Japan’s government pension fund joins boardroom diversity initiatives in UK and US

The Government Pension Investment Fund (GPIF) has joined boardroom diversity initiatives on both sides of the Atlantic, a further sign that the world’s largest asset owner is putting its weight firmly behind environmental, social and governance (ESG) investing.

It has signed up to the 30% Club in the UK and the Thirty Percent Coalition in the US, which campaign for 30% representation of women on boards.

The 30% Club launched as a campaign in the UK in 2010, driven by leading fund management figure Helena Morrissey, with a goal of achieving a minimum of 30% women on FTSE-100 boards.

The Thirty Percent Coalition is a separate initiative – backed by leading institutions such as CalSTRS, Thomson Reuters and JP Morgan Chase – that is “committed to the goal of women, including women of color, holding 30% of board seats across public companies”.

The GPIF, saying it believes that the integration of ESG factors into the investment process mitigates risk, said in a statement: “Gender diversity is regarded as one of major social and governance factors. By joining these two [initiatives], GPIF can expand the knowledge of ESG to fulfill fiduciary duty for our beneficiaries.”

It follows the JPY135trn (€1trn) fund having set up a new Stewardship & ESG group internally at the start of last month under Hiroshi Komori, Senior Director of the Public Market Investment Department.The GPIF says the aim of the division is to strengthen the fund’s fiduciary duty for beneficiaries by furthering stewardship and ESG activities from a more strategic perspective, and to increase the understanding of responsible investment principles in Japan.

In July the GPIF, which became signatory of the PRI in 2015, announced the launch of a tender for ESG indices, in a move which could spur the growth of ESG investing in the country.

Earlier this year the Japanese government set up a new high-level long-term investment group – with members including leading figures such as the GPIF’s investment chief Hiromichi Mizuno and governance expert Professor Kunio Ito, who chairs the new body.

The panel, called the Study Group on Long-term Investment toward Sustainable Growth, was established by the Ministry of Economy and Trade (METI) in August to enhance corporate value and promote mid- to long-term investment based on ESG factors.

Elsewhere in Japan, a governance code proposal is planned to be released by year-end by the Financial Services Agency (FSA) to improve auditing standards. The proposal, currently still being fleshed out, is likely to install independent non-executive directors to oversee boards with a public interest mandate, Reuters reported on November 10. “Auditors are essential infrastructure for Japan’s capital markets,” Kazutoshi Harada, director of the FSA, said. “And their listening to third-party opinions is crucial for them to function as that infrastructure.”

With reporting by Elena K. Johansson.