suffcent and the

0:30:26.640 --> 0:30:32.080
<v Speaker 3>more regerient by using a renewable energy and other decarbonized energy.

0:30:32.800 --> 0:30:36.800
<v Speaker 3>As a corporate Japan, we would like to contribute to

0:30:36.880 --> 0:30:40.600
<v Speaker 3>the overall optimization of the japan economy and the industry

0:30:41.400 --> 0:30:46.320
<v Speaker 3>rather than partial optimization of the individual company. As a result,

0:30:47.200 --> 0:30:52.160
<v Speaker 3>we expect Japanese company to continue to shine with their

0:30:52.200 --> 0:30:57.080
<v Speaker 3>competitiveness and a contribution to the next generation. Back to

0:30:57.080 --> 0:30:59.840
<v Speaker 3>your Homazon, thank you wonderful.

0:31:00.080 --> 0:31:02.480
<v Speaker 2>That's all for me today. Thank you takouch Sam for

0:31:02.520 --> 0:31:04.920
<v Speaker 2>giving us your insight. We really appreciate it.

0:31:04.960 --> 0:31:05.760
<v Speaker 3>Thank you very much.