ESG

• Few Japanese stocks that have advantages in profitability has led to the fact that investors who invest long-term in quality stocks have few Japanese stocks to choose from globally.
• It’s the profit margin on sales that has had the greatest impact on changes in ROE. Companies must now get their core competencies once again to regain competitiveness and profitability.
• Even if business selection and investment in promising businesses were to be implemented, it would be several years before they bear fruit. For many investors, this pace seems unacceptable.

• Rather than lowering the minimum investment amount, attention is focused on whether the essence of the issue is whether the long-standing unit share system can be abolished.
• This system, which doesn’t grant voting rights to shareholders who don’t hold more than certain number shares, has led companies to turn inward-looking by making AGMs skeleton and accelerating cross-shareholdings.
• With corporate racketeer, who triggered the introduction of this system, gone and the reduction of cross-shareholdings beginning, shareholder units that can exercise voting rights for open AGMs should be reexamined.

• Comparing the number of Japanese companies in top 50 global market capitalization and Japan’s GDP as percentage of world’s GDP in 1989, it’s clear that economy and companies didn’t grow.
• Without more Japanese companies that have an edge in profitability, a key focus for long-term global investors, it will not be possible to put long-term investment money into Japanese equities.
• It is assumed that BoJ’s policy of inducing the yen to depreciate through ultra-monetary easing may have in part spoiled company managers and caused them to neglect their corporate efforts.

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

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

• If a company seeks immediate effects to improve capital profitability, it’ll return cash to shareholders because it’ll be years before the company can recoup it by making more investments now.
• Even companies that have increased valuations by raising their capital profitability can improve it by reducing their cash on hand and policy shareholdings, which are still too large.
• Companies with low capital profitability and low valuations have to gain investor confidence through quarterly earnings disclosures by demonstrating that their disclosed goals are achievable.

• The most significant reason for decreasing parent-subsidiary listings is the presence of overseas investors who have long pointed out the problems with this issue. This TSE’s request will support them.
• The issue of parent-subsidiary listing is whether the listed parent should incorporate the profitability of equity-method affiliate/listed subsidiary to enhance its profitability, or effectively use its assets by divesting them.
• If extending to equity-method affiliates, there are many companies that haven’t made progress in reviewing their business portfolios, and this is where the fundamental issue of ROE not increasing lies.

• While cash on hand is high, many companies have not been able to improve their return on capital, so more companies are expected to announce shareholder returns, including share repurchases.
• The change in awareness of companies can be attributed largely to the changing environment of high foreign ownership and TSE requests.
• Since it takes time to raise the profit margin, and it’s not easy to identify CapEx opportunities, the measures to improve ROE will reduce policy shareholdings and cash on hand.

• While cash flow has improved, companies haven’t found promising investment opportunities. Continuation of a rigid dividend policy is another factor that further increases cash on hand.
• Given that the already high level of cash on hand is expected to build further in the current fiscal year, there is room to increase shareholder returns considerably.
• For many companies, it is not easy to find new sources of investment other than through M&A, and shareholder returns are the most effective way to reduce cash.

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

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

• Fraud occurs regardless of the market on which the company is listed or the size of the company. Even if corporate governance is superficially in place, fraud will repeat itself.
• If anything can deter the occurrence of scandals, it is diversity. It is necessary to create an organizational environment that accepts different values and allows people to voice their opinions.
• In many cases, companies that committed fraud aren’t delisted, and management doesn’t take responsibility. There continues to be a bad tradition in which the whistleblower is blamed for the fraud.