- Revision of the Charter of Corporate Behavior
- Corporates' Contributions to Childcare Policy
- Economic Situation
- Corporate tax system
- Trans-Pacific Partnership
- Japan-China Relations
Revision of the Charter of Corporate Behavior
We have revised the Charter of Corporate Behavior for the first time in seven years. Since establishing the Charter of Corporate Behavior in 1991 as a guideline for corporate behavior for our member companies to follow, Keidanren has reviewed the Charter and its Implementation Guidance on several occasions in light of changes in the social environment. This latest revision is the first since 2010. In the intervening years, as evidenced by the adoption of the Guiding Principles on Business and Human Rights and the Paris Agreement and other actions taken by the international community, the contribution companies make to solve such global issues has become even more important. The private sector is also expected to exercise creativity and innovation to deliver on the Sustainable Development Goals (SDGs) that were adopted by the United Nations in 2015.
In light of these developments, Keidanren is aiming for the realization of Society 5.0, a future society in which people's lives and society as a whole will be optimized, taking maximum advantage of innovative technologies. This kind of future society, in which economic growth will be compatible with solutions to social issues, is in line with the principles of the SDGs of the United Nations.
To this end, Keidanren has revised its Charter of Corporate Behavior with the primary aim of delivering on the SDGs through the realization of Society 5.0. The Charter states clearly that corporations must play a leading role in resolving the challenges faced by the international community and the realization of a sustainable society, while giving ample consideration to corporate ethics and their responsibility towards society as in the past. I would urge the top management of Keidanren's member companies to set an example in following the spirit of the Charter and to raise awareness about the Charter's spirit within their own corporations and corporate groups.
The recent string of corporate scandals is extremely disappointing. However, I see these incidents as being due to the individual circumstances of each company involved, and they do not call into question the condition and ethics of Japan's corporations as a whole. In the event that one of Keidanren's member corporations violates the Charter of Corporate Behavior and it leads to a loss of society's trust in that corporation, top management are to take the initiative to resolve the problem, including investigating the causes of the incident and preventing it from recurring. Even with this latest revision of the Charter, its spirit continues unwavering. The Charter of Corporate Behavior calls on management to investigate the causes, prevent recurrences, and respond to customers at their own responsibility; not impose penalties or punishment. The objective of corporations is the pursuit of profit, but that in no way means that they can do anything they want to achieve that. It is a matter of course that they must obey the laws and regulations and carry out their social responsibilities.
Corporates' Contributions to Childcare Policy
As part of the effort to support children and childrearing, the business community has been asked to make a larger contribution to funding solutions to the shortage of childcare places, on top of the burden of the increase in the consumption tax. So far, through increases in such contributions, Keidanren has cooperated in the development of facilities for childcare places for an additional 70,000 children. Given the additional burden that will be placed on Japan's citizenry as a whole with the increase in the consumption tax, the business community cannot disregard the idea of making a corresponding contribution. We hope to move the conversation towards forming a consensus within the business community. In terms of concrete programs, we will coordinate with the government to ensure that programs are acceptable for corporations and will help employees to remain in their jobs. Basically, we do not envisage scholarship programs that would lead to free higher education. It is also important that we give due consideration to small and medium enterprises, so the business community will debate all of these points amongst ourselves thoroughly.
Prime Minister, Shinzo Abe, has suggested a concrete figure of ¥300 billion. Taking this request seriously, we are currently giving consideration to what scale of contribution will be acceptable to the business community, and that figure of ¥300 billion is by no means a foregone conclusion.
We believe that this request from Prime Minister Abe to the business community for contribution is the result of discussions between the government and the ruling parties as one. I believe that the daring policy proposals being put forward by the LDP's more junior Dietmembers regarding children and childrearing have been one background factor that has prompted this request. For our part, the business community wants to do its fair share to cooperate.
The Japanese economy is on a path of moderate growth. Economic expansion has been recorded for 58 consecutive months, and GDP has also grown for six straight quarters. Throughout the world as well, the U.S. economy is strong, and the Chinese and European economies are also trending favorably. Amid these circumstances, Japanese companies continue to record strong performances. With the weaker yen, export companies, in particular, appear to be driving growth.
Corporate tax system
Keidanren has continued to call for Japan's corporate effective tax rate to be lowered to around 25%, in line with the other OECD countries. With the tax reforms of two years ago, the effective tax rate was cut by almost 5% from 35%, bringing it below 30%, but we will keep up our call for it to be lowered to around 25%. However, such tax cuts would need to be pursued after comprehensive consideration of issues such as how revenue shortages would be covered and the order of priority, so we will hold continued dialogue with the relevant parties.
Recently, the four business groups compiled recommendations for the early realization of an 11-member TPP, which we delivered by hand to Prime Minister, Shinzo Abe, and Minister in charge of Economic Revitalization, Toshimitsu Motegi. With the announcement of the U.S. withdrawal from the TPP by President Donald Trump, now is not the time to discuss the issue with the U.S. government. The withdrawal of the U.S. has reduced the economic and geopolitical benefits of the TPP, but it continues to have major significance in terms of creating extensive, high-standard rules for trade and investment in the Asia-Pacific region. Also, given the supply chains that Japanese companies have extended on a global scale, there is tremendous benefit in doing business based on rules that are common to those 11 countries. While we hope that the United States will rejoin the TPP in the future, it is important first that TPP-11 be realized at an early stage. I understand that there has been considerable progress made in talks at the chief negotiator level, and we look forward to a basic agreement being reached at the summit meeting in Vietnam.
With the start of China's new leadership regime, stable political foundations are being built under the strong leadership of General Secretary and President, Xi Jinping. It is under these circumstances that I will visit China on November 20, where I hope to meet and exchange views directly with China's leaders about China's future economic management and the outlook for Japan-China relations. The further development of Japan-China economic relations will, along with the establishment of stable political and diplomatic relations, lead to a stronger relationship of mutual strategic benefit between our two nations.
Regarding the One Belt One Road Initiative, in May this year, I accompanied LDP Secretary-General, Toshihiro Nikai, to the Leader's Roundtable Summit of the Belt and Road Forum for International Cooperation as deputy delegation leader. I understand that the Japanese government's policy is to cooperate with the OBOR Initiative on the premise that values such as the principles of fairness, freedom, and equal opportunity are assured. Based on this fundamental direction, I intend to exchange opinions about this initiative during my upcoming China visit, at next month's Japan-China CEO Dialogue, and at other opportunities.