One of the most significant achievements of former prime minister Shinzo Abe's "Abenomics" economic reform strategy has been the improvement in Japanese corporate governance standards. The government's prioritizing of corporate sector reform - a policy pursued with equal vigor by new prime minister Yoshihide Suga - has been an important influence in boosting Japanese corporate performance, as well as returns for investors. Moreover, the concepts of best practice; robust environmental, social, and governance (ESG) disclosure; and improved stakeholder engagement have been recently highlighted as central to long-term sustainability.
Measuring the impact of governance and regulatory reform is no exact science, but a key aspect of the improvement seen in Japan has been the introduction of stewardship and corporate governance codes, in 2014 and 2015, respectively. These regulatory guidelines have effectively provided a framework for improvement for Japanese companies - a road map to becoming more economically productive, globally competitive, and better positioned to attract international investment. The recent revision of Japan's Stewardship Code and Corporate Governance Code, in 2020 and 2021, respectively, provides an opportune time to revisit the progress made to date, expectations moving forward, as well as some of our own firsthand engagement experiences with Japanese companies and regulatory bodies alike.
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