ESG

• Keppel Ltd, once renowned for its offshore marine and real estate businesses, is undertaking a fundamental transformation to become a global asset manager with S$200bn in funds under management (FUM) by 2030.
• It is unprecedented for an industrial operator to successfully transform into an asset manager of such scale.
• As such, close attention ought to be given to the progress and prospects of Keppel’s transformation. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Itelyum Group’s ESG as “Adequate”, in line with its Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”.

• There’s gap in timelines for results between many companies that started to incorporate the cost of capital into their management and investors who are looking for results in investment performance.
• If this gap surfaces, investor expectations will be stripped away. Companies that determine that it will take a long time to achieve results can be expected to consider going private.
• For a company to seek access to institutional investors, it must first produce results. The race is on to achieve results within limited timeframes and faster than other companies.

• Business portfolio reforms are lagging and improving profitability, the driver of ROE, will take more time. Further Reducing policy shareholdings and cash on hand are needed to improve capital profitability.
• In days of cross-shareholdings, management tended to be less conscious of the goal of sustainable growth in shareholder interests because they need not listen to opinions of other minority shareholders.
• Cross-Shareholdings have decreased, and management is now required to be more conscious of capital profitability. ”TSE’s request” will hopefully prevent this change from going backwards.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Best Secret’s (Schustermann & Borenstein) ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

• A comparison of two surveys shows progress in disclosing GHG emissions over half-year, with small increase in Scope 1 and Scope 2, while little progress was made in Scope 3.
• Many companies are cautious about disclosing in annual securities reports, even if they are certified by a third-party certification body or stated in their own integrated reports.
• However, FSA will require companies with over 3 trillion yen in market capitalization to disclose to Scope 3 in FY3/2027, and most companies are likely to comply with this requirement.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Scan Global Logistics’ ESG as “Adequate”, in line with the Environmental and Governance scores, while the Social score is “Strong”. Controversies are “Immaterial” and Disclosure is “Adequate”.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Iliad’s ESG as “Adequate”, in line with its “Adequate” Social and Governance scores, while the Environmental score is “Strong”. Controversies are “Immaterial” and Disclosure is “Adequate”.

• Policy shareholdings don’t create tension in management and ensure the interests of minority shareholders. Secondly, holding shares that don’t create value can burden capital profitability and undermine shareholder interests.
• The increase in foreign ownership only changed the mindset of some company managers, but “TSE’s request” was enough to awake managers who had become accustomed to being protected by cross-shareholdings.
• If reducing policy shareholdings is viewed as HR issues related to the director election agenda, it makes sense why improvements haven’t progressed similarly to the unclear nomination process for directors.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Recordati’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Material”, while Disclosure is “Strong”.

• TSE’s classification translates into three groups: companies which can independently increase capital profitability, companies which haven’t yet fully implemented plans, and companies which haven’t yet responded to “TSE’s request.”
• Mock engagements by TSE, which doesn’t have voting rights, will be focused on whether they actually make the company think about management strategies and implement them, thereby increasing corporate value.
• To help companies effectively implement “TSE’s request,” an idea would be to offer time-limited discount on listing fee paid to TSE by companies that have significantly increased their market capitalization.

• The first problem is that companies desperately match numbers, and original goal of ensuring board diversity has been lost; the second is the increase in the number of board memberships.
• The low ratio of women in managerial positions has forced companies to rely on outside talent for female board members, which has further increased matching numbers.
• There are problems both for the company that knowingly hires board members to serve concurrently in multiple companies and for the outside board members who knowingly accept such positions.

• Of the companies that have been removed from the list of companies subject to transitional measures, only about half have been able to meet the criteria for maintaining their listing.
• It’s not easy for companies applying transitional measures to comply with the criteria for maintaining listing, so it’s realistic to move to a market with looser criteria for maintaining listing.
• Besides problems with listing screening process, many managers consider IPO to be the goal and have little will to grow the company after listing, leading to slump in corporate value.