Factors promoting business strategies, activities, and long-term commitment for climate change mitigation: a survey of Japanese enterprises

ABSTRACT

Currently, businesses worldwide are expected to make long-term commitments aimed at climate change mitigation to achieve carbon-neutrality by 2050. However, before companies make long-term commitments, they may need incentives or institutional arrangements that encourage them to act. Previous studies have suggested that these incentives and institutional arrangements differ from those offered to encourage short- and mid-term activities. Japan has established a government-industry collaboration to mitigate climate change. This framework has proven to be organized and effective in undertaking climate action for the short- and medium-term; however, a more effective framework could be developed to promote a long-term strategy. This study surveyed 235 Japanese companies to examine effective institutional arrangements related to climate action. It demonstrated that the business sector aims to formulate institutional arrangements to ensure fairness and transparency in its climate change actions. Accordingly, norms, financial incentives, and accountability were identified as important factors. Furthermore, norms set by industry associations and international organizations influence the establishment of long-term commitments, unlike those set by third parties. Financial incentives were effective for encouraging long-term commitments and general mitigation activities, notably short- to mid-term activities. Information disclosure and verification by a third party had a positive effect on ensuring accountability in vision and quantitative target-setting for CO₂ emission reduction. Long-term commitments are encouraged when such institutional arrangements serve as a self-regulating system for companies to establish and implement their vision.

Key policy insights

• The role of non-state actors has attracted attention for achieving climate-related goals. Thus, identifying a mechanism that incentivizes non-state actors, particularly in the business sector, is crucial.

• Traditionally, government-guided frameworks have worked well in Japan. This study demonstrates the role of business associations, international organizations, and third parties in formulating institutional arrangements that promote a long-term commitment toward the 2050 vision.

• Industry associations and international organizations serve as norm-setters, while third parties act as a verifying body, enforcing fairness and transparency. Thus, appropriate institutional arrangements could serve as a self-regulating system to encourage companies to achieve climate change-related actions.

KEYWORDS:

• Climate change mitigation
• business strategy
• long-term commitments
• institutional arrangement
• accountability

Acknowledgements

The design of the questionnaire is owed to Toshihiko GOTO, the staff from CSR, and the climate divisions of many companies. We would like to acknowledge the useful suggestions from Tomoaki Watanabe and participants from the workshops in 2017 and 2018, including Hiroyuki Tezuka, Yoshiaki Ichikawa, Mitsuaki Komoto, and Masato Yoshizawa. We also express our thanks to Bi Yi Fan, Shinsei Matsuno, Sachi Shugyo, and Asako Yamaguchi for their assistance. We are grateful to the anonymous reviewers for their valuable comments that helped improve this paper, and we would like to thank Taylor & Francis Editing Services for editorial assistance and reviewing this manuscript for English. This research was supported by KAKENHI (17H01939, 20H04395) under the auspices of the Japan Society for the Promotion of Science.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by Japan Society for the Promotion of Science [Grant Numbers 17H01939, 20H04395].