A group of prominent Japanese private sector chiefs advising the country’s Economic Finance Advisory Committee on promoting mid- to long-term stable institutional finance for sustainable growth have recommended that responsible investment should increase five-fold by 2020 from JPY1trn (€7.1bn) to JPY5trn (€35.5bn). In their February 20 recommendation (in Japanese): to government, the committee members, Professor Ito from Tokyo University, Mr. Kobayashi, President of Mitsubishi Chemical Holdings, Mr. Sasaki, Deputy Chair of Toshiba and Mr. Takahashi, Board Chair of the Japan Research Institute, said market demand for medium- and long-term funds was increasing in areas such as infrastructure development, human resources and education. The committee said that because of risk aversion after the financial crisis these demands haven’t so far been met. Consequently, they said it was important to create the right tax and labour frameworks for corporate research and development, capital and human investment alongside stable, cost-effective financial instruments, notably in venture financing. As part of this, the committee said Japan should lead the world in the standards it sets pension funds for socially responsible investment. It said this would be achieved by creating a guideline to improve the investment environment for pension funds and increase participation from Japanese pension funds. This, they said, required policy that clarified that the goals of socially responsible investment and fiduciary duty do not contradict each other. It said Japan should also aim to lead in the development of integrated financial and non-financial reporting by companies on areas such corporate strategy, governance, intellectual property, CSR, and environmental reporting.As part of the Abe government’s “Revitalisation Strategy” for Japan to exit deflation into sustainable economic growth, Japan is undergoing reforms in the areas of corporate governance, long-term finance and sustainability. One is the Japanese Financial Service Agency (FSA) led “Principles for Responsible Institutional Investors”, also known as Japan’s Stewardship Code. This is working alongside the FSA Panel for Vitalizing Financial and Capital Markets, which is looking at enhancing long-term investment returns by Japanese public pension funds. At the same time, the Japanese Ministry for Economy, Trade and Industry (METI), is working on the Corporate Reporting Lab to facilitate dialogue between Japanese companies and investors. The Lab links to a special project on “Competitiveness and Incentive Structures for Sustainable Growth”, described as “Japan’s Kay Review” looking at long-term corporate performance and value and capital market structure that will support that.
RI Asia Conference 2014: Tokyo, March 5-6
More than 300 pension funds, asset managers and investment service providers will attend the RI Asia 2014 conference in Tokyo on March 5-6 to explore the major government and industry initiatives that will come to fruition this year. The RI Asia Keynote Speech will be given by Professor John Kay, author of the original report, the “Review of UK Equity Markets and Long-Term Decision-Making”.
Look out for RI’s reporting from next week’s conference.