japanese xbrl based esg reporting project -...

Frankfurt, .

Japanese XBRL based ESGReporting Project

June 7, 2017

Yoshiaki WadaXBRL JAPAN, Chair ofXBRL Asia Round Table

Today’s Contents

1. Back Ground Story

2. Project History

3. ESG Report and XBRL

4. Ultimate Goal

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3

ESG is the important key word for the recent investment trend

E : EnvironmentCorporate attitude to cope with“Environment issues”

S : SocialCorporate attitude to cope with“Social issues”

G : GovernanceCorporate attitude to cope with“Governance issues”

World Trend for ESG based Investment (1)

Source: Global Sustainable Investment Review 2012

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Ratio of ESG investment in the region

USA11.2%

Australia & NewZealand

18%

Africa35.2%

Asia(ex. Japan)

2.9%

Europe49%

Canada20.2%

Japan0.2%

Realityin Japan

World Trend for ESG based Investment (2)

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Our Project Goal

Establish the Social Infrastructure to improve the ESGbased dialogue between investors and industries

Enhance the proper evaluation of the corporateattitude to “Environment Issues”

Improve the efficient and fair investment trend in thesociety

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2013 2014 2015 2016 2017 2018 2019 2020

Technical POC Operational POC Go Live

BasicResearch

XBRLadoption

Collaboration withCDP

DataAnalyze &CommunicationFunction

Operation rule setting,system upgrading for Going Live

Establish the Non-Financial InformationDisclosure Platform

Time Line and Project HistoryParis Agreementcame into effect

Paris Agreementcame into active

Project Scheme

Question:

How to Analyze Non-FinancialData?

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AIArtificial Intelligence

One Possible Solution is

But AI is Not Almighty

Text Mining on AS-IS Documents

Un-Structured Information

AI

Even for AI, it is not easy to analyze

Text Comparison on Standardized Documents

AI

Structured Information

Better result can be expected

Example (1)

1 Early life and education2 Member of the House of Representatives (1993–2006)3 First term as Prime Minister (2006–2007)

3.1 Domestic policy3.1.1 Economy3.1.2 Education3.1.3 Imperial household

3.2 Foreign policy3.2.1 North Korea3.2.2 China, South Korea, and Taiwan3.2.3 India

3.3 Defense3.4 Unpopularity and sudden resignation

4 Inter-premiership (2007–2012)4.1 2012 general election

5 Second term as Prime Minister (2012–2014)5.1 Economic policy (Abenomics)

5.1.1 "First Arrow": Monetary policy5.1.2 "Second Arrow": Fiscal policy5.1.3 "Third Arrow": Growth strategy and structural reform

5.2 2013 Upper House election5.3 Domestic policy

5.3.1 Education5.3.2 Population growth

5.4 Foreign policy5.5 Defense and security policy5.6 2014 cabinet reshuffle5.7 2014 general election

6 Third term as Prime Minister (2014–present)6.1 Foreign policy6.2 Security and defense issues6.3 Re-election as LDP President and "Abenomics 2.0"

7 Political positions and philosophy7.1 Views on history7.2 Response to mass media7.3 Yasukuni Shrine7.4 Restoration of Sovereignty Day7.5 Immigration

8 Honors, awards and international recognition8.1 Honors8.2 Awards8.3 Honorary doctorates

9 Cabinets9.1 First term (2006–2007)9.2 Second term (2012–present)

10 Family10.1 Ancestry11 See also12 References13 External links

1 Early life and education2 Career as an entrepreneur3 Political career

3.1 Mayor of Surakarta3.2 Governor of Jakarta

3.2.1 Blusukan3.2.2 Lelang Jabatan3.2.3 Health care program3.2.4 Educational program3.2.5 Public transportation3.2.6 Financial reforms3.2.7 Transparency3.2.8 Revamping street vendors and traditional markets3.2.9 Flood control

3.3 Presidential candidacy3.4 President of Indonesia

3.4.1 Economic performance3.4.2 Fuel subsidies reduction policy3.4.3 Maritime-axis doctrine3.4.4 Infrastructure3.4.5 Foreign policy3.4.6 Policies on drugs crimes and capital punishment

3.4.7 Relations with his political party4 Awards and honours5 Personal life

5.1 Family5.2 Film adaptation

6 See also7 References8 Further reading

Example (2)

1 Early life and education2 Member of the House of Representatives (1993–2006)3 First term as Prime Minister (2006–2007)

3.1 Domestic policy3.1.1 Economy3.1.2 Education3.1.3 Imperial household

3.2 Foreign policy3.2.1 North Korea3.2.2 China, South Korea, and Taiwan3.2.3 India

3.3 Defense3.4 Unpopularity and sudden resignation

4 Inter-premiership (2007–2012)4.1 2012 general election

5 Second term as Prime Minister (2012–2014)5.1 Economic policy (Abenomics)

5.1.1 "First Arrow": Monetary policy5.1.2 "Second Arrow": Fiscal policy5.1.3 "Third Arrow": Growth strategy and structural reform

5.2 2013 Upper House election5.3 Domestic policy

5.3.1 Education5.3.2 Population growth

5.4 Foreign policy5.5 Defense and security policy5.6 2014 cabinet reshuffle5.7 2014 general election

6 Third term as Prime Minister (2014–present)6.1 Foreign policy6.2 Security and defense issues6.3 Re-election as LDP President and "Abenomics 2.0"

7 Political positions and philosophy7.1 Views on history7.2 Response to mass media7.3 Yasukuni Shrine7.4 Restoration of Sovereignty Day7.5 Immigration

8 Honors, awards and international recognition8.1 Honors8.2 Awards8.3 Honorary doctorates

9 Cabinets9.1 First term (2006–2007)9.2 Second term (2012–present)

10 Family10.1 Ancestry11 See also12 References13 External links









1 Early life and education

1 Early life and education

3.2 Foreign policy

3.4.5 Foreign policy

5.4 Foreign policy

6.1 Foreign policy

10 Family

5.1 Family

11 See also

6 See also

12 References

7 References

Not easy to compare an elementto another element

Example (3)

















If common chapter structure/standard style sheet is used,

AI can easilycompare!

XBRL can make thispossible!

By expressing element as Taxonomy

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MMMMM MMMMMM MMMMM MMMMMMMMM MMMMM MMMMM MMMMMMM MM MMMMMMM MMMMMMMMMM

Actual View of Data Analyze Tool

AI can run on these standardizedsegment data!

What Non-Financial Reports tells us?

Time Line

Now

Financial Reports mainlytells the past story

Past FutureUp-turn

Stagnation?

Downturn?

Non-financial Reports gives the hint tomake a forecast for future

Because it is possible to know thebusiness philosophy from Non-financialReport

By the way・・・

Average life of company,in Japan

16

18

20

22

24

26Years

Source: Tokyo Shoko Research

Average life of company, in Japan

Survival Rate of Starting-up Business inJapan

⇒ Years from start-up

Source: White Paper 2011,Small and Medium Enterprise Agency,Japan

Survival Rate of Starting-up Business in Japan

Years from Starting-up Number of companies

More than 100 years 19,518

More than 200 years 938

More than 300 years 435

Life of Company in Japan

Source: Teikoku Data Bank

Business Climate

There is “Sunny Days” and “Rainy Days” in Business Climate

There is no company free from unexpected events/change in businessclimate

What divides “Survivor” and “Looser”?

Awareness of Risks

Readiness for Changes in Business Climate

And ESG Report gives us the clue to evaluate thesefactors

Ability to alter the Risks to Business Opportunity

Three Important Factors to be checked

Environment Report Project in Japan

First trial in the world by governmentto standardize ESG report

64

103

206

255

1327

95

160

0

50

100

150

200

250

300

FY2013 FY2014 FY2015 FY2016

Filing Companies

Increasing Number of Project Participants

Financial Performance

ESGPerformance

Good Poor

Good

Poor

Company A

Company B

Company C

Company D

What is your preference order of thesecompanies?

Investors Decision

Important Relation between ESG and MarketPerformance

Currently, there is no clear evidence to support that good ESGperformance will lead to good future financial performance.

However, our empirical study shows the result that ESGoriented company shows better performance in stock market.

Stock Price Performance in Japan

20

40

60

80

100

120

140

160

180

200

220

200001

200007

200101

200107

200201

200207

200301

200307

200401

200407

200501

200507

200601

200607

200701

200707

200801

200807

200901

200907

201001

201007

201101

201107

201201

201207

201301

201307

201401

201407

201501

201507

ESG株価指数 TOPIX NIKKEI225 TOPIX LCOREMOE PJParticipants

An Investment Fund based onEnvironment Report was Released!

In the Public Economics, there has been a popular argument, such as,

Internal Economy VS

External Economy

And it has been realized that the mechanism tocombine these two economy is difficult to build.

Missing Market Mechanism

Market

Economic Activities, Measureable within Market Mechanism

Internal Economy

Economic Activities, Not Measureable within Market Mechanism

External Economy

Making External Economy visible in Market mechanism

Ordinal business activities, making visible profits

Public service, environmental pollution, CO2 emission, resource wasting, etc.

Role of Non-financial Information

For whom?

Two Economic Values

Two Types of Player

Non-financial Information is especially important toinvestors who do not have hedging tool

Trader Investor

・Short time trader,focusing on HFT（High Frequency Trade)・Risk hedging byderivatives, futures andindex trading isavailable

・Private Investor,Pension Funds, focusingon long-term return・Only limited riskhedging tool is available

Major Market Participants

Matured Society and Transparent Market

In the matured society, social welfare system is important

Especially, Pension Fund is a core of social security system

Key factor for the sustainable Pension Service is efficient andreliable capital/bond market

Transparency of the market is essential for the better society

XBRL has a great potential for the Overall Transparency ofFinancial & Nonfinancial aspect within the Market

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Thank you for your attention!