Firms to be urged to disclose climate-linked risks

Japan's Financial Services Agency and the Tokyo Stock Exchange plan to urge businesses to disclose their management strategies and risks of losses related to climate change.

The two organizations made public draft revisions to the Corporate Governance Code on Wednesday. The code is a set of guidelines aimed at increasing transparency in the management of listed companies.

The draft calls on companies listed on the First Section of the Tokyo Stock Exchange to properly disclose their management strategies on climate change and the risk of losses in the event of a weather disaster.

The two organizations point out that Japanese and foreign investors are increasingly interested in measures against climate change.

The draft calls for at least one-third of board members to be outside directors independent of the company. It also calls for active disclosure of corporate information in English.

The FSA and the TSE want to introduce the revised guidelines from June.

But as the guidelines are not legally binding, it remains to be seen whether targeted companies will swiftly follow the requests.