The WBA Urban Benchmark: Are Japanese Companies Meeting the Urban Sustainability Challenge?

2024-12-19

In the World Benchmarking Alliance’s first Urban Benchmark published in October 2024, 300 of the most influential companies were assessed on how they address urban needs. Codo summarizes the key findings of the benchmark and analyzes how Japanese companies performed in this assessment.

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. For companies, these benchmarks provide an opportunity to measure their efforts against global standards, identify areas for improvement, and enhance their international competitiveness. High rankings build trust with investors and stakeholders, while demonstrating transparency and commitment to ESG goals. In an era of increasing focus on sustainability, WBA results are a valuable tool for driving positive change and long-term success.

The Urban Benchmark is the first WBA benchmark to assess how private companies impact urban environments across the ESG spectrum, including human rights, climate impact, and social equity. With 55% of the global population living in urban areas, these assessments shed light on how businesses are shaping the cities of the future.

Corporate sustainability measures are still insufficient

The WBA identified five major trends from the 300 companies assessed:

Minimal Commitment to Reducing Urban Pollution: Despite the severe societal impact of urban pollution, company efforts remain lackluster. Only 9 out of 300 companies reported reducing air pollutants, even though pollution contributed to over 8 million deaths globally in 2023. On noise pollution, a mere 13% of construction and transportation companies implemented measures to reduce its impact, despite its links to hearing loss, sleep disturbances, cardiovascular diseases, and mental health issues.
Affordability is overlooked: The privatization of urban services like transportation and utilities has led to rising costs, pricing many people out of essential services. The benchmark revealed that 75% of companies scored zero on affordability metrics. This trend, coupled with the control of housing markets by major real estate corporations, risks worsening access to basic necessities for low-income urban residents.
Poor engagement with key stakeholders: Companies assessed in the benchmark serve over 692 million people, yet fewer than half identified local communities as key stakeholders. Alarmingly, none recognized informal settlements like slums, which house over one in seven people worldwide. This lack of two-way communication overlooks valuable insights from end users that could ensure solutions address real needs.
Weak climate commitments: Although cities account for 70% of global CO2 emissions, fewer than half of the companies disclosed their greenhouse gas emissions, demonstrating a clear gap in accountability and commitment to climate-positive actions.
Insufficient Disaster Preparedness. With climate change intensifying the frequency and impact of natural disasters, the resilience of urban systems is critical. However, more than half of the companies operating in vulnerable regions failed to conduct risk assessments or disclose emergency response plans, even when their services are vital to recovery efforts.

How did Japanese companies perform?

The benchmark’s highest-ranked company was Enel (Italy) with a score of 47.8/100. The average score across all 300 companies was 11.3/100, highlighting a low overall performance. Only 11 companies scored above 30.

Fifteen Japanese companies participated in the benchmark, with an average score of 15.7/100—higher than Chinese companies (6.0/100) and South Korean companies (13.0/100). Here is how they ranked:

Ranking	Company Name	Total Score
#23¹	Taisei Corporation	27.0/100
#26	Daiwa House Group	26.2/100
#35	Mitsubishi Estate	25.3/100
#43	Obayashi Corporation	23.9/100
#45	Tokyo Electric Power Company (Tepco)	23.6/100
#53	Tokyu Fudosan	22.0/100
#79	Mitsui Fudosan	18.3/100
#85	Kajima Corporation	17.7/100
#92	Tokyo Gas	16.9/100
#109	Kansai Electric Power (Kepco)	14.6/100
#159	Sumitomo Realty	9.3/100
#183	Nikken Sekkei	4.9/100
#205	Tokyo Water	2.2/100
#208	Osaka Metro	2.0/100
#217	Tokyo Metro	1.3/100

While Japanese companies performed well in Core Social Indicators related to human rights and compliance (average: 20.7/100), significant gaps remain:

No single indicator was fully met by all Japanese companies, and only 14 indicators were met by more than half of them. On the other hand, more than 72 indicators were unmet by all Japanese companies.
Surprisingly for a country prone to natural disasters, Japanese companies performed very poorly in the “Natural Disaster Risk Reduction” category, with no company having conducted risk assessments nor following standards for disaster proofing. Scores for the “Climate Proof and Resilient Cities” are brought up by the fact that more than half of assessed Japanese companies disclose their Scope 1,2 and 3 GHG emissions and have time-bound targets to reduce them.
Despite performing best in the Core Social Indicators category, no Japanese companies disclosed their definition of a living wage nor have made a statement about overtime work.

Recommendations for Japanese Companies

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

1) Japanese companies must foster healthy urban environments: Japanese companies scored poorly in the “Healthy Cities” category, which evaluates air quality, noise pollution, and open spaces. With 28.3% of Japan’s land publicly owned², companies in construction and real estate should prioritize creating and maintaining safe, accessible public spaces to improve their WBA scores.

2) Strengthen Stakeholder Engagement: Japanese companies need to take a more active role in addressing social concerns, particularly with vulnerable communities. Transparent human rights policies, proactive stakeholder engagement, and disclosures on living wages and overtime work are critical for meaningful progress in the “S” of ESG.

3) Increase English Disclosures: Limited availability of information in English negatively impacts benchmark scores and global visibility. For instance, while Osaka Metro regularly publishes safety assessments in Japanese³, the lack of English disclosures resulted in unmet scores. Making such information bilingual would not only improve rankings but also attract international investors.

Conclusion

The WBA Urban Benchmark reveals that Japanese companies, while performing slightly better than some regional peers, still have significant room for improvement in addressing urban sustainability challenges. To build resilient, inclusive, and sustainable cities, Japanese firms must prioritize pollution reduction, stakeholder engagement, and transparent communication. These efforts will not only enhance their WBA scores but also align with the global movement towards a more sustainable future for urban populations.

At Codo Advisory, we specialize in sustainability consulting and are uniquely positioned to support companies aiming to improve their WBA scores. From developing comprehensive ESG strategies to enhancing transparency and stakeholder engagement, we can help bridge the gaps highlighted in the Urban Benchmark. If your company is looking to improve its performance or address specific areas of concern raised by the benchmark, don’t hesitate to contact us.