【Research Report】The GR Scores 2021

Nikko Research Center Inc. has developed the Governance Research Scores (GR Scores) and has been evaluating the robustness of Japanese companies’ corporate governance since 2017. The GR Scores evaluate the corporate governance initiatives of 109 major Japanese companies by benchmarking them against the two standards, Japan’s Corporate Governance Code as the domestic standard, and the ICGN Global Governance Principles as the global one. This report provides an overview of the GR Scores 2021 as of the end of 2020, following the last year.
The overall domestic score average was 55.9%, up 1.7 points from the previous year. The main factors of the rise include the increased disclosures of sustainability risks such as environmental and social risks, the increase in the companies having three or more independent directors and their proportion in the board of directors is one-third or more, the increased disclosures of skill maps on the diversity of the board, the increase in the establishments of remuneration committee, and the increase in the companies with a remuneration committee comprised of a majority of independent directors. The improvements were found in the areas that seem to go ahead of Japan’s Corporate Governance Code revisions published in June 2021.
On the other hand, the absolute level of overall global score average was low at 27.3%, though it rose 1.8 points on average from the previous year. The main factors of the rise include the increase in the companies that set a remuneration policy as one of the roles of the remuneration committee, the increase in the companies disclosing the measures to avoid bribery or misconduct, the increased training for directors and employees on the Code of Conduct, the increased disclosures of indexes regarding the diversity of the board, and the enhanced independence following the revision of independence criteria by the Tokyo Stock Exchange in February 2020.