Introduction
In recent years, the international environment surrounding companies has rapidly shifted from an era in which free cross-border economic activity was taken for granted to one in which companies must design their business operations taking into account geo-economic risks. For Japanese companies that may be affected by such changes in the environment, it has become increasingly important to assess developments in economic security policies across jurisdictions and to develop management strategies, together with detailed initiatives based on these strategies, to enhance their autonomy and indispensability. At the same time, many companies express concerns that such initiatives will increase costs in the short term and that it is difficult to determine the appropriate level of compliance. However, corporate efforts to address economic security and enhance autonomy and indispensability, including diversifying procurement sources to ensure supply stability, delivering products and services incorporating robust cybersecurity, or implementing measures to prevent the leakage of critical technical information, represent more than mere risk management. Over the medium- to long- term, these efforts enhance corporate value and create new business opportunities.
In light of these developments, on November 20, 2025, the Ministry of Economy, Trade and Industry (METI), following deliberations by the “Study Group on Economic Security Management Guidelines” comprising private-sector experts and other stakeholders, released a draft “Economic Security Management Guideline” (the “Guideline”). The Guideline outlines the principles of which management should be aware and directions for initiatives when companies address economic security. The Guideline is open for public comment until December 26, 2025, after which METI intends to release a finalized version. METI also anticipates that Guidelines will be reviewed and updated on an ongoing basis in response to changes in the international environment, policy trends, and other developments.
Since the renewed focus on economic security, driven by factors such as intensifying U.S.-China strategic competition, the expanded use of economic statecraft to exert influence through economic measures, and the COVID-19 pandemic, there has been extensive debate from various standpoints, perspectives, and angles regarding how companies should approach economic security.[1] The Guideline is based on this accumulated body of discussions, and does not substantively introduce new arguments or perspectives. Nevertheless, it has significant value in that METI has distilled the key points of what had previously been somewhat fragmented discussions and presented, in relatively general terms, principles of which management should be aware and directions for initiatives. In this newsletter, attorney-at-law Mr. Osawa, who handles numerous matters related to economic security, together with Mr. Kitani and Ms. Morishita, as well as attorney-at-law Mr. Yuasa, who was involved in developing the Guideline as a member of the aforementioned study group and is familiar with its outline and drafting background, summarize the Guideline’s key points and discuss practical considerations for companies contemplating economic security responses tailored to their specific circumstances.
Structure and Basic Policy of the Guideline
1. Structure of the Guideline
The Guideline consists of four sections: “Introduction,” “Basic Policies,” “Principles of which Management Should be Aware,” and “Directions for Initiatives in Specific Areas.”
2. Basic Policies
(1) Positioning
The Guideline is based on the view that corporate economic security measures should be approached not only from the “defensive” perspective of risk management, but also from the “growth-oriented” perspective that initiatives such as supply stabilization and enhancing technology management frameworks can enhance corporate value and may be favorably evaluated by stakeholders including business partners and investors. Accordingly, the Guideline compiles “recommended practices for corporate management in considering business strategy.” Please note that the matters described in the Guideline are recommendations only and are not intended to impose obligations on companies. However, it is noteworthy that the Guideline carefully differentiates between expressions such as “should/is necessary/is required,” “is expected,” “is desirable/is desired,” and “is useful/is effective,” thereby varying the tone of expression according to the degree of recommendation to companies.
(2) Target Companies and Audience
The Guideline is broadly directed at companies in general, regardless of industry or business scale, with management personnel (including executive officers and other responsible persons in comparable positions) as the primary intended audience. However, it should be noted that companies involved in the supply of specific critical materials designated under the Economic Security Promotion Act, or companies in industries covered by the critical infrastructure regime under the same Act, are specifically noted as companies “expected to proactively implement measures with reference to the Guideline.” In addition, METI has published related documents in connection with the Guideline (including the “Guidance on Measures to Prevent Technology Leakage” and “Compilation of Private Sector Best Practices”), which are intended as reference tools for practitioners when implementing specific measures. It is anticipated that additional tools for practitioners will be released in the future.
(3) Relationship with Management’s Duty of Care
One notable feature of the Guideline is its reference to the relationship between corporate economic security measures and the duty of care owed by management. Specifically, the Guideline states: “Initiatives and measures in line with the Guideline support prompt and decisive management decisions made by management in circumstances where there are economic security risks. While strictly speaking, this requires consideration on a case-by-case basis, such initiatives and measures generally serve as one form of evidence that management is fulfilling its duty of care.” Conversely, this implies that, while the business judgment rule applies to management activities, it also suggests that, if a company mismanages its economic security response and this results in consequences such as the leakage of core technologies or disruption or cessation of the stable supply of products and services, the possibility cannot be ruled out that, depending on the process of gathering and analysis underlying their management decision, management may be found in breach of their duty of care (Article 423, Paragraph 1 of the Companies Act). As economic security risks become complex, multi-layered, opaque, and fluid, it is increasingly important for members of management to be mindful of the legal protection afforded to their business decisions.[2]
Principles of which Management Should be Aware
This Guideline sets out the following three principles of which management should be aware:
1. “Accurately understand one’s own business and develop risk scenarios”;
2. “View responses to economic security not merely as costs but as investments”; and
3. “Maintain ongoing dialogue with multiple stakeholders.”
We provide an overview and explanation of the key points of each principle below.
1. Accurately Understand One’s Own Business and Develop Risk Scenarios
While economic security risks are often difficult to predict, and it is challenging to determine in advance precisely which parts of a company’s operations will be affected and to what extent, the Guideline emphasizes the importance of preparing for potential risk scenarios and considering countermeasures. In particular, companies should (i) identify, to the extent possible, the volume and value of transactions across their value chain (by country/region, and by product/service), and understand business interdependencies; (ii) identify core technologies that give the company a competitive advantage; and on that basis, (iii) assess which products and services could be disrupted by external factors such as economic coercion by other countries or regional conflicts, and identify events that could lead to the loss or leakage of core technologies.
This reflects the view that, in relation to economic security risks, it is essential for companies to conduct risk assessments that are based not only on conventional risk mapping (i.e., identifying abstract risk items and ranking their importance) but also on more specific scenario analysis (i.e., analyzing the potential impact of anticipated scenarios, such as amendments to export and investment regulations or the outbreak of armed conflict, on the company’s products and services).
2. View Responses to Economic Security Not Merely as Costs but as Investments
Although economic security measures may sometimes conflict with short-term profit maximization, the Guideline emphasizes the growing importance of ensuring a company’s autonomy and indispensable nature not only for maintaining corporate value but also for earning the trust and favorable evaluation of stakeholders such as business partners and shareholders.
This principle can be understood as reaffirming the “offensive” aspect of economic security (i.e., one of the basic policies of the Guideline described above) as a principle of which management should be aware.
3. Maintain Ongoing Dialogue with Multiple Stakeholders
The Guideline emphasizes that there are inherent limits to what a single company can achieve on its own to address economic security concerns. Collaboration with stakeholders, including business partners, financial institutions, shareholders, and national and local governments, is essential. The Guideline also emphasizes the importance of companies maintaining appropriate communication with relevant parties regarding the gathering of risk information and countermeasures, even during normal business operations. When other companies request cooperation or collaboration on economic security measures, it is important to engage in good-faith dialogue and assess the necessity of the requested measures, taking into account not only the company’s position but also the potential impact on counterparties and the broader industry. The Guideline also indicates that stakeholders such as financial institutions and investors are expected to evaluate and support companies that recognize the importance of economic security.
This point appears to reflect the practical reality that economic security measures can incur short-term costs and sometimes conflict with the preferences of stakeholders, such as business partners and investors, who prioritize short-term economic efficiency (for example, where supplier diversification increases costs and requires adjustments to pricing). However, from a long-term perspective, such initiatives can enhance transaction security and ultimately serve the interests of stakeholders. Therefore, from this perspective, the Guideline can be understood as encouraging companies to engage in dialogue with multiple stakeholders to foster an understanding of the importance of economic security measures.
Directions for Initiatives in Specific Areas
This Guideline identifies three key pillars for corporate economic security measures: (i) “Initiatives to Ensure Autonomy”; (ii) “Initiatives to Ensure Indispensability”; and (iii) “Strengthening Governance for Economic Security Measures.” For each pillar, the Guideline sets out recommended actions for companies. We summarize the key points of these three pillars below and set out the key recommendations that management, etc. should keep in mind.
1. Initiatives to Ensure Autonomy
The Guideline highlights the importance of ensuring a company’s autonomy (i.e., reducing its excessive dependence on specific countries, regions, or companies and building supply chains that are not susceptible to external factors such as economic coercion by other nations or border measures) not only from the perspective of Japan’s overall economic security, but also for maintaining and enhancing the company’s own corporate value. Recently, against the backdrop of pandemics and geopolitical risks, in addition to cases where the supply chains of raw materials and components are fragmented by economic measures among states, disruptions of supply chains in the IT/software industry, such as cyberattacks, have also occurred; and it has become indispensable to make management decisions on the premise of the risks brought about by concentration of procurement sources and production bases. Therefore, going forward, management is expected to take a comprehensive view of the entire supply chain and implement measures for alternative procurement, stockpiling, and network strengthening. It is also important to position these initiatives not as short-term costs, but as investments for maintaining and enhancing corporate value over the medium- to long-term.
Recommended Actions of which Management Should be Aware in “Initiatives to Ensure Autonomy”[3]
2. Initiatives to Ensure Indispensability
The Guideline explains that, for companies, ensuring indispensability means enhancing international competitiveness through continuous innovation and the appropriate protection of technology and information, so that the company’s products, technologies, services, etc. become irreplaceable for business partners and the international community. As nations compete to secure technology, talent, and capital in strategic sectors, the outflow of Japanese companies’ technology overseas can result in the loss of competitive advantage not only for individual companies but also for the entire sectors. Therefore, the companies are expected to (i) position the identification of core technologies and the assessment of and countermeasures against leakage risks as management priorities on par with R&D and business investments, and (ii) develop medium-to-long-term strategies to continuously create new sources of indispensability through ongoing innovation on the basis that existing strengths may become commoditized in the future.
Recommended Actions of which Management Should be Aware in “Initiatives to Ensure Indispensability”
3. Strengthening Governance for Economic Security Measures
The Guideline identifies strengthening governance as one aspect of economic security measures. In this context, “governance” is defined as a concept that encompasses (i) risk management, which is specifically designed to identify and assess economic security risks and opportunities and to address them appropriately and flexibly, and (ii) mechanisms for continuously monitoring the effectiveness of such risk management and organizational operations. A key feature of economic security measures is that they require swift management decisions from a medium- to long-term perspective in order to accurately assess a company’s risks and opportunities amid rapidly changing regulatory developments and international conditions, even when such decisions may appear to conflict with short-term interests. For this reason, the Guideline emphasizes that companies should move beyond traditional control-centric governance and instead build agile governance[5] that enable timely assessment and revision of policies in response to changes in the external environment. More specifically, management is expected to (i) integrate domestic and international regulatory and geopolitical intelligence with internal company data to visualize risks and opportunities; (ii) make investment or divestment decisions for countermeasures from a medium- to long-term, company-wide optimization perspective; and (iii) establish a cross-functional organizational structure and clear allocation of roles, responsibilities, and authorities to support this decision-making process.
Recommended Actions of which Management Should be Aware in “Strengthening Governance for Economic Security Measures”
Conclusion
This Guideline is a landmark document with virtually no equivalent in other jurisdictions. It sets out the government’s basic principles and direction for corporate economic security measures. However, it should be noted that the Guideline was developed with the specific purpose of enhancing awareness of economic security issues and increasing incentives for management across all Japanese companies. Therefore, as described above, it provides general guidance on matters that should be considered when implementing economic security measures, without limiting the scope to a specific industry or company size. Accordingly, companies should not treat the Guideline as merely abstract principles. Rather they should assess how to translate the Guideline into specific measures in light of each company’s unique circumstances, including its operating environment, economic security-related risks, business scale, geographic business footprint, and the relevant laws, regulations, and policy developments in various jurisdictions. Furthermore, companies should consider how to develop practical, workable measures that strike a balance with business requirements and operational burdens. In addition, as companies implement specific economic security measures, the Guideline can serve as a common internal benchmark. For example, it can be cited as reference material when explaining actions to management or relevant departments, or it can be used to provide persuasive support when communicating with external stakeholders.
View original article here.
Authors: Oki Osawa (Partner), Yu Yuasa, Tatsuyoshi Kitani, Maya Morishita
Endnotes
[1] Examples include: Toshifumi Kokubun, “Management Strategy and Economic Security Risks,” Nikkei Publishing (September 2021); Sevrani Klevis, “Trends in Economic Security and the Strategic Response Required of Japanese Corporate Boards,” Junkan Shoji Homu No. 2275 (October 2021); Oki Osawa, “Fundamentals and Approach to Economic Security That Legal and General Affairs Personnel Must Grasp: How to Engage with Economic Security and Expected Information Gathering, Analysis, and Internal Sharing,” Shojihomu Business Law School (July 2023); Keisuke Hanyuda, “Business and Geopolitics/Economic Security,” Nikkei BP (March 2025); Kazuto Suzuki, “What is Geoeconomics? Strategic Thinking in an Era Where Economics Becomes a Weapon,” Shincho Sensho (September 2025); Eiki Tagami, “20 New Common Sense Principles of Economic Security from the Perspective of Geoeconomic Risks,” Chuo Keizai Sha (November 2025).
[2] In this regard, please refer to the roundtable discussion “What are the Offensive and Defensive Intelligence Functions to Prepare for Economic Security and Geopolitical Risks (Part 1)” (August 2024), hosted by partners Kosuke Hamaguchi and Oki Osawa of Nagashima Ohno & Tsunematsu, together with Keisuke Adachi and Mitsushiro Niibori of KPMG Consulting, in which the significance of intelligence functions in relation to the duty of care of management in business decision-making contexts was discussed.
[3] The Guideline includes, as an appendix, a checklist of recommended actions of which management should be aware, which may be used as a reference material for companies. The points in the table above reflect our summary of the contents of the checklist.
[4] In relation to the basic approach under the Antimonopoly Act concerning initiatives such as information exchanges between businesses, the “Basic Approach of the Antimonopoly Act Concerning Business Initiatives Related to Economic Security” (Fair Trade Commission) and the “Case Studies on Economic Security and the Antimonopoly Act” (Fair Trade Commission, Ministry of Economy, Trade and Industry, Ministry of Land, Infrastructure, Transport and Tourism) were published on the same day as the Guideline. For further details, please refer to Competition Law Update No. 48 (International Trade and Economic Security Update No. 34): “Publication of FTC, METI, and MLIT ‘Case Studies on Economic Security and the Antimonopoly Act, etc.’” (Japanese).
[5] For further discussion on agile governance, see Compliance Legal Update No. 63: “A New Governance for Surviving VUCA–METI Publication of ‘Agile Governance: Overview and Current Status GOVERNANCE INNOVATION Vol. 3.’” (Japanese).