Director, Nikkei Research SDGs Center
Masanori Koizumi
In this article, we will explore the following three topics; companies’ (1) progress in promoting SDGs management, (2) progress in taking actions to address environmental issues, and (3) progress in responding to issues related to respect for human rights and actions to it, from the data of the Nikkei SDGs Management Survey.
The Nikkei SDGs Management Survey targeted public listed companies and non-listed companies with over 100 employees. It was conducted from May to July 2021. The survey asked each company about its status from the perspective of SDGs management. 846 companies cooperated in 2021, and the number of cooperation is increasing every year since the first survey in 2017 (637 companies). Each participating company's progress in SDGs management is scored and announced in the newspaper as a ranking with a rating of 5 stars at maximum.
80% of the total 846 responding companies in 2021 have answered that messages are sent out by top leadership for promoting SDGs management. The score has increased by 5 points since 2020.
The group of companies rated as 3 stars, around 150 companies, will be cited as the “average position” or "average companies" hereafter. This is to see the behavior of companies in the median position since some companies are more advanced than others. Almost all of the companies in this median position have had the top leadership send out messages. This group of average position companies is proceeding ahead of the overall average, indicating that many other, broad range of companies have also done so.
In addition, nearly half of the companies, an increase of 10 points from the previous year, are sending out messages on their progress and achievements in contributing to the SDGs. 36% (up 10 points from the previous year) of companies agreed with or supported the recommendation of TCFD (Task Force on Climate-Related Financial Disclosures) in terms of participation and involvement in the initiative.
Furthermore, more than 30% (5 points increase from the previous year) of companies overall have “internal audits” and “evaluations by external directors” for their evaluation of the actions of the promotion system. Among the average position companies, 40% have implemented those measures. The group of average companies was at the 20% level previously, resulting in an increase of nearly 20 points over just one year. Regarding the promotion system, we can see companies that installed observational audits for their actions steadily increased from the previous year.
Next, we will look at the status of corporate actions to address environmental issues. We asked the respondents whether or not they are taking action to solve environmental issues in three areas: “climate change mitigation/adaptation,” “use of sustainable resources,” and “conservation of biodiversity and biological ecosystems.”
Upon setting numerical targets for their entire company, two-thirds of the total responded to the target area of “climate change mitigation/adaptation” and half responded to “use of sustainable resources”.
Although there were no significant changes from 2020, the results show that the number of companies engaged in this area is increasing. Companies in the average position are proceeding ahead, with 90% having set numerical targets for “climate change mitigation/adaptation” and 70% for “use of sustainable resources”.
The percentage of companies that have identified and disclosed risks is 30% for both overall and average position companies. The number of average companies who have identified the risks but have not yet disclosed them increased significantly from 2020 to 2021. In the near future, those companies are expected to disclose.
In terms of specific efforts and actions, 70% overall indicated that they are currently working on “establishing procedures for handling complaints and redress” and “establishing detailed guidelines on respect for human rights”.
For companies in the average position, “establishing procedures for handling complaints and redress” and “education and training on human rights” account for nearly 90%. In addition, nearly 80% have “established a position or department responsible for human rights” and 70% have “established detailed guidelines on respect for human rights”. Similar to the case of efforts to address environmental issues, the results show that average companies are also ahead in addressing issues related to respect for human rights.
30% overall have identified and disclosed risks. Here, we will uncover the types of risks identified and the scopes of risk identification.
Popular risks that are being identified are “harassment,” “sex discrimination,” and “discrimination based on race, ethnicity, religion, nationality, etc.” More than 70% overall said that “infringement within the company” and “infringement at domestic consolidated subsidiaries” are the scopes of risk identification. Only about 30% cover “overseas business partners,” “domestic sales partners and sales agents,” and “overseas sales partners and sales agents.”
We also asked about actions related to respect for human rights in the supply chain. The scores of companies in the overall and average position are compared by two items, “established procurement guidelines and distributing them to partners” and “regularly monitoring the status through checklists, surveys, etc.”, separately either upon domestic or toward overseas partners.
In general, the percentage of companies taking action on the supply chain has increased from 2020 to 2021, but progress over overseas partners has been slightly lagging. Actions such as “established procurement guidelines and distributing them to partners” and “regularly monitoring the status through checklists, surveys, etc.” are carried out by around half toward domestic partners and about 30% toward overseas partners.
More than half of the companies in the average position have taken such actions for their domestic partners. However, for overseas partners, the percentage decreases near the overall level. It suggests that even the average position company still needs to take action toward overseas partners. Responding to respect for human rights, the average companies are proceeding ahead. However, progress seems to be slower upon the supply chains relating to overseas partners, and we should continue to watch closely.
SDG management requires companies to take action in a broad range of areas upon solving social issues through their core business. Thus, it may be hard to accomplish and gain outcomes in the short term. Nevertheless, the fact is, this is an issue we need to tackle over the next several decades.
