Our Basic Policy and Initiatives for ESG Investment
Basic Policy on ESG Investment
Sumitomo Mitsui DS Asset Management (SMDAM) believes that non-financial information including environmental, social, and governance (ESG) information is equally important as financial information for us to evaluate sustainability of businesses and impact on long-term profitability of corporation and REIT (corporations) given the increasing interest on environmental changes and SDGs. In that context, we proactively take following actions.
- We incorporate analysis and evaluation of non-financial information including ESG information into investment process of every product across variety of asset classes, taking account of characteristics of products. With our commitment to do this, we aim to be a front runner in the field of ESG investment.
- We exercise our voting rights taking into account engagement activities relating to ESG theme.
- In course of engagement activities with corporations, we aim to enhance their enterprise value by encouraging them to take appropriate actions to address ESG agendas.
- We also encourage corporations to disclose more detailed information of ESG related policies and actions, which we believe leads to favorable reputation among capital market participants.
In summary, we as a responsible institutional investor will fulfill our fiduciary duties by providing good quality investment services leveraging analysis and evaluation of non-financial information including ESG.
Initiatives for ESG Investment
We initiated ESG evaluation in 2009. Since then, we have continuously enhanced our capabilities of ESG research by various means including set-up of dedicated section in 2016.
- *Events prior to merger as of April 2019 were those of Sumitomo Mitsui Asset Management.
- **Stewardship Enhancement Section was renamed to Responsible Inventment Section upon being independent.
ESG investment activities are monitored by ESG Meeting, Responsible Investment Committee and FD and Sustainability Meeting. ESG Meeting is working-level talks and its role is to monitor if ESG activities are properly implemented and continuously reinforced. Responsible Investment Committee is organized under the board of directors and it consists of independent directors. The role of the committee is to monitor fulfillment of fiduciary duties including responsible investments as well as controls over conflict of interest. The committee makes a proposal to the board whenever needed. FD Sustainability Meeting is an advisory body to CEO and it consists of external experts. The Meeting makes a recommendation to CEO across company-wide activities relating to fiducial duties.
＜Organization chart in charge of ESG investment＞
In order to go above and beyond expectations, we signed or took part in various domestic and global initiatives such as Asian Corporate Governance Association (ACGA), United Nations Principles of Responsible Investment (UN PRI), 21th Century Financial Principles, 30% Club Investor Group, Task Force on Climate-related Financial Disclosures (TCFD) and TCFD Consortium, and Climate Action 100+. Being a part of these initiatives enables us to sense a change of global trend and gives us deeper insight regarding responsible investment.
United Nations Principles for Responsible Investment (UN PRI)
UN PRI were published in April 2006 by the then Secretary-General Kofi Annan with the aim of improving long-term investment results for customers and final beneficiaries, , the idea being that institutional investors should first establish a good understanding of ESG issues and then incorporate them into the investment process. We are awarded the highest rating A+ for Strategy & Governance in the annual PRI assessment.
Principles for Responsible Investment
- We will incorporate ESG issues into investment analysis and decision-making processes.
- We will be active owners and incorporate ESG issues into our ownership policies and practices.
- We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will each report on our activities and progress towards implementing the Principles.