Nikkei SDGs Management Survey

• Sustainable

Naoki Hara, Editorial Research Department

This article will introduce the Nikkei SDGs Management Survey and how you can utilize the data.
(Summarized and translated from a seminar held in December 2022.)

Outline of the Nikkei SDGs Management Survey

The Nikkei SDGs Management Survey marked its 4th time in 2022, receiving responses from 886 companies. The survey results were published in the Nikkei newspaper on November 17.

Eight companies — Asahi Group Holdings, Omron, Kirin Holdings, Shiseido, Softbank, SOMPO Holdings, Mitsubishi UFJ Financial Group, and Ricoh — were rated as the top 5-star companies with over 70 in the standard score. All of them can be said as leading companies in SDGs initiatives, performing well across the four elements; SDGs strategy/economic value, social value, environmental value, and governance.

On November 2022, the SDGs Management Awards was announced. Kirin Holdings won the SDGs Strategy/Economic Value Award, Omron the Social Value Award, Ricoh for the Environmental Value Award, and Mitsubishi UFJ Financial Group seized the Grand Prize.

Making progress on SDGs management with the analysis report

We have heard various concerns from companies that are working on SDGs. For example, a company has decided to focus on SDGs and has built a specialized department, but they noticed that the understanding of SDGs is not spreading into the frontline sections. Another problem is that reporting the progress to the board members is difficult since there are no quantitative data to evaluate the effectiveness of their initiatives. We also hear that companies are lost in finding ways to respond to the increasing number of new issues that are emerging nowadays, such as Green Transformation (GX) and human rights.

Not limited to SDGs, the following three perspectives are the keys to promoting.

• Set priorities aligned with the company's materiality and spread awareness throughout every team.
• Set KPIs and conduct effectiveness assessments based on facts.
• Knowing the case studies over responding to new emerging issues.

The SDG Management Survey Analysis Report can cover these.

The report comes in three parts, (a) Evaluation, (b) Data, and (c) Premium. Nikkei Research also offers lecture sessions based on the results.

The Evaluation section of the report provides an in-depth evaluation based on the metrics of the SDGs Management Survey. In addition to the four main categories — (1) SDGs Strategy/Economic Value, (2) Social Value, (3) Environmental Value, (4) Governance — and the 21 categories behind them, the report has a further breakdown of 62 sub-categories that will picture the strengths and weaknesses of the company in much detail.

The report provides the standard score calculated from each response of the 886 companies. With a score of 50 as the average, it will show your company’s progress with each initiative. By comparing with the selected competitors (5-10 companies), you can find suitable SDG initiatives by looking at the same industry or business category, for example.

The Data section of the report provides detailed information on the status of each company’s initiatives based on the 200 questions in the SDG Management Survey. For choice-based questions, the report shows the overall implementation rate for the 886 companies, as well as cross-tabulations of the implementation rate by segments such as the company type (publicly listed/privately held), sales size, etc. The number of implemented companies among the selected competitors is also shown. By comparing the status of competitors' initiatives with that of your own company, you can identify initiatives that your company should carry out but is not currently engaged in.

For numeric-value questions, such as answers to certain performances, the histogram distribution and average values are shown in the report. You may use the values of a similar sales size as KPIs, or compare them with the competitors’ average values for setting the KPIs.

In the Data section, free comments on SDGs promotion measures are also included (those of permission granted to disclose). It should help consider unique initiatives for your company.

The following is an example use case of the two sections, (A) Evaluation and (B) Data, of the analysis report.

First, from the Evaluation section, the company grasped its status by each indicator and found that there is a difference in internal penetration in the areas of “SDGs promotion/Economic value.” Although the company exceeds the overall average of 50, it was below the average of its competitors.

— The company now understands its weaknesses.

Next, from the Data section, the company looked into the specific areas of internal penetration initiatives, and found that they have done “employee training,” “internal communication via the intranet and posters,” and “distributing SDGs pin badges or printing SDGs logo on business cards,” but have not yet “set target goals and action plans for each business field” or “include in investment decision making.” However, 6 out of 8 competitors in the same industry have already implemented those measures.

— The company can now think about what kind of actions are more closely linked to their businesses, rather than just the initiatives led by the promoting department.

The Premium section of the report covers the following areas.

• Evaluation and KPIs aligned with materiality
• Advanced case studies of businesses contributing to the promotion of SDGs
• Evaluations and details of initiatives over Green Transformation (GX) based on the GX500 rankings published in the Nikkei GX
• Status of corporate efforts toward respecting human rights
• External audits of the company's perceptions

To make progress in SDGs and sustainability, it is important to consider the materiality based on your company's situation, set KPIs, and proceed with the initiatives accordingly to the level of importance. We will evaluate your company linked to your company’s materiality, allowing you to consider the status based on your company's priorities, other than the overall ratings in the standard SDGs Management Survey report. We can also provide the materiality and KPIs of selected competitors, making it possible to see and compare how other companies in your industry are promoting SDGs.

In the SDGs Management Survey, the overall GX score was calculated by considering the efforts to promote GX, and the top 500 companies were announced as the “GX500” on November 24 in the newly launched media Nikkei GX (site in Japanese and viewable to paid subscribers only). Our report will include data on the top 500 companies and selected competitors.

One of the key factors in promoting GX is the setting and announcement of long-term target goals. In the 2021 survey, more than half did not have any goals. This year, a massive increase was seen, with the majority of companies declaring to be carbon neutral.

However, looking at the details of their declarations, most companies still stand within Scope 2. While about 60% remain at the Scope 2 level, only around 30% of companies stretch out to Scope 3, which includes their supply chain. In the Premium section of the report, we defined 157 companies that cover Scope 3 as “companies that have set ambitious long-term goals and are promoting GX,” and analyzed their status of GX initiatives. The results show how the long-term goal setting and announcement drive GX promotion.

Apart from the SDGs Management Survey, Nikkei Research conducted another survey targeting consumers (BtoC) and corporate individuals (BtoB) and rated companies over their “efforts to build a decarbonized society.” The results show how well the company's initiatives over GX and SDGs are understood externally.

In addition, the SDGs Management Survey asked companies to name “companies that are making outstanding contributions to the SDGs through their businesses.” The rankings were made based on the number of votes. We believe that these are great companies from the perspective of corporate experts who are in charge of sustainability. The report also includes the reasons why these companies were selected. These evaluations by consumers and other stakeholders should be useful for corporate communications, public relations, and investor relations.

To summarize, each section, Evaluation, Data, and Premium, can be utilized as follows.

First, with the Evaluation section, looking at the standard scores in detail, you get to understand the strengths and weaknesses of your company. Next, with the Data section, you can compare the implementation of initiatives or their performance with other companies. Then, with the Premium section, you will be able to check the evaluation according to your company's materiality and think about how to respond to new issues such as GX.

By combining these three sections, we can support your company’s SDG promotion.