FY2021: Management indicators that investors and companies place importance on

According to questionnaire survey (multiple answers allowed) for the Life Insurance Association of Japan conducted in FY2021 targeting 475 listed companies and 95 institutional investors. Investors are focusing on ROE (85%), while companies are 58%. Regarding ROIC, investors are about 46%, companies are about 3%, and the cost of capital is about 38% for investors and about 2% for companies.ROE is an index that shows how much shareholders' equity has

 

ROE (financial index) and ESG (non-financial index) are integrated to improve corporate value. Balanced Scorecard is an activity that adds an environmental perspective.

 

The idea that "generally the purpose of a company is to maximize its corporate value, and the role of management is to continuously improve its corporate value" is become popular in Japan.

 

According to the Ito report released by the Ministry of International Trade and Industry in 2014, Japan has suggested that ROE is at a lower level than in Europe and the United States (5.3% in Japan, 22.6% in the United States, 15.0% in Europe), and the lowest line should be 8%, aiming for a higher level.

The Ito report concludes that the challenge for Japanese companies is earning power, and that it is the expectation of investors to improve ROE by increasing this earning power.

In 2019 Mr. Ito proposed ROESG management.

 

What is ROESG management?

 

ROE (financial index) and ESG (non-financial index) are integrated to improve corporate value. Balanced Scorecard is an activity that adds an environmental perspective.

 

It can be seen that while companies are interested in sales and profit margin, investors expect a return on their investment.

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