Can ESG now be considered ‘mainstream’ in Japan? The pace of change has certainly been rapid.
ESG is an increasingly prominent theme in the Japanese
investment world. The backing of the GPIF – at US$1.5 trillion,
the world’s largest pension fund – means that fund managers
are acutely aware of the importance of their stewardship
It’s no surprise then that this year’s Responsible Investor Asia
conference, held in Tokyo, was the largest in its eight-year history.
With more than 700 attendees attending, it provided us with
valuable insight as to how stewardship themes are developing in
For me, there were three major talking points over the course of
the two-day event:
This was the subject of a panel discussion I took part in on
corporate governance, and is a key focus for the GPIF.
The GPIF is a super long-term investor (it has a 100-year
mandate) and it is committed to fulfilling its stewardship
responsibilities by promoting engagement between asset
managers and companies. As it does not directly manage money,
its focus is instead on how the stewardship duties are exercised
through its external managers.
Discussions at the conference centred around how investors can
use their voice and collective influence to drive change. Equally
though, there was a great deal of focus on how investors can
report on and effectively measure & monitor the success of their
engagements. This latter point is particularly relevant important
for us and one of the ways we measure our engagement is
via our annual stewardship report, with the 2019 report just
2) UN Sustainable Development Goals (SDGs)
Japan is keen to show its leadership in this area, with the G20
meeting in Japan this summer and the 2020 Tokyo Olympics
providing a platform to further its ambition.
One of the important discussion points here was from the
Japanese business federation Keidanren. Its Society 5.0
programme wants to use technological advances to help
achieve the SDGs and has a target of ‘no-one left behind’.
Its call to Japanese businesses is to lead, rather than follow.
Meanwhile, the Japanese regulator, the FSA, is also focused
on the SDGs and how it can encourage further engagement by
3) Climate change
Japan has experienced a number of extreme, and deadly,
weather-related events in the last few years including
extreme heat, exceptional rainfall and strong typhoons all
of which have focused attention on the potential impacts of
As such there is increasing pressure on companies
and investors to disclose how they are approaching
climate change and in particular incorporating the
recommendations from the Task Force on Climate-related
Financial Disclosure (TCFD). As things stand, these
recommendations are a voluntary framework and form
part of a confusing ‘alphabet soup’ which companies face.
However, there are encouraging signs that we should see
material progress over the next couple of years to the
different reporting frameworks currently in place coalescing
around the TCFD recommendation.
Responsible investing reaching the mainstream
Can ESG now be considered ‘mainstream’ in Japan?
The pace of change has certainly been rapid. According
to the Global Sustainable Investment Alliance (GSIA),
between 2016 and 2018 Japan was the fastest-growing
region in terms of responsible investment of professionally
managed assets. For asset managers like ourselves who
are committed to working towards a more sustainable
investment environment, this is definitely a positive sign.
This information is issued and approved by Martin Currie
Investment Management Limited (‘MCIM’). It does not
constitute investment advice.
Past performance is not a guide to future returns.
Market and currency movements may cause the capital value
of shares, and the income from them, to fall as well as rise and
you may get back less than you invested.
The opinions contained in this document are those of the
named manager(s). They may not necessarily represent the
views of other Martin Currie managers, strategies or funds.
The information provided should not be considered a recommendation to purchase or sell any particular security. It should not
be assumed that any of the security transactions discussed here were or will prove to be profitable