Third-Party Opinion

Read the J-OIL MILLS REPORT 2024

The world of corporate information disclosure is undergoing some remarkable changes. For instance, in Japan a new section entitled “Sustainability Policy and Initiatives” was added to the template for annual securities reports from the fiscal year ended March 31, 2023. Overseas, the International Sustainability Standards Board (ISSB) published the “General Requirements for Disclosure of Sustainability-related Financial Information” in March 2023, and a draft of those standards was released in Japan in March 2024. Meanwhile, deliberations are underway at Japan’s Financial Services Agency by the Financial System Council’s Working Group on Disclosure and Assurance of Sustainability-related Financial Information.
While discussions about statutory disclosure appear to be taking the lead, I believe the role of voluntary, integrated reporting is assuming a more important role than ever before. It appears likely that a substantial amount of key forward-looking information on such aspects as business models, the value-creation process, and strategy will be relegated to the integrated report. Accordingly, questions will center on whether creative and imaginative disclosure methods are being used to convey information effectively in the integrated report.
In opinion-exchange meetings in preparation for this report, J-Oil Mills responded sincerely to suggestions for improvements, facilitating the employment of creative methods. This underpinning is described in the editorial policy, in the section outlining “core concepts.” Given the various disclosure requirements in place nowadays, it is important to clearly elucidate core concepts when disclosing information. These concepts include “story development based on specific explanations,” and “promotion of stakeholder understanding and an awareness of dialogue.”
In line with these core concepts, messages from C-suite executives, outside directors, and executive officers in charge of various content areas contribute substantially to the story development. Their messages demonstrate the superiority of this voluntary reporting medium. By using the first person to relay managers’ awareness of the issues and level of commitment, the report helps to dispel potential doubts or concerns stakeholders may have and bolsters their level of confidence in the Company.
One of the creative devices employed in this report is a logic tree describing “PBR reverse-tree development.” This diagram makes it easier to understand compliance with the Tokyo Stock Exchange’s requests on “improving the price-book ratio: management with an awareness of the cost of capital and the share price.” In addition to aiding reader understanding, the logic tree provides an opportunity for the publisher to identify problems and find solutions; I would encourage the Company to try using the logic tree to create other parameters.
I would also like to point out some unfortunate points. In the 2023 edition, two pages were devoted to materiality, and the identified materiality was described along with the process, and the next step was to "organize submateriality, set goal images, and KPIs." However, the progress of these measures cannot be read, and the only appearance in the vocabulary (materiality) is the president's message (P36), and there is no mention of it in the CxO message. Since materiality is "resolved by Executive Committee and then reported and approved to Board of Directors," CxO and other Executive Officer have a responsibility to take the initiative in mentioning the progress of materiality. During this time, we have confirmed that materiality "plays an important role in improving the quality of communication, such as clarifying the key issues and opportunities that companies are facing, and clarifying sustainable growth strategies." I would like to ask you to start the aforementioned next step as soon as possible and announce it at the next meeting. At that time, we expect to include descriptions from the following perspectives.
- The penetration of policies showing people taking ownership of materiality
- Connections to business strategy, medium-term business plans, and long-term corporate value creation
- Materiality-related risks and opportunities

Integrated report