Japan’s giant Government Pension Investment Fund signs up to PRI

Move will impact external managers of world’s largest pension fund

Japan’s Prime Minister Shinzō Abe announced this weekend that the country’s $1.2trn (€1trn) Government Pension Investment Fund, the largest asset owner in the world, has signed up to the United Nations-supported Principles for Responsible Investment (PRI) – the move will mean it will ask its external managers whether they are also signed up.

“This will surely contribute to the achievement of sustainable development,” Abe said. “The principles represent a pledge by signatories to consider environmental, social and corporate governance factors while investing.” Abe has introduced a number of responsible investment reforms as part of his wider ‘Abenomics’ reform programme to revitalize the country. The ‘third arrow’ of Abenomics has seen the creation of the Principles for Responsible Institutional Investors, a stewardship code based on the UK model (which the GPIF signed earlier this year) as well of its own version of the Kay Review – the Ito Review – and a corporate governance code.

It means that Japan will now have seven asset owner PRI signatories. In total there are now 35 signatories across all categories in the country.

The GPIF has also made some moves in the responsible investment space; last year it awarded contracts to QUICK, MSCI ESG Research and Ernst & Young to undertake research into ESG and stewardship. Its latest move demonstrating a commitment to invest along ESG principles is signing up to the PRI.The GPIF is an influential player in the Japanese investment world, and it is likely that other major pension funds in the country will follow its move.

A document on the GPIF’s website announcing the news outlines its attitudes to ESG issues. It says the fund believes considering ESG issues properly will enhance returns and increase corporate value.

It says to fulfill its commitment to the Japanese Stewardship Code it has signed up to the PRI, started ESG research and will encourage external managers to incorporate ESG issues in their engagement activities.

It will ask external asset managers whether they are signatories to the PRI, report their ESG activities, and ask non-signatories the reason for not signing.

The fund has a large number of external investment managers including a host of the world’s largest international asset managers such as Invesco Asset Management, Goldman Sachs Asset Management, Schroder Investment Management, BlackRock, State Street Global Advisors and PIMCO to name a few. It also has assets with leading domestic players too.

In other news, a new group to enhance corporate governance in Japan is inviting comment. The ‘Council of Experts’ has been set up by the Japan Exchange Group in the wake of the Toshiba scandal. Last month, Toshiba was delisted from the JPX-Nikkei 400 after an independent audit revealed it had overstated its profits by JPY151.8bn (€1.1bn) since 2008. The new group held its first meeting on September 24. Announcement