Supply chain sustainability practices in Japan

Read the full report from S&P Global Sustainable1, supported by Japan Exchange Group, here.

Read the Japanese reference translation of the report here.

Supply chains often span the globe, and a single large company may count on hundreds or even thousands of suppliers. That can make managing risk at every level of the supply chain a significant challenge. For Japanese companies, supply chain management can take on even more importance: As an island nation, Japan faces additional challenges in terms of securing commodities and other inputs via trade, and it faces growing impacts from climate change physical risks.

Companies around the world, including in Japan, are turning their attention to their supply chains to identify potential sustainability issues. In line with increased expectations from investors and some regulatory regimes, companies are also looking to disclose their strategies for reducing exposure to sustainability-related risks. More companies are recognizing that the sustainability performance of their supply chains can have reputational and, in some cases, regulatory consequences.

To take stock of sustainable supply chain management in Japan and across different regions, S&P Global Sustainable1 analyzed data collected in the S&P Global Corporate Sustainability Assessment (CSA) on over 3,000 companies included in the Dow Jones Best-in-Class World Invited Universe, which are publicly traded companies globally that are assessed in the CSA and invited to participate.

Key findings from our full report include:

• many Japanese companies are taking steps to assess, disclose and address their supply chain risks;
• adoption of supply chain management practices is generally more widespread in Japan than in the surrounding Asia-Pacific region;
• companies in Japan are behind their peers globally in the practice of screening suppliers for potential sustainability-related risks;
• Japanese companies are global leaders in setting net-zero targets, but fewer Japanese companies include Scope 3 emissions occurring throughout their value chains than companies in other regions;
• consideration of biodiversity and nature at the supplier level appears more advanced among Japanese companies.