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 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
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)
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
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
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!