Corruption, collusion, and lobbying—experts discuss how Japanese companies are addressing these sensitive Issue.

Vice Chair of the Global Sustainability Standards Board (GSSB)
GHG Protocol Technical Working Group (TWG) Members
Zeroboard Research Institute Director Tomoo Machiba

As companies address diverse ESG Issue and disclose information on them, areas such as "prevention of corruption," "fair competition (prevention of anti-competitive practices)," and "engagement in public policy (lobbying)" tend to be considered delicate Issue that are rarely discussed proactively by Japanese companies, compared to themes such as climate change and human capital. However, these Issue go beyond mere compliance and are crucial themes deeply related to the core of sustainability, concerning the "economic impact" that corporate activity themselves have on the soundness of market functions and social systems.

Recently (April 2nd), I co-hosted a webinar with the Global Reporting Initiative (GRI), where I serve as Vice Chair of the Disclosure Standards Review Committee, to analyze the draft GRI Standards currently being revised on "Corruption," "Competition," and "Public Policy." This article transcribes the dialogue between our guest speakers, lawyer Daisuke Takahashi (Shinwa Law Offices), who is active on the front lines of corporate law, governance, and global compliance, and lawyer Sachiko Ichikawa (Tanabe Law Offices), who is also a member of the working group for this revision, and delves deeply into how Japanese companies can respond to these three economic Issue in a way that is relevant to their practical work.

Background of the GRI Standards Revision

Currently, the GRI Standards, the international voluntary standards for sustainability reporting, are undergoing a comprehensive revision of their standards regarding economic impact. As part of the second phase, exposure drafts for three disclosure standards—GRI 205—Anti-Corruption, GRI 206—Anti-Competitive Practices, and GRI 415—Public Policy—were released, and public comments were solicited from stakeholders worldwide until April 10th *1) . The common philosophy behind these revised standards is not merely to report the number of fraudulent activities after the fact, but to demonstrate how companies can build governance systems to prevent fraud proactively, manage risks across the entire value chain to enhance integrity, and explain this to the outside world with high transparency (Table).

Table: Current GRI Standards on Corruption, Competition and Public Policy (2016 Edition) and Draft Revisions

Source: Global Reporting Initiative

Expanding Definition of "Corruption" and Value Chain Management

In past corporate practices, "corruption prevention" primarily focused on establishing internal regulations and providing training to prevent direct misconduct, such as employees bribing public officials or engaging in embezzlement or fraud for personal gain. However, in recent international trends, the concept of corruption has transformed into something extremely broad and complex. The revised draft of the Corruption Standards *2) aims to align with international guidance such as the United Nations Convention against Corruption (UNCAC) *3) and the Financial activity Task Force (FATF) *4) , and therefore strictly addresses corruption risks that extend beyond traditional bribery to include the misuse of digital data, the abuse of influence, and even the management of corruption risks mediated by "intermediaries" such as consultants and agents acting on behalf of a company. Furthermore, in addition to traditional aspects such as poverty and environmental destruction, the negative social impacts of corruption now explicitly include macro-level institutional and systemic effects such as "paralysis of policy," "distortion of market competition," and "erosion of democratic institutions."

In the webinar, lawyer Takahashi pointed out that, in light of international developments such as the 2023 revision of the OECD Guidelines for Multinational Enterprises *5) , the background to this expansion of the concept is that "there is a view that corruption broadly includes the use of power for personal gain, and the means are becoming increasingly diverse. Therefore, companies must not only crack down on the exchange of money, but also address this as an integrity issue related to overall governance." In particular, for Japanese companies that operate globally, indirect bribery through third parties such as joint venture (JV) partners, local suppliers, and agents carries the risk of being subject to extraterritorial application of laws such as the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA) *6) . In fact, many recent enforcement cases of these laws have been initiated not by the direct provision of bribes, but by opaque flows of funds through third parties.

Daisuke Takahashi is a partner attorney at Takahashi & Shinwa Law Offices. He holds Masters of Laws (USA, France, Germany, Italy) and is a Certified Securities Analyst (CMA) of the Securities Analysts Association of Japan. His expertise lies in legal advice and crisis management in the fields of global compliance, sustainability/ESG, and technology. In the field of anti-corruption, he has held various public positions, including Chairman of the CSR and Internal Control PT of the Japan Federation of Bar Associations' Committee on Lawyer Practice Reform, Steering Committee Member and Secretariat of the Anti-Bribery Commission Japan (ABCJ), JETRO's New Export Nation Expert, OECD Centre for Responsible Business Conduct Consultant, and Deputy Legal Expert of the UN Intergovernmental Working Group on Business and Human Rights. He was also involved in the development of the Japan Federation of Bar Associations' "Guidance on Anti-Bribery Abroad," and the Global Compact Network Japan's "Tokyo Principles for Strengthening Anti-Corruption" and "Anti-Bribery Assessment Tool." Profile: https://www.dtakahashi.com/profile

Naturally, it is practically impossible for a company to completely control the actions of all the countless business partners at the end of its massive global supply chain. However, this does not absolve companies of accountability. To address this, lawyer Takahashi emphasized the importance of thoroughly implementing a "risk-based approach" in anti-corruption, human rights, and environmental due diligence. In other words, it is necessary to identify positions or partners that are considered to have a high risk of corruption, depending on the risks specific to the country or region in which the business operates, or the industry and Contents of the business of the trading partners, and then conduct focused background checks and responses in those areas. The revised draft of the GRI also changes and expands the scope of risk assessment from the traditional "company's own business premises" to "positions and business partners," and strongly requires companies to disclose how they identify high-risk areas and take preventive measures such as verifying beneficial owner information and managing charitable donations.

Risks surrounding "competition" inherent in digitalization and domestic business practices

Next, the perspective required of companies regarding "fair competition" has also changed significantly. With digitalization and the rise of platform businesses, new anti-competitive factors such as data monopolies and restrictions on market access have become apparent. The GRI's draft "Competition Standards" *7) now includes not only traditional anti-competitive practices such as price Action and market allocation, but also structural problems such as "predatory Settings," "abuse of dominant market position," and even "monopsony" (buyer monopoly) *8), where buyers exert excessive control over suppliers.

Unique Issue faced by Japanese companies in the domestic market include the formation of joint ventures (JVs) in the construction industry and the multi-layered subcontracting structure seen in Manufacturing and IT industries. Attorney Takahashi warns that even if these uniquely Japanese business practices have been tolerated as industry customs until now, it has become necessary to re-examine whether they are truly without problems in light of the demands of modern global competition law. Within Japan, law enforcement against abuse of dominant position and imposition of unfair trading conditions is becoming stricter year by year, with the enforcement of the Act on the Proper Operation of Small and Medium-Sized Contractors (*9) which amended the Subcontracting Act and the New Freelance Act (Act on the Proper Operation of Transactions Related to Specified Contractors) (*10). Companies must objectively examine whether their trading structure distorts the competitive environment of the market and establish a system that can logically explain its legitimacy to external parties.

What is even more noteworthy is lawyer Takahashi's point that such anti-competitive practices not only harm market efficiency and consumer interests, but also carry the risk of escalating into human rights issues. For example, when monopsony or abuse of dominant position forces unreasonable demands for price reductions and harsh trading conditions on vulnerable small and micro suppliers, the consequences ultimately manifest as low wages, long working hours, and poor working conditions for the workers of the supplier companies. In other words, protecting a fair trading environment is an essential foundation for protecting the human rights and livelihoods of people working at the end of the supply chain.

Attorney Ichikawa also states that anti-competitive practices are essentially "nothing more than acts in which stakeholders try to profit by taking advantage of societal distortions." Companies should not merely declare that they are not involved in cartels, but also verify whether their purchasing behavior and trading policies are creating structural exploitation, and disclose mechanisms for effectively implementing internal reporting systems such as whistleblower protection schemes and correcting them as necessary. This can be considered a response to international competition standards.

Transparency in "lobbying" to prevent criticism of greenwashing

Of the three themes discussed, the area of ​​"engagement in public policy," or lobbying, is the most challenging for Japanese companies to address and requires the highest level of judgment from management. The conventional "GRI 415 – Public Policy" primarily focused on recording and reporting monetary and in-kind "political donations" to political parties and politicians. However, in the revised draft of the "Public Policy Standards" *11) , the central concept of reporting has shifted significantly from simply recording funding to explaining the entire activity, including "what policy areas," "what position the company takes," "through what actors (government officials, lobbyists, etc.)," ​​and "what activity the company engages in."

This situation stems from the critical scrutiny from civil society and investors regarding opaque lobbying activity by companies. In 2024, the British think tank InfluenceMap analyzed that many of the world's major automakers, while outwardly proclaiming ambitious sustainability and decarbonization targets, were secretly engaging in negative and activity activity against the promotion of electric vehicles (EVs), and gave Japanese companies, in particular, extremely low scores in the evaluation of their policy engagement *12) . If companies publicly declare their commitment to solving social Issue such as climate change, but in reality work to undermine regulations in order to protect their own or their industry's vested interests, this can be seen as a typical example of "greenwashing," and could damage their credibility even more than companies that do not address the Issue at all.

Attorney Ichikawa pointed out that Japanese companies should pay particular attention to "exercising influence through industry associations" in this issue. Many Japanese companies have a common practice of making policy recommendations through Industry associations rather than through lobbying on their own. The revised draft's PP-2 (Consistency of Public Policy Positions) goes directly to this point, requiring companies to evaluate whether there is consistency between their official sustainability goals and policy positions and the positions of the industry associations they belong to or the "third parties" they commission, and to disclose how they will address any mismatches.

Sachiko Ichikawa is a lawyer at Tanabe General Law Office (Dai-ichi Tokyo Bar Association, New York State), a USCPA, and a graduate of the University of Tokyo. She specializes in corporate law, particularly human resources and corporate governance, and has experience in litigation, primarily focusing on securities fraud. She also possesses expertise in accounting. She has served as an executive training instructor at the Company of Directors Training Institute (BDTI). He has served as an independent outside director at Tokyo Electron, Olympus, and Azbil, and is also an FSA Credential Holder, making him well-versed in ESG disclosure standards. She has been a member of the GRI Labour Advisory Group since 2022 and the GRI Economic Impact Working Group since 2024. Profile: https://www.tanabe-partners.com/lawyers-member/sachiko_ichikawa

Attorney Takahashi also cites the 2022 UN Working Group on Business and Human Rights report *13) , warning of the risk that lobbying activity by multinational corporations hinder the introduction of appropriate environmental and human rights regulations, ultimately leading to negative impacts on society. Companies are required to recognize how their policy involvement is linked to overall societal sustainability, to re-examine their stance, and to communicate it to the public with high transparency.

Disclosure as "future accounting" and "proof of integrity"

As we have seen, efforts to prevent corruption, anti-competitive practices, and inappropriate involvement in public policy are not merely a matter of compliance. They embody the very integrity that society expects from companies, and are an extremely important management Issue that demonstrates what value a company provides to society and what negative impacts it is trying to minimize. This is precisely why the current draft revision of the GRI Standards requires more detailed information on prevention mechanisms, thorough Education and training, and governance by the board of directors, etc., than simply reporting past violations.

Attorney Ichikawa, who has been involved in the governance of numerous companies as an outside director, points out that even if the executive board reports, "We haven't had this kind of problem in the past, so it's okay," one cannot take that at face value, given the recent surge in scandals. As long as a company is an organization whose purpose is to pursue profit, the business operations are constantly exposed to the temptation of unfair profit-seeking and the risk of taking dangerous risks. The fact that a problem has not surfaced does not mean that there is no risk. Rather, what is required is to face the cold reality that such temptations and risks exist, and to disclose that strong control activity and environments (such as the establishment of an internal whistleblowing system, risk-based due diligence, and continuous training) have been built and are functioning to control them.

Attorney Ichikawa states that "while financial accounting represents past figures, sustainability accounting is 'future accounting' for measuring future corporate value." In other words, disclosing the extent to which preventative measures are in place demonstrates to investors that future reputational risk and the risk of massive fines are being kept low, which in turn directly leads to a reduction in the cost of capital and, consequently, an increase in corporate value.

Attorney Takahashi stated that the role of legal and compliance departments should not be limited to a defensive function of simply "protecting the company from risk," but should also involve working closely with information disclosure personnel such as IR and sustainability departments to proactively communicate to the outside world "proof of integrity"—how the company is working with integrity. This is precisely the offensive tool that enhances a company's credibility and strengthens its competitiveness in the global market. I was very impressed by how both attorneys, despite being legal experts, repeatedly emphasized points that companies should address beyond the scope of legal compliance.

The revised draft of the GRI Economic Impact Standards covers a wide range of disclosures, which may present practical challenges for Japanese companies. However, it should be seen as an excellent opportunity to seriously re-examine the impact of their business activity on the market and society, and to communicate that impact to the world in their own words. The draft will be reviewed based on public comments and is scheduled to be completed by the end of 2026, after which it will apply to disclosures based on the GRI Standards.

*1) Global Reporting Initiative (GRI), Topic Standards Project for Economic Impact. https://globalreporting.org/standards/standards-development/topic-standards-project-for-economic-impact

*2) GRI, GRI Topic Standard Project for Economic Impact – Corruption exposure draft, January 2026. https://www.globalreporting.org/media/pylmvl0k/gri-topic-standard-project-for-economic-impact-corruption-exposure-draft.pdf

*3) Ministry of Foreign Affairs, "United Nations Convention against Corruption (abbreviated as UN Corruption Convention),"July 20, 2017 https://www.mofa.go.jp/mofaj/gaiko/treaty/shomei_6.html

*4) Financial Services Agency "Financial activity Task Force (FATF)" website : https://www.fsa.go.jp/inter/fatf/fatf_menu.html

*5) Ministry of Health, Labour and Welfare, "OECD Guidelines for Multinational Enterprises" website: https://www.mhlw.go.jp/stf/seisakunitsuite/bunya/hokabunya/kokusai/oecd/shishin.html

*6) Nikkei Risk & Compliance Hub "Overseas Bribery" https://rc-hub.nikkei.com/solutions/risks/bribery

*7) GRI, GRI Topic Standard Project for Economic Impact – Competition exposure draft, January 2026. https://globalreporting.org/media/n5mgahsp/gri-topic-standard-project-for-economic-impact-competition-exposure-draft.pdf

*8) Risk Management Institute, "Research on Monopsony Structure in the Japanese Market,"September 14, 2025 https://www.hoken-kaitori.com/news/information/2025-0914-1387

*9) Government Public Relations Online, "From January 2026, the Subcontracting Act will become the 'Subcontracting Act'! The rules for consignment transactions will change significantly,"November 18, 2025 https://www.gov-online.go.jp/article/202511/entry-9983.html

*10) Government Public Relations Online, "Law to Create an Environment Where Freelancers Can Work with Peace of Mind, Starting in November 2024!", January 30, 2026 https://www.gov-online.go.jp/article/202408/entry-6301.html 

*11) GRI, GRI Topic Standard Project for Economic Impact – Public Policy exposure draft, January 2026. https://globalreporting.org/media/lzehwgzy/gri-topic-standard-project-for-economic-impact-public-policy-exposure-draft.pdf

*12) InfluenceMap, "Industry and Climate Policy Involvement: A Global Analysis,"May 1, 2024 https://japan.influencemap.org/JP/report/Automakers-and-Climate-Policy-Advocacy-A-Global-Analysis-27906

*13) UN Working Group on Business and Human Rights, A/77/201: Report on corporate political engagement and responsible business conduct, Office of the High Commissioner for Human Rights (OHCHR), 22 July 2022. https://www.ohchr.org/en/documents/thematic-reports/a77201-report-corporate-political-engagement-and-responsible-business