August 31, 2003


How Eco-Friendly Are Japanese Companies?

Keywords: Newsletter 

JFS Newsletter No.12 (August 2003)

The Ministry of the Environment has conducted the "Survey on the Actions of Eco-friendly Businesses" annually since 1991. On August 8, 2003, the Ministry published the results for fiscal 2002, available (in Japanese) at the following Web site:

Below is an overview of the results of the survey, showing the efforts made by Japanese companies for the environment, as well as their awareness and future directions.

In this survey, the Ministry sent questionnaires to 2,655 companies listed on the stock exchange and 3,735 unlisted companies that have 500 or more employees. Of the total, 2,967 (46.4%) companies returned valid responses.

Many companies regarded their efforts and actions for the environment as a "social contribution" (40.3%), and many had a positive view about them, with responses such as "they are an important factor affecting business performance" (29.9%), and "we see them as one of the most significant corporate strategies" (22.0%). The ratio of companies with positive views is increasing compared to past surveys.

Asked about corporate philosophy on the environment, 62.7% of companies had specific environmental targets, an increase of 3.5 points from 59.2% in the previous survey in fiscal 2001. The number of companies that have adopted specific action plans to achieve the goals has grown steadily, from 76.0% to 81.7%, an increase of 5.7 points.

About 98% of the companies have already adopted activities to conserve the environment, with "energy conservation" the most prevalent (98%), followed by "reducing office waste" (83.6%), "reducing printing, etc." (83.5%), "reducing industrial waste" (72.5%), "developing environmental management systems" (66.0%), and "promoting green purchasing" (62.9%).

Of respondents, 49.7% had offices and staff responsible for company efforts on the environment. Regarding companies educating their employees on environmental matters, 40.1% do so on a regular basis and 31.9% on an ad hoc basis. Combined, they represent more than 70% of the companies.

Asked about their opinion on environmental grading, 25.7% responded that "it is necessary, because environmental grading enables the establishment of new corporate brand." Another 36.9% replied, "it is necessary to introduce this system in Japan, because in other countries where socially-responsible investment is taking root, businesses are selected based on their environmental and social performance." These replies denote a high level of interest in this matter.

Of respondents, 58.7% replied positively to the question, "As a member of the community, do you engage in environmental activities as a part of your contribution to society in your locality?" The top activities included "clean-ups" (80.7%), "receiving visits to our facilities" (40.6%), and "greening the vicinity of the plant" (34.8%). The entities that the businesses collaborated with included the "local government" (54.4%) and "other companies" (41.6%). There was a difference in response between listed and unlisted companies, with 40.8% of listed companies and 29.3% of unlisted companies naming "citizen's groups" as their collaborative partners.

As for ISO 14001 certification for environmental management systems, 62.5% of the companies either had already acquired this certification, or were planning to do so and making preparations. When asked about the benefits of certification, the companies cited answers such as "improved environmental awareness" (86.5%), "reduction of the impact on the environment" (78.8%), and "cost reduction" (60.7%).

To the question "Do you instruct or request your subsidiaries [defined as those with more than 50% ownership by the respondent] to follow your company's environmental policies and efforts?" 29.5% responded "yes." In addition, 10.1% responded that they do so now, but only to their major subsidiaries. The majority of companies did not do so, an indication that further progress is needed here.

To the question on whether they take into consideration environmentally-friendly business operations when choosing contractors and suppliers, 6.5% said that "ISO 14001 certification is a precondition," and 48.8% answered "we have no fixed standards, but do take these factors into consideration." These replies indicate that more than half of the companies surveyed consider the environmental aspects when choosing business partners. The corresponding figure was 32.1% for choosing business partners abroad.

About "green purchasing" responses included "we are sourcing based on green purchasing guidelines and purchasing lists" (7.1%), and "we consider green purchasing when making purchases, although we have no guidelines and no lists" (18.8%), and "we will consider green purchasing in the future" (21.5%). These results show that green purchasing is spreading among companies.

Concerning information disclosure related to the environment, the number of companies that disclose information to the general public increased by 4.6 points, from 31.3% in 2001 to 35.9% in 2002. The contents of the information included "environmental management guidelines" (86.4%), "the status of their efforts" (60.4%), and "environmental targets" (57.7%). However, progress is needed in the future as disclosure of information on actual performance was still relatively low, with fewer companies answering "the volume of waste disposal" (51.6%), "CO2 emissions" (39.3%), "environmental impact by the business activities" (30.7%), and "the amount of chemical substances used" (24.4%).

The ratio of companies that produced and published environmental reports in fiscal 2002 was 21.9%, or 650 companies, but an additional 251 companies were planning to produce them for the next fiscal year, a sign that an increasing trend for reporting. In addition, nearly 70% of the companies provided information on their company Web pages.

Of respondents, 3.1% said that they produce the so-called "triple bottom line" sustainability reports (covering the environment, society and the economy) and 25.7% responded that they do so "to the extent possible." A further 45.7% were considering writing about the triple bottom line in future reports. These can be seen as positive signs for the future.

As for environmental accounting, 19.3% said they have already adopted such systems, and another 15.5% were currently considering the introduction of such a system.

Asked if respondents were conducting what they called "environmental business," 32.3% of the companies said that they had already begun, 5.9% said that they already had plans to begin, while 28.0% said they would like to begin in the future. These responses shows the active interest in this topic.

As for measures to prevent global warming, 67.7% companies have adopted some kind of undertaking, an increase of 5.1 points from 62.6% in fiscal 2001. This rise denotes the improvement in global warming measures among businesses.

About the introduction of carbon taxes to prevent global warming, 26.3% replied they do not have clear opinions about this, although a total of 33.6% said they were by either "in favor" and "somewhat in favor."

About the introduction of a national emissions trading system, 39.4% responded that they "can neither support nor oppose such a system at this point because the details are not yet clear." However, the total of respondents saying "in favor if the details are reasonable" and "in favor if company discretion is allowed" amounted to 39.2%.

When asked about their consideration of the environment in overseas business activities in developing countries, 31.6% replied, "no specific efforts are being made." Among those that do undertake some measures, "technical assistance" (37.5%), "asking overseas business operations to submit reports about their efforts to consider the environment" (25.2%) were the responses most frequently cited, and relatively few companies replied that "our headquarters investigates this directly" (14.3%), and "the environment is taken care of as part of medical procedures and standards that are in place"(14.3%).

As for disclosure of information on environmentally-friendly efforts in international business operations, "no disclosure" (66.8%) was the most common response, compared to "this is stated in our environmental reports" (14.1%), and "we reply when asked" (12.0%).

The survey results show that overall, more companies are becoming conscious about the environment and are expanding their efforts. In the future, it will be important to see them invest more efforts into improving their actual environmental performance (even if companies create the proper organizational structures and reporting systems, there will be only limited benefits for the global environment if their actual performance doesn't improve). Furthermore, they need to face the challenge of effectively exerting indirect influence on their business partners and overseas operations.