摩根士丹利-日本新的大战略 Japan's New Grand Strategy

Foundation

June11,202308:00PMGMT

JapanEconomics

Japan'sNewGrandStrategy

Japan'snewgrandstrategyisemerging.Achievingaspirationsrequiresenhancedcapabilitiesin(a)fastertechnologyadoption;(b)labormarketliquidity;(c)corporateandnationalgovernance,and(d)fiscalefficiency.Disruptionmayoccurbutwouldraiseincomeforbothcapitalandlabor.

Forimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

Foundation

MorganStanleyMUFG3

Japan'sNewGrandStrategy

Japanisdevelopinganewgrandstrategy,pressuredbydemographicsathomeandgeopoliticsabroad.Asuccessfulgrandstrategyrequirescapabilitiestomatchaspirations,butJapannowlackssomeoftheneededcapabilities.Inordertoenhancecapabilities,Japanhasfourbigjobs:

1.Fastertechnologydiffusion.Japanexcelsatrecognizingproblemsandcreating/gatheringtechnologysolutions;butitlagsintimelyconsensuscreationandtimelyaction.

2.Enhancelabormarketliquidity.Newtechnologycannotspreadwithoutaretrainedandre-allocatedlaborforce.Bothreskillingandhigherlabormetabolismareneededforfasterdiffusion.

3.Enhancegovernanceofbothprivateandpublicsectors.Thepri-vatesectorhasmadegreatprogress,butstillneedsmoreattentiontofinancialefficiencyandflexibilityofbothbusinessportfoliosandinternalprocedures–especiallyHR.Thepublicsectorhasimprovedaswell,butremainshamstrunginmanycasesbylegacyrules,siloedstructure,andincentiveincompatibilitybetweenelectoral/bureau-craticproceduresandurgencyofpublicneeds.

4.Fiscalrebalancing.Thefirstpartistoreducecoststhrough(1)usingtechnologyintraditionalspendingareas(medical,pension,welfare)and(2)changingrulesinothers(raisingpensionreceiptage).Thesecondpartistousethesavingsbothtoinvestinnewneeds(reskilling,R&D)andachieveaprimarysurpluslargeenoughtostabi-lizethedebt/GDPratio.

Inthe"IndicatorsofProgress"section,weoutlinethecurrentstateofthesefourinitiatives,andlistpotentialsignsoffurtherprogressinthenewgrandstrategy.

Continuedmeasurestoimplementthenewgrandstrategywilllikelydisruptfiveindustriesinparticular:(1)Energy,(2)Agriculture,(3)Healthcare,(4)AI/IT,and(5)Education.(SeeFeldman,Robert,etal.

,JapanEconomics:TheSevenTransformations

ofaHighlyEffectiveEconomy,

MorganStanley,March6,2023.)Theresultingcreativedestructionwilllikelyraiseincomeforbothcapitalandlabor,raiseeconomicsustainability,andthusapproachthe"NewCapitalism"thatPMKishidaseeks.

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Contents

5GrandStrategy:TheoryandPractice

6BigJob#1:FasterTechnologyDiffusion

8BigJob#2:LaborMobilityandReskilling

11BigJob#3:CorporateandNationalGovernanceReform

14BigJob#4:FiscalEfficiency

16IndicatorsofProgress

18GrandStrategyandIndustrialDisruption

19Endnotes

Foundation

MorganStanleyMUFG5

GrandStrategy:TheoryandPractice

Aspirationsvs.Capablities.PMKishida’s“NewFormofCapitalism”qualifiesasagrandstrategy,inthesenseusedbyGaddis[Endnote1].Gaddisdefinesgrandstrategyas“alignmentofpotentiallyunlimitedaspirationstonecessarilylimitedcapabilities.”Ontheissueofwhatis“grand”,headdsthatitrelatestotheimportanceofwhatisatstake,andthescopeoftheneededwork“acrosstime,space,andscale.”Kishida’s“newformofcapitalism”isanattempttoimprovethenation’scapabilities,acrosstime,spaceandscale,inordertoachievenationalaspirations.

ThetwomajoraspirationsinNewCapitalismaretheverysametwoaspirationsthathavedominatedJapanesepolicyforsevendecades.Oneisnationalsecurity,sothatJapancanmaintainitspoliticalinde-pendenceandsecurityofsupplychainsforenergy,food,andmate-rials.Theotheriseconomicprosperity,sothatlivingstandardsarehighandrising,andthatabrighteconomicfuturecanbeachieved.

Whiletheaspirationsarethesame,requiredcapabilitiesarechanging.Therearealsotwogeneraltypesofcapabilities.Oneisthemilitary/diplomaticpowerthatallowsJapantoplayaconstructiveroleingeopolitics.Theotheriseconomic/financialpower,suchasaneducatedlaborforce,asophisticatedcapitalstock,technology,andcompetitiveeconomicinstitutions(ruleoflaw,marketcompetition,regulationofexternalities,etc.)Economic/financialpowerbringshigherlevelsofaverageproductivity,whichinturnmaintainshighstandardsoflivingandsociallyacceptabledistributionofincomeandwealth.

HistoryofJapan'sGrandStrategyApproach.Historically,therehasbeenabifurcatedassignmentofaspirationstocapabilities.Nationalsecuritywasachievedmostlybyrelianceonmilitary/diplomaticpower,whileeconomicprosperitywasachievedmostlybyrelianceoneconomic/financialpower.However,therewaslittlecrossfertil-ization.Thatis,military/diplomaticpowercontributedrelativelylittletoeconomicprosperity.Indeed,militaryspendingwascappedat1%ofGDPfordecades.Inaddition,economic/financialpowercon-tributedrelativelylittletonationalsecurity.ExportsofweaponswereeffectivelyprohibitedbyinterpretationofJapan’sconstitution,andmostuniversitiesprohibitedfacultyfromparticipatinginmilitarytechnologyprojects.

Overthelastdecade,however,thechangesingeopoliticalbalancehavemadethisassignmentofcapabilitiesandaspirationsobsolete.Bothcapabilitiesnowcontributetobothaspirations.Thisrealitymakesitallthemoreimportantforpublicandprivatesectorcapabili-tiestoworktogether,inordertoachievebothaspirations.[2]

Inshort,forJapantocontinueachievingitsaspirations,itmustnotonlycontinuetoaugmentitscapabilities,butalsomustenhancecross-fertilizationoftheirimpactonbothaspirations.

FourBigJobs:Inordertoenhancecapabilitiesandenhancetheirimpactonaspirations,Japanesesocietymustmovequicklyanddeci-sivelyinfourareas:(1)Acceleratethediffusionofnewtechnologies;(2)Makelabormarketsmoreflexibleandskill-based;(3)Improvegovernanceinbothcorporateandpublicsectors;and(4)Improvefiscalefficiencythroughbringingtheprimarybalanceabovenetinterestpayments.

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BigJob#1:FasterTechnologyDiffusion

Economictransformationdependsonrapiddiffusionoftechnology.systemforelectionorganization–PMKoizumidissolvedtheDietand

Theprocesshasfourparts:(a)Recognition:Recognizetheproblem;calledageneralelection.Hewonanoverwhelmingvictory,andthus

(b)Technology:Findordevelopatechnologytosolvetheproblem;theDietwasobligatedtopassthereform.Thelesson:Overcoming

(c)Consensus:Createconsensustousethetechnology;(d)Action:resistancefromorganizedvestedinterestsrequiresmarshallingsup-

Implementthetechnologyquickly.[3]portfromdiffuseinterests.[

8]

Historically,JapanhasbeenskilledatRecognitionandTechnology,

buthaslaggedonConsensusandAction.Hence,successofgovern-

mentpoliciesorcorporatestrategieswillrequirebetterperformance

onconsensuscreation,andonactionplanswithshortdeadlinesand

clear,measurabletargets.

BuildingConsensus:HistoricalexampleshelpunderstandwhyJapan

hasfallenshortonbuildingconsensus.Ahistoricalsuccesscasein

EuropewasintroductionofcoffeeintoVienna,inthemid1700s.The

pubswerefiercelyopposedtocoffee,butthecoffeehousesrepre-

sentedanewculture.Therewereviolentclashesbetweenthetwo

sides,untilEmpressMariaTheresaorderedthatthosewhosoldone

beveragemustselltheotheraswell.Aleaderwithstrongpopular

supportthusconvertedcompetinginterestsintocooperativeones.

Coffeehousesnotonlyspreadtotheworld,butalsobecamethe

venueforideaexchangeandhelpedspurbothtechnologicaland

organizationalinnovations.[4]

AninterestingfailureinthebusinessworldwastheinabilityofKodak

tocommercializeatechnologythatitdevelopedfirst–digitalcam-

eras,firstcreatedin1975.ThereasonlayinKodak'sfearofcannibal-

izingitsimmenselysuccessfulandveryhigh-marginfilmbusiness.[5]

Inbothcases,institutionalinertiapreventedrapidadaptation.

TheimpactofinstitutionalinertiawaswellsummarizedbyUpton

Sinclair,"Itisdifficulttogetamantounderstandsomethingwhenhis

salarydependsonnotunderstandingit."[6]Whenmiddlemanage-

menthasastrongsayinwhattechnologiesareadoptedordiffused,

thenthereisatendencytoavoidinnovations.Methodstoovercome

suchbarriersincludecreatingseparateorganizationstodevelopthe

newtechnologyandorganizationalchangestoreducetheimpactof

silos.[7]

Inshort,creatingconsensusrequiresactiveleadershipfromthetop.

AgoodexampleofsuccesswasthePostalReform,implementedby

PMKoizumi.Hemadeacleartothepopulationwhyhewantedthe

reform,andreceivedwidespreadsupport.Whenresistanceamong

somepoliticiansdeveloped–duetotheirdependenceonthepostal

PMKoizumi’scommunicationstylewasoftencriticizedas“populism”

and“theatrics”,butprovedquiteeffectiveasatoolforovercoming

vestedinterests.PMAbewasapoorcommunicatorduringhisfirst

term(2007-08),butbecamequiteeffectiveinhissecondterm

(2012-20).Incontrast,PMSuga,whosepro-reformpolicieswerepopular,wasapoorcommunicator,andcouldnotmusterpublicsup-

portasapolicytoolforhisagenda.

TakingQuickAction:Takingquickactionposesadifferentsetof

problemsforJapanesesociety,partlycultural.Meyer[9]pointsout

thatJapanesedecisioncultureisrareamongcountries,inthatsocial

statusanddecisionrightsarenotnecessarilycorrelated.Often,presi-

dentsofcompaniesinJapanhavefarlesspowertosetgoalsandtar-

getsthaninothercountries.Incontrast,middlemanagementismuch

stronger,becauseitoftenusespassiveresistancetoimpedechanges.

Moreover,lifetimeemploymentlessensthebargainingpowerthat

thecompanypresidentshaveovernon-cooperativestaff.

Ingovernment,whereseparationofpowerscomplicatesdecisions

further,buildingconsensusandactingquicklyareevenharder.Prime

ministersinJapanhavelowlevelsofcontroloverministriesand

administrativeorgansofgovernment.Thebarriersareinstitutional,

suchastheCommission(shingikai)system,underwhichsingle-min-istrycommissionsmustdeliberatepolicyproposals.Thesecommis-

sionsareoftendominatedbythebureaucratsthattheyaresupposed

toadvise.Overthelast20years,powerhasconcentratedmoreinthe

PM’soffice,butthelineministriesretainagreatdealofpowerto

delayanddiluteaction.[10]Moreover,politicalfactorsspurfrequent

changesofministersandviceministers,andthusdilutetheabilityof

politicianstodevelopexpertiseandtousethatexpertisetodirect

policy.

Technologypolicyprovidesaquintessentialexampleofdecisionbar-

riers.Therearetwomajorcommissionsinvolved,namely(a)the

CommissiononIndustrialStructure(19members,underthejurisdic-

tionoftheMinistryofEconomics,TradeandIndustry)and(b)the

CommissiononScience,Technology,andAcademia(30members,

underthejurisdictionoftheMinistryofEducation,Culture,Sports,

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Science,andTechnology).Formanyyears,therewasnooverlapofmembershiponthesetwocommissionsatall.Asofthiswriting,onlyonepersonisamemberofbothcommittees–andthatperson(aneminentphysicist)isalsothepresidentofamajornationaluniversity.Theoverlapamongothermajorcommissionsisjustasthin.Recentresearchsuggeststhatscantcommunicationbetweensuchcommis-sionshindersteamwork.[11]Thenaturalresultisinconsistentandinefficientpolicies.

Thereisnopanaceatocureslowdecisionmaking;infact,itissome-timesbesttodecideslowly.Unfortunately,thereisnoacceptedmodelofoptimaldecisionspeed.Therearemanyaphorisms:

•Decidequicklyifthedecisioncanbeeasilyreversed,butslowlyifitcannot.

•UseBayesianmethodstocorrecterrorsquickly,byusingmoderndatascience.(SeeDuhig,Charles,Smarter,Faster,Better,RandomHouse,2016;Bean,Randy,andThomasDavenport,FailFast,LearnFaster,Wiley,2021)

•Planslowly,butactquicklyoncetheplanisset.(SeeFlyvbjerg,BentandDanGardner,HowBigThingsGetDone,CurrencyPublications,February2023)

•Embedcrosssilodecisionmakingintoyourorganization.(SeePentland,Alex,SocialPhysics,Penguin,2015;Tett,Gillian,TheSiloEffect,Simon&Schuster,2015.)

Japanhasthereputationforbeingveryslowtomakedecisions,butfasttoimplementoncedecisionsare(finally)reached.[12]Thefirstpartofthereputationisnotdisputable,butthesecondis.Forreasonsofsiloedsocialstructureandbottom-updecision-makingmentionedabove,thisauthorisskepticalaboutfastimplementation.Evenworse,slownesscanfrustrateplayerswhowanttoactfast,thentheseplayerstakerecklessactioninordertocreateafaitaccompli.[13]

Intheend,thequestionofdecisionspeedcomesdowntothecultureofanorganization–leadership,incentives,procedures,externalpressure,andthebusiness/politicalenvironment.Moreover,organi-zationsgothroughphasesoffastandslowaction,astheinternalincentivesandexternalenvironmentinteract.[14]Whenjudgingwhetherdecisionmakingisspeedingorslowing,itcanbehelpfultoexaminetheinternal/externalinteractions.

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Wage,Productivity

110

100

90

80

70

60

50

B

C

A

1520253035404550556065707580WorkerAge

40

WageProductivity

BigJob#2:LaborMobilityandReskilling

Thelifetimeemploymentsystemiscollapsing,butthelegalstruc-

turethathassupporteditremainsinplace.Thus,thepaceof

improvedlabormobility–asinequanonfortechnologydiffusion–

dependsonhowquicklylawsandcustomscanbeadaptedtothereal-

itiesofthecurrentlabormarket.

Howdoesnewtechnologyalterthispicture?Thekeyelementisthat

newtechnologiesaremorequicklyabsorbedbytheyoung,andso

theproductivityprofileshiftstotheleft(Exhibit2).Suddenly,the

economicsoflifetimeemploymentareentirelydifferent.Withthe

newtechnology,areaCismuchlarger.

Breakdownoflifetimeemployment:Thefirstreasonforthebreak-Astechnologychanged,Japanesecompanieshadtoact,inorderto

downofthelifetimeemploymentsystemistechnologyacceleration.controlcosts.Oneactionwastohiremorenon-regularworkers–

AsshowninExhibit1,theeconomicviabilityoflifetimeemploymentwhodonotreceivethestronglegalprotectionsagainstdismissal.

dependsontwoelements:anage-basedwagesystemandanage-Thelawsaroundsuchhiringwereeasedinthe1990s,andworkers

basedproductivityprofilethatisaninvertedU.Intheearlyyearsofhiredoutsideof“indefinitelaborcontracts”(i.e.fixed-termcontract

work(A),thewageexceedsproductivity,andsothefirmisinvestingworkers,temporaryworkers,andday-workers)rosesharply.Hiring

intheemployee.Astheemployeelearnsthejob,productivitystartsunderthelifetimeemploymentsystemwascurtailed.Asecond

toexceedthewage(B),andthefirmearnsareturnontheinvestment.actionwastoenhanceworkertrainingprogramsinsidefirms.

However,inlightofpoorincentivestoacquirenewskills,produc-However,trainingoutsidefirms(e.g.sendingpromisingemployeesto

tivitystartstofall;afteracertainage,workerswithoutdatedskillsforeignMBAprogramsetc.)wascurtailed,sincefirmsdiscovered

seeproductivityfallbelowthewage(C).Constrainedbylaw,thefirmthattheywerelosinghigh-trainedemployeestootherfirms.

cannotfirelowproductivityworkersbeforeretirementagewithout

considerablelegalandreputationrisk.Forthefirm,lifetimeemploy-Thisproblemisonlygettingworse,astechnology(especiallyITtech-

mentiseconomicwhenthefirm’sinvestmentinyoungworkers(A)nology)accelerates.Inresponse,firmsarehiringmoremid-career

anditsnetcostforworkersnearretirement(C)addtolessthantheemployees,andenhancinginternaltrainingprogramsforscarce

excessproductivity(B)inthemiddleyears.skills.[15]Wagecompetitionisrising,andsothebenefittojob-

moversisrisingaswell.

Exhibit1:LifetimeEmploymentWorksfortheFirmwhenB>A+CExhibit2:ImpactofTechnologicalProgressonAge-WageProfile

Wage,Productivity

110

100

90

80

70

60

50

40

1520253035404550556065707580

WorkerAge

WageProductivityProdutivity2

Source:MorganStanleyResearch

Source:MorganStanleyResearch

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SpringWageHike,Headline[t+1],%

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Thesecondreasonforweakeningoflifetimeemploymentisthelaborshortage.Immigrantsupplyhasslowedsharply.UntilCOVID,foreignworkersupplywasrisingquickly,by14%inboth2018and2019.Thisslowedtoatrickle(4%)in2020,andasprinkle(0.2%)in2021.Therecoveryin2022wasonly5%,bringingthetotalto1.8mln(2.66%ofthelaborforce).Withtheyensoweak,theattractivenessofJapanasadestinationhaswaned.

Domesticdemographicssuggestacontinuedworseningoflaborshortage.First,thepopulationinthe20-69agegroupwilllikelyfallbyanother4millionormoreinthe2022-32decade.Second,theaverageageofthatpopulationwilllikelyrisebyabout1.4years,com-paredtoaflataverageageinthe2012-22years.[16]Third,thegendergapinparticipationrateshasalreadycontractedsignificantly(seeExhibit3),implyingthatfurtherrisesoffemaleparticipationmaynotbeabletoeasethelaborshortage.Formales,whoseparticipationrateshistoricallyhavebeeninthehigh90%range,therehasbeenamodestupwardshiftforthe60-64group,butthisgroup’sparticipa-tionrateisnowclosetothatformenunder64.

Thethirdreasonforthelaborshortageistheskillgap;Japaneseworkersaresignificantlylesseagertopursuetrainingoutsidetheworkplacethanworkersinothercountries:Lowlabormobilityimplieslowpayofftonewskills.Theresultisthatfirmshavetroublekeepingupwithchangingskillneeds.

Inshort,reskillinghasbecomeakeyfactorinJapaneselabormarkets.Unfortunately,Japanislaggingothercountries.[17]IntheOECD’s“DashboardonPrioritiesforAdultLearning”from2019,Japanscoresbelowaverageinall6categories.[18]Thegovernmentrecognizes theproblems:InPMKishida’splansfornewcapitalism,athree-yearallocationbudgetofY400bln($3bln)wasakeyfeature,withthegoalofretrainingabout1mlnpeople.Thegovernmentisconsidering

Exhibit3:LaborForceParticipationRatesbyAgeandGender,1988,2022

ParticipationRate(%)

100

90

80

70

60

50

40

30

20

10

0

→

个

AgeofWorker

75.+

65.74

60.64

55.59

50.54

45.49

40.44

35.39

30.34

25.29

20.24

15.19

Male'88Male'22Female'88Female'22

Source:MinistryofHealth,LaborandWelfare(forpopulationdata)andMinistryofInternalAffairsandCommunications(forlaborforcesurveydata)

weakeningthetaxadvantagesonretirementpaymentsforthosewhostaywithafirmforover20years.However,theproblemmaybelargerthantaxtweakscansolve:ArecentstudybyMcKinseyGlobalInstitutecalculatedabasecaseinwhichJapanwouldcreate10-11mlnnewjobsasaresultofnewtechnologies.[19]

Train,Pay,andKeep.HowwillJapanadapttothefurtherworseningofthelaborshortage?Forcompanies,theansweris“train,pay,andkeep.”Thefirstresponseisincreasingbothon-the-jobtrainingandexternaltrainingofferedtoemployees,evennon-regularemployees.Thesemeasuresaddressboththeretentionissueandtheskillgapissue.Thesecondresponseistoraisewages.Indeed,thespringwageroundin2023was6.5standarddeviationsabovethepointthatcon-sumerpriceincreaseswouldhavepredicted.(SeeExhibit4.)Throughtheseresponses,firmshopetoincreaseretentionandraiseskills.

MonetaryCompensationforDismissal.Intimesofgreattech-nologychange,thethornyissueofjobcutsisinevitable.Akeylaborpolicydebatehasbeenonthequestionof“monetarycompensationfordismissal.”Whileimportantinsomecases,thedetailsofcurrentproposalsdonotsuggestanymajorchangeoflabormarketliquidity.

•First,thetypeofdismissaldiscussedforthissystemis“wrongfultermination,”whichisdefinedundertheLaborActArticle16tobe“dismissalsthatlackobjectiveandrational reasons,andwhichcannotberecognizedasconsistentwith socialnorms.”

•Second,becauseofthisdefinition,theworkerinvolvedmustseekthejudgmentofalaborboardoracourt.Whilethecaseisunderconsideration,theemployeecannotfindanotherjob,becausehe/sheisassertingcontinuedemploymentatthefirm.

Exhibit4:SpringWageRoundComparison

20

23Spring:3

.69%;6.5s

dev

abovem

edianfore

cast

y

=0.1919x+

1.9557

R²=0.456sderr=0

.2

ove

rall=

2022CPI

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-2.0-1.00.01.02.03.04.0

CPIIncrease[t],%

Source:LaborPolicyinstituteoftheMinistryofInternalAffairsandCommunications,“WageHikesofMajorCompanies”(ShuyoKigyoShunkiChinageRitsu),andMorganStanleyResearchcalculations

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•Third,evenifthecourtdecidesintheworker’sfavor,theonlyremedyisinvalidationofthedismissal,andpaymentofbackwagestotheworker.

“Monetarycompensationfordismissal”wouldonlyenhanceaninad-equateremedy,butwouldnoteliminatethedifficultyandcostofdeterminingwhetheradismissalwas“wrongful.”[20]

ClearerRulesonFairSeverance.Inshort,theproblemdoesnotlieinmonetarycompensationperse,butratherinthecomplex,lengthy,anduncertainprocessthatsurroundsseverance.Hence,Japanneedslaborreformsthatwouldmakelabordisputessimpler,shorter,and

surer–nottomentionfairtoworkersandemployersalike,butalsosupportiveofretrainingandhigherlabormobility.Thatis,therearemanyeconomicexternalitiesassociatedwithlowlabormobility,andsosomesortofpublicinterventionmaybejustified.

Whilehard-and-fastlawsmaybetooinflexible,Japan’slabormobilityneedsmaybeaddressedwithanationalguidelineonseverancepack-ages.Theseguidelineswouldhavetoinclude(a)monetarycompen-sation(basedonlengthofservice,jobcontent,etc.),(b)healthandlifeinsuranceextensions,(c)familysupportforschooltuition/elderlycare,(d)assistanceinhuntingforthenextjob,and(e)retrainingforhigh-demandskills.

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BigJob#3:CorporateandNationalGovernanceReform

CorporateGovernance

ReformsofcorporategovernancebeganinearnestwithAbenomics.EvenbeforetheItoReportofAugust2014,theTSEhadlaunchedtheTSE400Index,theFSA'sStewardshipCodehadbeenimplemented,andtheCompaniesActhadbeenamended.Thesereformstriggeredasignificantincreaseinexternaldirectors,slimmingthesizeofBoards,increaseddiversityonboards,andmoretransparent,goals-basedrulesonselectionofboardmembers.Inaddition,theyrequiredinstitutionalinvestorstoincreasedialogwithcompanies,tovotetheirshares,andtoannouncehowtheyhadvoted.Somespecificchangesarelistedbelow.

SignificantProgress

•Shareoffirmswithmorethanamajorityofindependentdirectors:TSE120183%,20208%;PrimeMarketsharein2022,12%;JPX_Nikkei400in2022,16%.

•Shareoffirmswithmorethan1/3independentdirectors:TSE12018,32%;2021,72%;PrimeMarketshareoffirmswithmorethan1/3independentdirectors2022,91%.

•ShareofcompanieswithEnglishdisclosure:TSE1201412%;PrimeMarket2022:91%

•NumberoffirmsthatsupportTCFD:Japan1228,US467

•DomesticinvestorsvotingagainstAnti-TakeoverMeasures:2014,48%;2022,79.9%

•Shareoffirmswithelectronicvotingrightsforinstitutionalinvestors:TSE12014,20%;PrimeMarket202292%

•Shareofstockownedbyfinancialinstitutions:2000,22%;2021,7.2%

•NumberofActivistFundsactiveinJapan:2014,8;2023,69.

•ESGFundtotalAUM:Mar2020:$1.1bln;Mar2023,$3.5bln

•ShareofPrimeMarketfirmswithNOfemaleseniorexecu-tives:2018,62%;2022,18%.

LittleProgress

•Shareofstockownedbynon-financialbusinesses:2000,21.8%;2021,20.0%

•Shareofcashonbalancesheet:TOPIX2001,25%;2021,22%.(ThefigurefortheUSwasabout5%