Asset Management One

Japanese

Japan’s Stewardship Code

WHAT WE DO

Established on October 1, 2016
Asset Management One Co., Ltd.

Asset Management One Co., Ltd. (Asset Management One or “the Company”) declares its acceptance of the “Principles for Responsible Institutional Investors,” known as Japan’s Stewardship Code (“the Code”), to fulfill its stewardship responsibilities properly as a responsible institutional investor.

  • The Company believes that fulfilling its stewardship responsibilities properly will help enrich the Japanese economy and society. As an asset management company that contributes to clients and beneficiaries (“clients”) and society, the Company wishes to contribute to sound economic and social development by conducting appropriate stewardship activities and thereby support the optimum distribution of social resources.
  • “Stewardship responsibilities” in the Code refers to the responsibilities of institutional investors to enhance the medium- to long-term investment return for their clients by encouraging their investee companies to improve corporate value and achieve sustainable growth through constructive engagement or purposeful dialogue, based on their in-depth knowledge of the investee companies and their business environment.
  • The Code describes principles that are useful for “responsible institutional investors” that fulfill “stewardship responsibilities.” The Company has established the following policies for the seven principles of the Code.

Principle 1:
Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities, and publicly disclose it.

  • The Company has established these policies because it believes that encouraging investee companies to enhance their corporate value and achieve sustainable growth from a medium- to long-term perspective through constructive, purposeful dialogue (engagement) will help expand the medium- to long-term investment return for its clients.
  • Based on this belief, the Company has analysts with a high degree of expertise and experience who seek to obtain accurate information on each investee company’s financial situation, as well as its non-financial situation, including environmental, social, and governance (ESG) factors. This information enables the Company to hold constructive, purposeful dialogue and exercise voting rights appropriately.
  • The Company will improve its efforts to fulfill stewardship responsibilities by training its analysts and reviewing its stewardship activities on a regular basis. The Company will regularly report the status of its stewardship activities to clients to help ensure accountability as a fiduciary duty. The Company believes that it can fulfill its stewardship responsibilities as a “responsible investor” by conducting these wide-ranging activities.

(System for fulfilling stewardship responsibilities)

  • At the Company, the Responsible Investment Committee established as one of the management policy committee for fulfilling stewardship responsibilities will supervise the exercise of voting rights and engagement, and will properly promote responsible investment.
  • The Responsible Investment Committee will discuss and report on matters related to overall stewardship activities, including the evaluation and review of the implementation of stewardship responsibilities, dialogue (engagement) with investee companies and the exercise of voting rights by the Company. The committee will review the achievements and will work to improve its stewardship activities. The committee will discuss whether to vote for or against the most important agenda items in terms of conflicts of interest.
  • Under the Responsible Investment Committee, a sub-committee on the exercise of voting rights is established to exercise voting rights appropriately. This sub-committee will discuss agenda items that are deemed to be important under the Company’s standards (except for the most important agenda items in terms of conflicts of interest). The results of exercising voting rights that are discussed by this sub-committee will be reported to the Responsible Investment Committee.

Principle 2:
Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

  • The Company will put clients’ interests first in its stewardship activities (including the exercise of voting rights). Under internal regulations, the Company will seek to strictly control conflicts of interest that can be expected.
  • When the Company exercises the voting rights of shares it holds at funds that it manages, it will exercise the voting rights under predetermined guidelines, taking into account only the interests of the clients.
  • The Company has the Responsible Investment Committee as one of management policy committee, which appropriately manages conflicts of interest. This committee is chaired by the head of the Investment Division, and its members include the head of the Risk Management Division. To promote responsible investment, the committee will thoroughly discuss issues in the asset management unit, which is independent of the corporate planning and the sales unit. The audit and supervisory committee members will also attend the Responsible Investment Committee meetings to check proper performance. The Responsible Investment Committee will discuss the most important agenda items in terms of conflicts of interest and the establishment, revision, and abolition of guidelines on the exercise of voting rights.
  • As for the most important items in the agenda in terms of conflicts of interest within parent and group companies, the Company will commission independent third parties to provide advice on whether to vote for or against them under the guidelines on the exercise of voting rights. The Responsible Investment Committee will discuss the advice from them to make appropriate decisions on the exercise of voting rights.

Principle 3:
Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities towards sustainable growth of the investee companies.

  • To monitor investee companies, the Company has a number of experienced analysts obtain accurate information through various opportunities. This information includes not only financial information, but also non-financial information, including environmental, social, and governance (ESG) information of investee companies.

    Major types of information obtained
    Corporate strategies Business strategy, business plan, industry environment, competitive environment
    Business performance Factors of changes in results
    Capital structure Capital efficiency, finance strategy, capital policy
    Governance Management structure, corporate governance
    Risk (society, environment) Risks to management, including social and environmental issues
    Other matters Other matters that have significant effects on management (including antisocial behavior)
  • The Company will work to monitor investee companies effectively by continuously studying their situation and regularly reviewing the dialogue held with them. The dialogue held with investee companies and the status of engagement with them will be reported to the Responsible Investment Committee, which will review them. The Company will work to improve and fulfill its stewardship responsibilities.
  • The Company will work to obtain information that might detriment corporate value of investee companies at an early stage.

Principle 4:
Institutional investors should seek for common understanding and work to solve problems through constructive engagement with investee companies.

  • The Company will work to share its understanding with investee companies through constructive dialogue to enhance their corporate value and capital efficiency, and encourage them to achieve sustainable growth from a medium- to long-term perspective.
  • If the Company believes that a investee company’s corporate value is at risk of being damaged based on dialogue with them, it will ask to conduct further dialogue with that company and encourage it to take steps for improvement.
  • The Company believes that it can discover the true capabilities of companies that their management is not aware of through engagement based on in-depth knowledge of their philosophy, history, and culture as well as their environmental, social, and governance (ESG) issues. For this reason, we emphasize long-term relationships of trust with corporate executives. We take pride in being highly skilled professionals, and will work to enhance our knowledge and ingenuity.
  • We will support management’s positive approaches of investee companies as a leading institutional investor in Japan. We will seek to help expand investment returns for our clients by bringing out the real strength of companies through constructive dialogue, and at times by sending harsh signals to them on behalf of the market.
  • The Company will make investments based on publicly disclosed information. We will not obtain information on material facts that are not disclosed through dialogue with investee companies. If we obtain information on undisclosed material facts, we will manage it properly under internal regulations. We will seek to comply with all applicable laws and regulations.

Principle 5:
Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; it should be designed to contribute to the sustainable growth of investee companies

  • The Company believes that the appropriate exercise of voting rights will encourage companies to strengthen their governance and will help them improve their corporate value and achieve sustainable growth in the medium to long terms. In principle, the Company will exercise its voting rights of all shares that it holds. In exercising its voting rights, the Company will decide whether to vote for or against agenda items, taking into account the situation of investee companies and its dialogue with them.
  • The Company recognizes the importance of corporate governance and believes that it will fulfill its fiduciary duty by exercising its voting rights appropriately. Through the exercise of voting rights, the Company will strongly urge companies to conduct business that maximizes shareholder returns in the medium to long terms, and encourage them to conduct sound corporate activities under appropriate governance that take into account the environment and society.
  • The Company will establish Guidelines on the Exercise of Voting Rights that will describe its policy on decisions in exercising voting rights and will post the guidelines on the website.
  • The Company will post the results of exercising voting rights on its website by categories of agenda (such as items on the appropriation of retained earnings, items on the appointment of directors and auditors, etc.).

Principle 6:
Institutional investors in principle should report periodically on how they fulfill their stewardship responsibilities, including their voting responsibilities, to their clients and beneficiaries.

  • The Company will regularly report its activities to fulfill stewardship responsibilities, including the exercise of voting rights and dialogue with companies, on the website and by other means.
  • The Company will record its stewardship activities, including the exercise of voting rights and some of the examples of dialogue with companies. It will also seek to improve its reports to clients when necessary by incorporating their perspective.

Principle 7:
To contribute to the sustainable growth of investee companies, institutional investors should have an in-depth knowledge of the investee companies and their business environment, and have skills and resources needed to appropriately engage with the companies to make proper judgements in fulfilling their stewardship activities.

  • The Company has built a system, which includes the Responsible Investment Committee, for conducting dialogue with investee companies and making appropriate decisions in stewardship activities.
  • The Company will enhance its stewardship activities, including dialogue with investee companies, by reviewing them on a regular basis. The status of stewardship activities will be reported at the meetings of the Responsible Investment Committee. The Company will work to improve its stewardship activities in accordance with the intent and spirit of the Code so that they will become truly appropriate activities.
  • The Company will seek to exchange opinions as needed with external experts and other institutional investors.
  • The Company believes that the Code, which is for corporate behavior, and the Corporate Governance Code, which serves as a guideline to improve governance for investee companies, represents two sides of the same coin. The Company will require its analysts to have a deep understanding of the Corporate Governance Code, and will use it in conducting constructive, purposeful dialogue (engagement) with investee companies.

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