Japan’s Corporate Governance Code revisions

The latest Japanese ESG indices and passive investment report, written in collaboration with SGX

This report, authored in collaboration with SGX, reviews the development of Japan's sustainability standards, the ESG performance of listed companies in Japan compared to market-specific indices, and the growth of index-linked SGX FTSE Blossom Japan Index Futures.

Key highlights from this quarter’s analysis:

• From the December 2025 review, the FTSE Blossom universe adopted TOPIX constituents as its parent index basis, alongside the rebranding to the FTSE JPX Blossom Japan Index series.
• Japan’s governance code reforms emphasise areas also captured by FTSE ESG. As governance practices evolve and become more comparable across companies, ESG assessments may more clearly reflect differences in governance practices, supporting greater transparency in index construction and performance interpretation.
• The FTSE JPX Blossom Japan Index delivered solid Q1 2026 performance, with ESG factors contributing positively, reflecting stronger ESG-driven stock selection relative to other factors. The Sector Relative Index also benefited from ESG contributions but showed more moderate relative returns due to tighter benchmark constraints.
• SGX FTSE Blossom Japan Index Futures remain the only liquid ESG derivatives contract in Japan, supporting broader adoption as a complementary or alternative exposure to TOPIX.