Kao was picked by the Government Pension Investment Fund in Japan (GPIF) to appear on both indexes on 3rd July, following an increasing and intentional focus on developing its social, environmental and corporate governance efforts.
GPIF was selected to advocate the recognition of companies that are invested in working towards the improvement of active environmental issues, helping to support social causes and pledging their commitment to ongoing corporate governance.
Environmental, social and governance selection
As both FTSE Blossom Japan Index and MSCI Japan ESG Select Leaders Index are two of Japan’s Environmental, Social and Governance-based equities, the decision to include Kao publicly applauds the company’s efforts in these areas.
With sustainable investing hot in Japan, FTSE Blossom Japan Index states on its website that “market participants are increasingly looking to incorporate sustainable investment approaches into their investment philosophy and strategies”.
As a result, FTSE Blossom Japan Index has been designed to “provide market participants with a tool to identify and measure the performance of Japanese companies that demonstrate strong environmental, social and governance (ESG) practices”.
The index, which was launched by FTSE Russell and is wholly owned by the London Stock Exchange Group, applies FTSE4Good Index Inclusion Rules, which incorporate UN Sustainable Development Goal rules.
Emanating from its parent index, the MSCI Japan IMI Top 500 Index, the MSCI Japan ESG Select Leaders Index was set up to “represent the performance of companies that have high Environmental, Social and Governance (ESG) performance”.
Kao has formed a mid-term plan, known as K20, that establishes and publicly states how Kao Group aims to build a global presence through maximising its sustainability activities, seeking to find social issue solutions and optimising corporate social responsibility initiatives to push the brand’s awareness around the world.
In May 2017, Cosmetics Design Asia reported how Kao was striving to place ethics at the forefront on their business activities. This came as Kao won the title of one of the ‘world’s most ethical companies’ for the 11th year in a row, along with the development of its beauty guidelines that reiterated the company's focus on ethical practices.