1、M FoundationAsia Primer|JapanJapans ESG Framework Japan remains focused on ESG factors,particularly within corporate governance and climate change,even as the appetite for ESG initiatives looks cloudier in other developed markets.We provide an overview of Japans current ESG backdrop,with context on

2、how it has evolved over time.M Morgan Stanley MUFG Securities Co.,Ltd.+Kazutaka KurodaEquity Strategist Kazutaka.K +81 3 6836-8922 This report provides an overview of sustainability trends among investors,corporations,and government in Japan.While there are concerns about declining sustainable inves

3、tment assets in Western markets due to stricter classification and naming guidelines for retail investor funds,Japan has not seen significant impacts and continues to maintain an upward trend in assets under management.This resilience is supported by the double code framework of Japans Stewardship C

4、ode and Corporate Governance Code,which includes provisions for considering ESG factors.Japans approach is not about weighing ESG factors in isolation,but rather about promoting ESG integration,engagement based on that,and the exercise of voting rights in ways that balance this with consideration of

5、 corporate value improvement.As individual themes,corporate governance and climate change form the foundation,with other themes featuring strongly as ancillary components.A major difference in corporate governance in Japan is that the board of directors role includes not only risk management aspects

6、 on the execution side as seen in Western countries,but also providing advice on capturing revenue opportunities.Nevertheless,Japan is actively incorporating Western systems such as sustainable information disclosure,appointment of outside directors,and disclosure of securities reports prior to shar