Authorities will be pushing companies to root out potential forced labour and human trafficking abuses in their supply chains.
Japan’s FSA (Financial Services Agency) and TSE (Tokyo Stock Exchange) will add a provision on human rights to its corporate governance code for publicly traded companies when it is revised next month, Nikkei Asian Review has reported.
The government drew up a “national action plan” on business and human rights last year, but it is not legally binding. By incorporating human rights in the governance code, authorities hope to encourage a stronger response.
The revisions to the code issued for consultation last month seek to promote board independence, gender diversity, an increased focus on sustainability and ESG, enhanced climate-related disclosures, and measures to address conflicts of interest.
Listed companies will be required to explain any non-compliance with the code’s provisions.
According to Nikkei, “respect of human rights” will be included in the section on sustainability. The planned language will call on boards to view human rights as an important management issue and think more about how to tackle the matter “proactively.”
Authorities will be pushing companies to act voluntarily to root out potential forced labour and human trafficking abuses in their supply chains.
The change is said to be aimed at helping Japanese corporates get out in front of risks related to consumer boycotts and difficulties raising capital overseas.