How Japanese firms address the issues of environment, society, and governance :

Mitsuharu Miyamoto, Hiroatsu Nohara. How Japanese firms address the issues of environment, society, and governance: a corporate governance perspective. Evolutionary and Institutional Economics Review 20, p. 25–46 (2023).

Abstract
Interest in environment, society, and governance (ESG) issues has increased in accordance with the growth of ESG-related investment. Until recently, however, interest remained low in Japan, which is unexpected, since Japanese firms have been characterized by stakeholder-oriented corporate governance. Thus, this study examined how Japanese firms address ESG issues, focusing on the corporate governance structure comprised of internally promoted managers, foreign shareholders, and independent directors. Using corporate-level raw data from 1522 listed firms from 2009 to 2016, this study shows that both internal managers and foreign shareholders promote ESG engagement from the consideration of corporate performance, whereas independent directors promote it from the consideration of stakeholder interests. Our empirical research exhibits that independent directors in Japanese firms have a dual function to represent shareholder and stakeholder interests.

Keywords
Social Responsibility, Corporate Governance, ESG/CSR, Independent directors, Foreign shareholdings

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