The Top 30 ESG Indicators for Enhancing Corporate Value (FY2024 ver.)

　ABeam Consulting Ltd. (Chuo-ku, Tokyo; Takahiro Yamada, President and CEO) has published the Top 30 ESG Indicators for Enhancing the Corporate Value of Japanese Companies (as of FY2024), based on the analysis conducted in order to clarify the correlation between enhancement of corporate value and ESG activities. It is the second time that we have conducted this analysis, following the one for FY2022, and the number of companies covered has doubled since that research, reflecting the increase in the number of companies that are on the journey of proving the power of ESG for value creation.

■Analysis survey background
　In order to achieve sustainable growth in corporate value, companies must appropriately manage, allocate and utilize non-financial capital as a source of competitiveness. ABeam Consulting has been offering “Digital ESG Service”* since 2019. By quantitatively visualizing the relationship between measures to strengthen non-financial capital and corporate value using clients’ internal and external non-financial data, we help bring about strategic management of corporate value enhancement in a bid to strengthen clients’ competitiveness over the medium to long term.
　In the latest analysis, specific indicators that show a strong correlation with corporate value are abstracted by applying the “Yanagi Model”, a formula that proves the relationship between ESG activities and corporate value, advocated by Ryohei Yanagi, Executive Advisor at ABeam Consulting and Visiting Professor at Waseda University, to the analysis of non-financial data of Japanese companies that ABeam Consulting has supported to date. As a result, we have identified the top 30 indicators that are correlated with corporate value at many companies, as shown in the following rankings.

■ Overview: Top 30 ESG Indicators for Enhancing the Corporate Value of Japanese Companies (as of FY2024)

　Among the Top 30 ESG Indicators for Enhancing the Corporate Value of Japanese Companies (FY2024), 21 have remained in the ranking continuously after appearing in the previous analysis, which shows the strong reconfirmation that these 21 indicators contribute to enhancing corporate value over the medium to long term.
　Among the newly ranked indicators, the following four are particularly noteworthy: the Number of new products created through R&D (4th place), Corporate brand survey results (14th place), CO2 emissions - Scope 3 / Category 11 (22nd place) and Employee engagement scores (25th place). In particular, the fact that the indicators related to R&D outputs and brand strength are ranked highly implies that strengthening these forms of non-financial capital, which should be drivers of corporate competitiveness, actually boosts corporate value.

■A closer look at the analysis survey Top 30 ESG Indicators for Enhancing the Corporate Value of Japanese Companies (FY2024)
　The following four points summarize our investigation of the analysis.

1. Research and development outputs
   Given the rankings for the Number of new products created through R&D (4th) and the Number of registered patents (16th), the data also shows that indicators directly linked to the creation of new corporate value and the strengthening of competitiveness through research and development lead to an increase in corporate value. Companies are required to appropriately disclose their research and development outputs to their stakeholders.
2. Brand strengthening
   Rankings for Number of visitors to plants, museums, showrooms, etc. (11th place) and Corporate brand survey results (14th place) show that brand power makes a major contribution to increases in corporate value. We found that it is crucial for companies to interact with their local communities and carry out branding activities in order to increase the reliability and loyalty and improve the reputation of the company, while also strengthening the brand power that leads to competitiveness.
3. Climate change countermeasures
   CO2 emissions - Scope 2 rose from 16th place to 5th place, and CO2 emissions - Scope 3/Category 11 was newly ranked at 22nd. This is the result of a strengthening of carbon neutrality initiatives at many companies. It is also due to an acknowledgement that reducing the negative environmental impact of products throughout their lifecycle is an important element in improving corporate value, as companies find it necessary to continue environmentally friendly product or service development and business activities in the future.
4. The importance of employee engagement
   The new ranking at 25th place of Employee engagement scores, an indicator of willingness to contribute to one's affiliated organization, shows that proactive initiative and eagerness to learn on the part of employees contribute to sustained corporate growth. High engagement leads to improved retention rates, as well as employee development and organizational growth. Although this is an indicator for which the actual values are rarely disclosed externally, it has become clear that it is important to offer a better working environment that enhances employee engagement.

■Key points in achieving management for true corporate value improvement as conceived by ABeam Consulting
　Based on the findings of this analysis into the current state of ESG management at Japanese companies, and the experience and know-how that ABeam Consulting has accumulated through its facilitation of management to improve corporate value, we have identified the following as key points for Japanese companies in further increasing their corporate value.

1. Appropriate allocation of non-financial capital through quantitative verification
   As the four highlighted indicators show, the range of ESG indicators that companies need to be aware of is steadily expanding. This trend suggests that companies now understand the crucial nature of non-financial capital more deeply, and that they are being called upon to promote specific initiatives to maximize its value by linking it to their business activities. Moreover, it is crucial that companies have a well-defined perspective on which ESG indicators they need to pay particular attention to, which ESG activities are actually effective, and also what areas need improvement, as they use quantitative evaluation to identify what sorts of non-financial capitals contribute to their corporate value so that they can make the appropriate allocations.
2. Visualization of the “story” that achieves increased corporate value
   Efforts to increase corporate value can never be brought to fruition with piecemeal measures alone. It is necessary to construct a consistent story by clearly identifying the elements that constitute the source of competitiveness for each business, visualizing the social impact of products and services, and formulating and implementing a management strategy that is consistent with human resource strategies, intellectual property strategies, etc. By reviewing and updating these on a regular basis, companies can aim for sustained growth while realizing the benefits of their ESG activities.

　Based on the results of this analysis, ABeam Consulting will continue to contribute as a partner that promotes the creation of new value and the realization of a sustainable society by supporting companies and organizations in the ESG domain to improve their value.

*Digital ESG Service: A service that uses digital technology to collect, store and analyze ESG information scattered throughout a company. It consists of three core components: Digital ESG Data Connection for the collection and centralized management of non-financial information, Digital ESG Data Analytics for analysis of the impact on management of the non-financial information that has been collected, and the Digital ESG Cockpit for visualization of information related to non-financial information and corporate value, and promotion of confirmation and decision-making by management and other stakeholders.
https://www.abeam.com/jp/en/expertise/sl259/

■Related Services
・Digital ESG Data Analytics for Integrated ESG Management
・Impact-Weighted Accounting Consulting Service

About ABeam Consulting Ltd.

ABeam Consulting is an integrated management consulting firm that provides global services tailored to each country and region through its worldwide network centered in Asia. The wide range of consulting services it provides include strategy, BPR, IT, organization/personnel, outsourcing and other domains of specialized expertise. Roughly 8,300 richly experienced professional ABeam consultants advise in the areas of finance, manufacturing, distribution, energy, information communications, as well as industry, and organizations in the public sector and other sectors. ABeam Consulting creates the future together with corporations and other organizations. As a creative partner leading the way reliably through change, we contribute to industrial and societal change.
Website: https://www.abeam.com/jp/en/