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In order to ensure that nations, states and governments act in accordance with ESG guidelines, it is vital for open, robust and transparent monitoring of their practices. While there are many new and exciting quantitative methods for evaluating states, such as the “Sustainable Shared Prosperity Index”, we have developed guidelines for qualitative reporting to supplement and buttress such metrics.
Our guidelines provide a framework through which students, researchers, and policy makers can score the ESG performance of states. By assessing the categories of “Market Structure”, “Public Goods” and “Sustainability”, along the dimensions of legislation, implementation and enforcement, we offer a standardized yet flexible approach to state monitoring.
We invite student teams to take advantage of these guidelines and publish their own evaluations. The U.S. Team has provided a sample report of Japan, which can be accessed below to reference in your own evaluations.
State Evaluation Sample: Japan
Quantitative Metrics: Japan garners an overall score of 0.663 in the Sustainable Shared-Prosperity Policy Index (18th place among 49 countries covered by this index); with a score of 0.594 for Market Structure (23rd place), 0.81 for Public Goods (12th place), and 0.583 for Sustainability (23rd place).
Market Structure Performance (A):
The Japanese government has made efforts to enhance market structures that support shared prosperity. In particular, it has focused on worker well-being as part of its "work style reform" in response to the decline in the working-age population and the diversification of working needs. Japan is known for its long working hours, overwork deaths, and low paid leave utilization rates. In response, the Ministry of Health, Labor and Welfare, and other ministries have increased expenditures for mental health measures and bolstered the social safety net. In addition, the ministry has been strengthening regulations on overtime work (from 2023) and formulating rules to reduce differences in treatment by employment status (from 2019). In terms of inequality, income inequality by household is widening. Japan's pre-redistribution Gini coefficient is now 0.5700 (2021) for initial income, up from the previous 0.5594 (2017). However, according to the Cabinet Office, the post-redistribution Gini coefficient has remained almost unchanged, indicating that the social security system and other programs are performing their redistributive function. It will be fascinating to see how the economy will evolve and how the social security system will be enhanced in the future as the working-age population declines.
Public Goods Performance (A-):
The Japanese government has taken steps to ensure the provision of public goods, particularly in the areas of health care, education, and infrastructure, many of which can guarantee high quality. In the area of education, in addition to the high literacy rate and gender equality already achieved, financial literacy and climate change awareness have recently been promoted in school education. Japan has achieved the world's highest life expectancy and healthcare standards through its universal health insurance system and has recently been enhancing pensions for the elderly and disabled and strengthening financial support for low-income people. On the other hand, the amount of social security payments, mainly for the elderly, has been inflated (23.5% of GDP), which has been criticized domestically.
Sustainability Performance (A-):
Starting in 2021, the Japanese government has declared 2050 carbon neutral and has begun investing in a large-scale sustainable society. Specifically, a high level of transparency has been ensured, including a 10% tax credit and 13.79 trillion USD investment to promote innovation and the publication of the results of a survey on the market size of the environmental industry. In addition, through Official Development Assistance (ODA), the Japanese government contributes to realizing sustainable development in developing countries by providing advanced technologies and financial support. The Japan International Cooperation Agency (JICA), the implementing agency for the environmental efforts initiated by the Kyoto Initiative (1997), has developed guidelines to ensure that environmental and social considerations are considered. According to the Ministry of the Environment, the National Budget for sustainability is nearly 108.2 billion dollars, up 1.27 billion dollars compared to the previous year.
Conclusion:
The Japanese government may be considered to be taking initiatives for more sustainable growth through increased budgetary investment, stronger laws, and information disclosure. However, Japan's demographics are changing rapidly, including the aging of its population, and as an "advanced country in terms of social issues," it will continue to be forced to respond in terms of its policies.
References:
https://www.mof.go.jp/policy/budget/budger_workflow/budget/fy2023/seifuan2023/07.pdf Ministry of Foreign Affairs of Japan: Sectoral Efforts to Achieve the SDGs: https://www.mofa.go.jp/mofaj/gaiko/oda/sdgs/effort/index.html Ministry of Economy, Trade and Industry: https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/0000148322_00001.html https://www.kantei.go.jp/jp/headline/tokushu/green.html