The Weight of “Accountability” as Shown by the FSA
In May 2026, news broke that the Financial Services Agency (FSA) had taken a tough stance toward revising the Corporate Governance Code. According to a Livedoor News article, this revision, promoted by the Takashi administration, is causing unease among large company executives.
At the same time, the Nikkan Kogyo Shimbun reported, “Growth strategy, accountability heavy as corporate governance guidelines are revised.” These two news items vividly illustrate the tectonic shifts occurring in the world of governance.
What is the core of this revision? It is that the “accountability for growth strategies” will become significantly heavier. While listed companies have long been required to disclose their growth strategies, this revision demands more specific explanations of why those strategies are feasible and what risks are anticipated.
Why Is the FSA Taking a Tough Stance Now?
The FSA’s shift to a tough stance appears to stem from a sense of crisis over the “hollowing out” of corporate governance in Japan. Since the Corporate Governance Code was introduced in 2015, many companies have formally complied. However, a considerable number of companies remain in a state of “pie in the sky,” where substance does not match form.
Particularly problematic is the “lack of specificity in growth strategies.” Cases abound where companies only set abstract goals like “increase sales by X%” or “enter new businesses,” with insufficient means of achievement or risk management systems.
It can be said that the FSA has made clear it will not tolerate such “governance in name only.” The judgment is that for the Takashi administration’s vision of a “virtuous cycle of growth and distribution” to be realized, companies must sincerely engage with governance.
3 Changes SME Owners Should Know
At first glance, this movement might seem to concern only large companies. However, SME owners should not consider it irrelevant. This is because the essence of this revision is about the “quality of governance,” a theme important regardless of company size.
Here, we organize three changes that SME owners should recognize.
Change 1: The Era of Demanding “Specificity” in Accountability
Previously, saying “we have a growth strategy” was often sufficient. However, going forward, it will be necessary to explain “why that strategy was chosen” and “what risks are anticipated and how they will be addressed.”
For SMEs, opportunities to be asked by business partners or financial institutions, “What specifically is your company’s growth strategy?” will likely increase. Abstract answers could lead to a loss of trust.
Change 2: “Effectiveness” of Governance Becomes an Investment Criterion
While this applies to large companies, institutional investors will strictly evaluate the effectiveness of governance. This indirectly affects SMEs. For example, if large companies demand stronger governance across their entire supply chain, the SMEs that are their business partners will also feel the impact.
Change 3: Management’s “Resolve” Becomes Visible
The essence of the governance code revision lies in questioning management’s resolve. To articulate a growth strategy specifically, one must accurately grasp the company’s strengths and weaknesses and face risks head-on. This means management’s “level of commitment” is being tested.
3 Actions SMEs Can Take Right Now
Before feeling anxious about the FSA’s tough stance, start preparing what you can do within your own company. Here are three specific actions you can put into practice starting today.
Action 1: Summarize Your Growth Strategy on “One Sheet of Paper”
First, try summarizing your company’s growth strategy on a single A4 sheet of paper. The key is to write specifically *why* it is achievable. For example, for a goal like “acquiring new customers,” delve into “why compete in this market?” and “what is the differentiation point from competitors?”
Through this exercise, you should see the “gaps” in your company’s strategy. If there are gaps, think about how to fill them.
Action 2: Create a Risk Map
Identify the risks anticipated in executing your growth strategy and organize them into a risk map. A risk map is a tool that visualizes risks along two axes: probability of occurrence and impact.
For SMEs, labor shortages, cash flow issues, and dependence on specific business partners often become major risks. Be clear about what measures you are taking against these risks.
Action 3: Make “Accountability” a Topic in Management Meetings
Develop a habit of regularly discussing at monthly management meetings: “Why are we executing this strategy?” and “What risks are we anticipating?” It’s okay if it doesn’t go well at first. Through repeated discussion, your ability to explain will naturally improve.
Conclusion: Governance Shifts from “Form” to “Substance”
The FSA’s tough stance marks a major turning point where governance shifts from “form” to “substance.” Although the revision is aimed at large companies, its essence applies to SMEs as well.
What’s important is to cultivate “management that can be explained.” If you can specifically articulate your company’s growth strategy, recognize its risks, and have countermeasures in place, you need not fear the FSA’s revision.
Governance is by no means a tool for “defense.” Rather, it is an “offensive” design technique to accelerate your company’s growth. Why not take this revision as an opportunity to review the quality of your own company’s governance?
Sources:
・Livedoor News: “FSA Suddenly Takes Tough Stance… Unease Among Large Company Executives Over Corporate Governance Code Revision Promoted by Takashi Administration”
・Nikkan Kogyo Shimbun: “Growth Strategy, Accountability Heavy as Corporate Governance Guidelines Are Revised”
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