ESG Investment

Basic Policy on ESG Investment

When investing, Sumitomo Mitsui DS Asset Management (SMDAM) analyzes and evaluates not only financial data but also non-financial data, including environmental, social, and governance (ESG) information, which is built into the management process in line with the investment philosophy and investment horizon, etc. for each managed product and taken into account when investment decisions are made.

SMDAM actively utilizes non-financial data, including ESG information, to analyze the stability and sustainability of investee companies and REIT investment firms, etc. (*1 & *2) (hereinafter referred to as "investee companies, etc.") in light of changes to the global business environment and the Sustainable Development Goals (SDGs), etc., and considers such data to be an important factor in offering insight into the medium- to long-term improvement in value of investee companies, etc., or the mitigation of damage thereto.

Furthermore, SMDAM aims to promote more appropriate actions, etc. to contribute to the value of investee companies, etc. by engaging in dialogue with them to convey its points of view and by sharing discussions on ESG issues that need to be resolved to raise value in (or mitigate damage to) investee companies, etc. in the medium to long term.

SMDAM will fulfill its fiduciary responsibilities to provide customers and final beneficiaries with good quality returns on investments by utilizing non-financial data, including ESG information, in a variety of different ways.

  • (*1)"REIT" refers to Real Estate Investment Trust, and "J-REIT" to Japanese REIT.
  • (*2)"REIT investment firms etc." refers to investment firms that hold REIT assets as well as asset management companies sub-contracted by investment firms to manage assets.

Initiatives Related to ESG Investment

In accordance with the Basic Policy above, SMDAM has set up an in-house ESG Committee and is pro-actively working to utilize non-financial data, including ESG information, in a number of different ways.

In addition, SMDAM has either signed, or is a member of, the following initiatives: United Nations Principles for Responsible Investment (PRI), Towards the formation of a sustainable society Financial Principles (21 century financial behavior principles), and the Asian Corporate Governance Association (ACGA).

United Nations Principles for Responsible Investment (PRI)

The United Nations Principles for Responsible Investment (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, etc.

Principles for Responsible Investment

  1. We will incorporate ESG issues into investment analysis and decision-making processes.
  2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  4. We will promote acceptance and implementation of the Principles within the investment industry.
  5. We will work together to enhance our effectiveness in implementing the Principles.
  6. We will each report on our activities and progress towards implementing the Principles.
PRI