Integrating the Sustainable Development Goals into Corporate Governance: A Cross-Sectoral Analysis of Japanese Companies

Abstract

The Sustainable Development Goals (SDGs) have become a guiding framework for the public and private sectors. For companies, the SDGs offer a way to create value for investors while addressing local and global issues. Japan has embraced the SDGs to demonstrate its commitment to sustainable development but, despite its high ranking, faces challenges in improving its performance. This study aims to investigate how Japanese companies are considering the SDGs in their corporate governance. Using a database of corporate social responsibility activities in 1630 companies, the degree to which the 17 SDGs are being integrated was examined across 33 industrial sectors. Next, hierarchical clustering on principal components was applied and identified four distinct patterns in the integration of the SDGs, ranging from almost no consideration of the SDGs to the nearly full consideration of all 17 goals, with two transitionary patterns in between. Some sectors strongly tended to belong to one pattern of SDG integration, while other sectors exhibited more variability. While the direct implications of this study may be limited to the context of Japan, the methodologies and outcomes point to future research that could lead to a better understanding of how the SDGs are being approached by the private sector.