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 one unfortunate omission. The 2023 edition devoted two pages to materiality, describing the process of identifying materiality and indicating that the next step was to “organize sub-materiality and set goal images and KPIs.” No progress in this area is discernable from the 2024 report, and materiality appears only as vocabulary in the message from the president (p.36); it is not in other C-suite messages. The Company explains the materiality process as “After resolution by the Management Committee, reporting to and approval by the Board of Directors.” Therefore, C-suite and executive officers are responsible for taking the lead in discussing progress on materiality.
We have seen how “materiality plays an important role in improving the quality of communication by identifying key challenges and opportunities facing the Company and articulating a strategy for sustainable growth.” I would urge the Company to initiate the aforementioned next step as soon as possible and publish this information in the next edition. I would hope to see the following perspectives included.
- 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