Asset owners in Japan are being encouraged to engage in stewardship on behalf of their beneficiaries – and include it in their mandates with fund managers – according to a draft revision to the country’s three-year-old Stewardship Code.
The code is being revised by the ‘Council of Experts on the Stewardship Code’ chaired by University of Tokyo Professor Hiroyuki Kansaku and there are several new elements.
“Asset owners should engage in stewardship activities themselves as much as possible in order to secure the interests of ultimate beneficiaries,” reads additional draft guidance to Principle 1 of the code.
It continues: “When asset owners do not directly engage in stewardship activities, including the exercise of voting rights, they should request that their asset managers be engaged in effective stewardship activities on their behalf.”
Elsewhere, the new draft guidance reads: “When selecting or issuing mandates to asset managers, asset owners should clearly specify issues and principles to be required in conducting stewardship activities, including the exercise of voting rights, in order to ensure effective stewardship activities.“In particular, large asset owners should proactively consider and clearly specify issues and principles to be required in conducting stewardship activities, including the exercise of voting rights, keeping in mind their positions and roles in the investment chain, instead of mechanically accepting asset managers’ policies without any verification.”
“They should request their asset managers to be engaged in effective stewardship”
The draft adds that asset owners should monitor whether their asset managers conduct stewardship activities in line with asset owners’ policies, making use of asset managers’ self-evaluations.
Asset owners, the draft states, should put emphasis on the “quality” of dialogue between asset managers and investee companies – “instead of mechanically checking the number of meetings held between them and the duration of such meetings.”
The draft is open for public comment until May 8.