Mixed results for Japanese companies in the first WBA Social Benchmark

In the World Benchmarking Alliance’s first ever Social Benchmark published in July 2024, the world’s 2000 most influential companies (SDG2000) were assessed on their commitment to the respect of ethics, human rights and decent work. In this blog post, we summarize the main findings and analyze how Japanese firms performed.  

What are WBA climate benchmarks? 

The World Benchmarking Alliance (WBA) is a global non-profit that creates benchmarks of over 2000 firms by comparing their contributions to the Sustainable Development Goals (SDGs) and publishes assessments of companies’ ESG plans across various industries. The assessments are based on the ACT methodology, developed by ADEME and CDP to measure the quality of corporate low-carbon transition plans.

The Social Benchmark is one of the largest benchmarks ever done by the WBA, assessing over 2000 of the world’s most influential companies: they alone generate the equivalent of 45% of the global GDP. If each of these companies were to act for better working conditions, the global impact would be unparalleled. However, as Social Transformation Lead at the World Benchmarking Alliance Namit Agarwal stated in the benchmark’s press release: “The fact that 90% of these companies are failing to act on fundamental social expectations shows the state of play of the private sector”.   

A cruel lack of action from almost all assessed companies

Based on the 2000 company assessments, the WBA identified 5 key findings: 

1. More than 90% of these 2000 companies are not even halfway to meeting basic social goals.
   The average score is very low on all parameters of respecting human rights (24% average), providing and promoting decent work (20%) and acting ethically (23%). On top of this, over 30% of companies only scored between 0 and 2 points out of 20 points. Albeit the top 10% companies show good measures for human rights and ethics, decent work seems to be a neglected area for all.
2. Stakeholder interaction is overlooked by many companies.
   Only 9% of assessed companies show concrete examples of how they interact with affected stakeholders, such as employee surveys or anonymous feedback forms for suppliers. Engagement with stakeholders affected by company activities is shown to correlate with a better average performance on every indicator of the benchmark.   
3. 80% of companies score 0 on all three initial steps of Human Rights Due Diligence (HRDD) indicators.
   This means these companies are not identifying, assessing nor taking action on their human risks and impacts, putting many workers and communities at risk. The benchmark also shows that only 6% of all 2000 companies have completed all three steps, most of them located in Europe and East Asia, in countries in which there is legislation on corporate responsibility and human rights.  
4. Only 4% of companies commit to paying their workers a living wage.
   A living wage means that the workers’ basic needs and their dependents are met without resorting to overtime work. Less than 4% of companies are currently filling that need, and under 1% have set a goal to do so. Companies sometimes disclose information related to minimum wages in their countries of operation, which is often far below a living wage. An overall low commitment to ensuring decent wages and meeting working hours indicators result in these two indicators being the lowest scoring in this benchmark.  
5. There is a lack of transparency in assessed companies’ lobbying practices.
   Remembering that these companies represent almost half of the global GDP, this lack of transparency creates risks for the entire society as they can influence policies to prioritize business needs rather than the public good. If more than half of the assessed companies in this benchmark commit to stop bribery and corruption, very few of them disclose their approach to political lobbying and even fewer disclose their lobbying expenses.

How did the Japanese companies perform? 

In this benchmark, the highest-ranking companies were EDP (Portugal), Glencore (Switzerland), Unilever (UK) and Yara (Norway) with a score of 15.5/20. Out of 2000 companies, 329 received a score of 0/20. The global average for the 2000 companies is 4.5/20.

One thing to note is that the companies have been assessed between 2021 and 2024, meaning any recent changes may not have been considered in this benchmark.

This benchmark assessed 151 Japanese companies in various sectors. Here are their detailed ranks.

Sector	Companies
Apparel and Footwear (global average: 6.5) (Japanese average: 9.25)	ASICS (score: 6) Fast Retailing (score: 12.5)
Automobiles and Capital Goods (global average: 5 ) (Japanese average: 4.2)	Bridgestone (score: 7) Honda Motor (score: 5.5) Iseki (score: 1) Keyence Corporation (score: 4) Kubota (score: 4) Mazda (score: 3) Nissan Motor (score: 8) Subaru Corporation (score: 4.5) Suzuki (score: 3.5) Toyota Motor Corporation (score: 6.5) Yanmar (score: 0) Yokohama Rubber (score: 3.5) Mitsubishi Motors Coporation (score: 4.5)
Banks (global average: 4.8 ) (Japanese average: 4.7)	MUFG (score: 7) Mizuho (score: 8) Norinchukin Bank (score: 4) Resona Holdings (score: 6) Shinkin Central Bank (score: 0) SMBC Group (score: 4) Japan Post Bank (score: 4)
Construction (global average: 3.7  ) (Japanese average: 1.8 )	JK Holdings (score: 0) Kajima Corporation (score: 5) Sumitomo Osaka Cement (score: 1.5) Taiheiyo Cement (score: 2.5) Nikken Sekkei (score: 0)
Extractives (global average: 4.9 ) (Japanese average: 4.7)	Cosmo Energy (score: 5.5) Hanwa (score: 1) Idemitsu Kosan (score: 7) Inpex (score: 10.5) JFE Holdings (score: 10) ENEOS (score: 8) Kobelco (score: 4.5) Marubeni-Itochu Steel (score: 0) Nippon Steel (score: 3.5) TANAKA Precious Metals (score: 0.5) Sumitomo Metal Mining (score: 2)
Food, Agriculture and Forestry (global average: 4.9 ) (Japanese average: 5.2 )	Ajinomoto Group (score: 11.5) Asahi Group (score: 11.5) Glico (score: 2) Fuji Oil Group (score: 8.5 ) Itochu (score: 5 ) Itoham Yonekyu (score: 0 ) Kewpie Corporation (score: 4.5 ) Kikkoman Corporation (score: 3 ) Kirin Holdings (score: 10 ) Kyokuyo (score: 1 ) Maruha Nichiro (score: 5 ) Megmilk Snow Brand (score: 8.5 ) Meiji (score: 11 ) NH Foods (score: 4.5 ) Nichirei (score: 5.5 ) Nippon Paper Industries (score: 5.5 ) Nissui (score: 7.5 ) Nisshin Seifun (score: 8.5 )  OJI Holdings (score: 5 ) OUG Holdings (score: 0 ) Starzen (score: 0.5 ) Sumitomo Forestry (score: 9.5 ) Suntory (score: 9 ) Tokyo Seika (score: 0 ) Yamazaki Baking (score: 0 ) ZEN-NOH (score: 0 )
Funds and other financial services (global average: 2.2) (Japanese average: 1.5)	GPIF (score: 0.5 ) Japan Pension Fund Association (score: 0 ) National Federation of Mutual Aid Associations for Mutual Personnel (score: 0 ) Nomura Holdings (score: 2.5 ) ORIX Group (score: 7 ) Pension Fund Association for Local Government Officials (score: 0 ) Sumitomo Mitsui Trust Holdings (score: 2) Federation of National Public Service Personnel Mutual Aid Associations (score: 0 )
ICT (global average: 5.9 ) (Japanese average: 6.8 )	KDDI (score: 10 ) Canon (score: 9 ) Kyocera (score: 4.5 ) Murata Manufacturing (score: 8.5 ) NEC (score: 9 ) NTT (score: 7 ) Panasonic Corporation (score: 4.5 ) SoftBank (score: 6.5 ) SONY (score: 9 ) Tokyo Electron (score: 8.5) Nintendo (score: 3.5 ) Toshiba TEC (score: 2.5 )
Insurance (global average: 4.7 ) (Japanese average: 4 )	Dai-ichi Life Holdings (score: 3.5 ) Meiji Yasuda Life Insurance (score: 1.5 ) MS&AD Insurance (score: 8.5 ) Zenkyoren (score: 0 ) Nippon Life Insurance (score: 2 ) Sumitomo Life Insurance (score: 3 ) Tokio Marine Holdings (score: 8.5 ) Japan Post Insurance (score: 4 ) Sompo Holdings (score: 10 ) T&D Holdings (score: 3 ) Sony Financial Holdings (score: 0 )
Real Estate (global average: 3.2 ) (Japanese average: 5 )	Daiwa House Group (score: 5 ) Haseko Corporation (score: 3 ) Kumagai Gumi (score: 4.5 ) Mitsubishi Estate (score: 7 ) Mitsui Fudosan (score: 3) Obayashi Corporation (score: 7 ) Sekisui House (score: 6.5) Shimizu Corporation (score:2.5 ) Taisei Corporation (score: 10.5 ) Daito Trust Construction (score: 1 ) Sumitomo Realty (score: 2.5 ) Tokyu Fudosan (score: 8.5 )
Retail (global average: 5.6 ) (Japanese average: 7.6 )	Aeon (score: 9.5) Rakuten (score: 10.5) Seven & I Holdings (score: 10) Zensho Holdings (score: 0.5)
Transport (global average: 2.8 ) (Japanese average: 3.5)	ANA Holdings (score: 10 ) Central Japan Railway (score: 2 ) Hankyu Hanshin  Holdings (score: 2.5 ) Japan Airlines (score: 9 ) Nippon Express (score: 2 ) SG Holdings (score: 4.5 ) Tokyu Corporation (score: 2 ) Yamato Holdings (score: 4.5 ) NYK Line (score: 2.5 ) Tokyo Metro (score: 0 ) Osaka Metro (score: 0 )
Utilities & Waste Management (global average: 3.9 ) (Japanese average: 3.2 )	Chubu Electric Power (score: 5 ) Chugoku Electric Power (score: 2 ) Kansai Electric Power (score: 3.5 ) Kyushu Electric Power (score: 3 ) Tohoku Electric Power (score: 2 ) Tokyo Electric Power  Company (score: 9.5 ) J Power (score: 3 ) Tokyo Gas (score: 1.5 ) Tokyo Water (score: 0 )
Other (global average: 5.6 ) (Japanese average: 6.2 )	Asahi Kasei Corporation (score: 6 ) Astellas Pharma (score: 6 ) Daiichi Sankyo (score: 5.5 ) DIC Corporation (score: 3.5 ) Kao Corporation (score: 12.5 ) Marubeni Corporation (score: 5 ) Mitsubishi Corporation (score: 5 ) Mitsui (score: 9 ) Otsuka (score: 11 ) Shin-Etsu Chemical (score: 3.5 ) Shiseido Company (score: 12.5) Showa Denko (score: 5 ) Sumitomo Corporation (score: 6.5) Takeda (score: 5.5) Toray Industries (score: 4.5 ) Tosoh (score: 0 ) Toyo Seikan (score: 9 ) Unicharm Corporation (score: 3 ) Sumitomo Chemical (score: 7 ) Nippon Paint Holdings (score: 4 )

Fast Retailing, Kao Corporation and Shiseido Company top the ranking of Japanese companies with 12.5/20 points, whereas 20 companies get a 0 mark.

On average, Japanese companies’ performance is in line with the global average. The best performing sectors for Japan are Apparel and Footwear, Retail and ICT, mostly customer-facing industries in which brand image is important, hence more effort put in placing emphasis on social commitments. On the contrary, Japanese companies performed very poorly in the Construction sector and Funds and Other Financial Services category, putting the country average below the already low global average.
On the plus side, the WBA highlighted Japanese companies’ performance on human rights, with almost half of them (48%) committing to respecting ILO’s fundamental rights at work compared to 26% of all companies assessed.

Here are the indicators for which Japanese companies have an overall good performance:

• 1a: The company has a publicly available policy statement committing it to respect human rights, which is approved by the highest governance body. (105/151 Japanese companies met this indicator)
• 13b: The company discloses the proportion of its total direct operations workforce for each employee category by gender. (110/151 Japanese companies)
• 14b: The company discloses one or more time-bound targets on gender equality and women’s empowerment. (109/151 Japanese companies)

There are however some indicators which no or almost no Japanese company assessed in this benchmark has met:

• 10b: The company describes how it determines a living wage for the regions where it operates.
• 11b: The company publicly states that all overtime work must be consensual and be paid at a premium rate.
• 13c:  The company discloses the proportion of its total direct operations workforce for each employee category by race or ethnicity.
• 13d: The company discloses the proportion of its total direct operations workforce for each employee category by one or more additional indicators of diversity (e.g. disability, sexual identity and marital and family status, etc). (only Kao Corporation and NYK Line met this indicator)
• 14d: The company discloses the ratio of the basic salary and remuneration of women to men in its total direct operations workforce for each employee category, by significant locations of operation.
• 18a: The company has a publicly available policy statement(s) (or policy(ies) setting out its lobbying and political engagement approach. (only Sompo Holdings and Astellas Pharma met this indicator)
• 18d: The company requires third-party lobbyists to comply with its lobbying and political engagement policy (or policies).

Recommendations for Japanese Companies

Based on our review of this benchmark’s data and reports, here are three recommendations for Japanese companies:

1. Japanese companies should improve their D&I reporting practices: Companies over 301 employees in Japan are required to publish data about the proportion of women in their workforce, including the proportion of male/female managers and the percentage of female directors. However, such reporting duties do not exist for other indicators. Some companies show the proportion of their workforce by nationality, others by their level of education or presence/absence of disabilities. As all companies have access to their own employees’ data and it can be compiled easily, disclosing it could help Japanese companies rank better in the benchmark and improve their image. For another example, if Japanese companies disclose the name of their board of directors on their international webpage with no pictures, it can be difficult for a non-Japanese person to know if this person is male or female, thus counting negatively towards their ranking.
2. More transparency for lobbying activities: As stated in the WBA’s key findings, most of the assessed companies’ lobbying practices are very opaque, with no disclosure on lobbying policies or expenditures.  Japanese companies should work on making information about their lobbying policy and interactions with the government publicly available (even if such a document exists internally, it will not be taken into account in a WBA benchmark if it is not accessible to the public).
3. Making information available in English: Although many of the Japanese companies reviewed in this assessment have some information about their social commitments, most of the time such information is only available in Japanese or only a summary is available in English. As such, it is often overlooked or just not considered by the WBA[1]. If Japanese companies wish to improve their ranking in the WBA benchmark, they should strive to make the same amount of information available in English as in Japanese. This would also have the advantage of making them more appealing to overseas investors.

Conclusion

The first-ever Social Benchmark by the World Benchmarking Alliance showed most the world’s most influential companies, including many from Japan, are falling short of meeting basic social goals. Despite some bright spots, significant improvements are needed on many fields, particularly in areas such as ensuring living wages, transparency in lobbying practices, and comprehensive diversity reporting. Japanese companies have shown potential with their commitments and policies but must strive for greater transparency and accessibility of information, especially in English, to enhance their global reputation and rankings.

The WBA insights report highlights that where government regulation and stakeholder pressure are in place, companies have the incentives and support to improve. It is crucial for companies to realize the importance of their social commitments and the profound impact they have on society, especially as one of the 2000 most influential companies globally. By adopting these recommendations, Japanese companies can not only improve their performance in future benchmarks but also contribute to a more ethical and socially responsible business landscape globally.

The WBA aims to publish the next Social Benchmark in 2026, meaning companies should act now to address these issues and demonstrate their commitment to social responsibility. The path to better social performance is clear, and with dedicated efforts, these companies can lead the charge towards more sustainable and equitable business practices.

More information

• World Benchmarking Alliance Social Benchmark 2024 Insights Report
• Press release
• More about the ACT Methodology

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[1] To explain Tokyo Metro’s “Unmet” evaluation of the 03-A indicator, the WBA stated: “The company has published its latest sustainability report in the Japanese language, hence, not considered in the assessment.”