We created diagrams on "ESG investment" in collaboration with the Government Pension Investment Fund (GPIF).
These diagrams answer questions such as "What exactly is ESG? Why does it matter?" while giving a bird's-eye overview. They are ideal for anyone who has heard the term ESG investment but doesn't know what it actually involves. The diagrams follow below.
Originally, we created these diagrams on ESG investment because we had written the introduction to the book "Business Model 2.0 Encyclopedia." In that introduction, we explained ESG investment as a keyword connecting the future of corporate management with social value.
At first, I too didn't understand why institutional investors like GPIF engage in ESG investment. Put simply, ESG investment means "investing in good companies," so while there is clearly social value, it seemed to me to lack economic rationality.
But that way of thinking was mistaken. When you manage on the scale of 100 trillion yen, the rise and fall of any single company's stock price is an extremely minor matter; it is more like investing in the entire economy of Japan (and not only Japan). In that case, to generate solid returns, you have to invest in a way that eliminates risks capable of shaking the entire Japanese economy. That means investing with consideration for E: environmental issues, S: social issues, and the G: corporate governance issues of facing up to them — and doing so leads to securing long-term returns. In other words, environmental and social issues have become impossible to ignore. Here too we catch a glimpse of why social value should be taken seriously.
Movements like the SDGs and ESG are happening worldwide, and external pressure is at work pushing companies to become entities that benefit society over the medium to long term. In short, there is no doubt that social value will become increasingly important for companies.
- From the introduction to the Business Model 2.0 Encyclopedia
Despite such a rough explanation, after the book was published GPIF reached out to us, and in the course of discussing their wish to spread understanding of ESG investment more widely, we produced these diagrams.
If someone who used to think ESG investment had nothing to do with them (or simply didn't know about it) comes to feel — as I once did — that this is a way of thinking society needs, and that it might therefore be relevant to them too, we would be truly delighted.
Note that ESG investment is not really a topic that can be summarized in a dozen or so diagrams. With the aim of delivering it as plainly as possible to people who didn't know about it before, we have omitted some of the complex and specialized content.
For more detailed information on ESG investment, please also refer to other materials such as the ESG activity reports.
https://www.gpif.go.jp/investment/esg/2019esg.html