Asset Management One


The Exercise of Voting Rights

1. Basic policies and approaches to exercise of voting rights

Asset Management One (hereafter as “AM-One”) has implemented the corporate message "creating a sustainable future through the power of investment" and made a clear commitment to being an asset management company that creates value to our clients and contribute to society through incorporating sustainability into our investment process and operations. We established a materiality map to capture key environmental and social issues facing global investors and the society, using two axes of "sustainable materiality" (which indicates the level civil society’s and investors’ interest) and "financial materiality" (which represents economic impact). We have identified nine core materiality themes (climate change, biodiversity, business and human rights, water resource, circular economy, diversity and inclusion, sustainable food system, air, water and soil pollution, health and well-being). Furthermore, considering the interdependencies between these core material issues, we also established three focus areas: climate change, biodiversity and environmental destruction, human rights and health & well-being. We therefore aim to incorporate the identified material issues, centred around the three focus areas, in our engagement activities and in exercising voting rights.

Through our stewardship activities, we actively engage with investee companies to encourage optimal allocation of capital and resources, with an aim to achieve sustainable value creation while providing solutions to societal issues. We regard exercise of voting rights on behalf of our clients as an essential part of our stewardship activities. In exercising our voting rights, we strive to ensure that management and boards are held accountable for achieving the long-term value creation of the company and for acting responsibly towards a sustainable development of society as well.

2. Process and operations of exercising voting rights

In exercising our voting rights, we have established detailed voting guidelines and criteria in accordance with the basic policies outlined above. We also review this voting guidelines and criteria as needed, to ensure effective and intelligent voting activities that is aligning with the long-term interests of shareholders and also reflecting changes of the economic and social environment.

A. System of exercising voting rights

AM-One is committed to conduct voting activities in a fair and intelligent manner, following the basic policies and detailed guidelines & criteria set for each voting items. We pay a particular attention to the occurrence of legal & regulatory violations, scandals and other contentious or high-profile cases where a company has caused substantial value destruction, as well as taking into account our engagement progress when exercising voting rights. In such occasions, a thorough discussion will be carried out at the “Exercise of Voting Rights Sub-committee” before we make final voting decisions. Additionally, in managing conflicts of interest that relate to AM-One’s parent or group companies etc., all voting decisions are further examined and made at the Stewardship Committee, following an advice from the Proxy Voting Advisory Council of which the majority of members are independent outside directors. AM-One’s Stewardship Committee, chaired by the CIO of Asset Management One Co., Ltd in Tokyo and of which the Head of Risk Management Division is also a member, was established to oversee the implementation of stewardship activities (including voting and engagement activities) and the management of conflicts of interest.

In exercising our voting activities, particularly in managing the potential conflicts of interest that relate to our parent or group companies etc., AM-One have adopted robust policies and internal control measures for proxy voting matters in order to make fair judgements and protect client interests. Specifically, the Stewardship Committee mentioned above oversees the overall stewardship activities including exercise of voting rights and management of conflicts of interest. Thorough discussions are conducted within the investment division, independently from the business planning and sales & marketing divisions. Meanwhile, the Audit and Supervisory Committee (which consists of a majority of independent outside directors) members also attend the Stewardship Committee meetings when required, to ensure that robust checks and balances are in place. With regards to the most important items on proxy agendas that may involve potential or perceived conflicts within the parent or group companies, AM-One also utilises independent advice from a third-party proxy provider, based on our general voting policies and guidelines. Further to this, after seeking independent opinions of the Proxy Voting Advisory Council (which is comprised of a majority of independent outside directors), the Stewardship Committee will further discuss thoroughly before any voting decisions are made on such occasions. As part of the monitoring process, the results of voting decisions and actions are also being reported to the Board of the Asset Management One Co., and to the Board’s Audit and Supervisory Committee.

B. Relationship with engagement and sustainable investment policies

In exercising voting rights, we put an emphasis on the importance of taking voting actions based on constructive engagement dialogues with investee companies, than merely ticking the boxes on general guidelines. When we assess the related engagement progress to make voting decisions on critical resolutions, we will undertake thorough discussions at the Stewardship Committee or at the Exercise of Voting Rights Sub-committee before the final conclusion is made. With regards to the most significant issues that are material to each company’s performance and shareholder value creation in the medium and long term, on occasions where a company’s measures and approach to ESG issues is regarded as inadequate to meet our expectations, we will actively hold engagement dialogues with the companies to seek remedial actions and improvement.

In occasions where a company has failed to respond or take sufficient actions despite our engagement dialogues for a considerable period of time, resulting in a significant destruction (or potential destruction) of shareholder value, or in light of AM-One’s Sustainable Investment Policy, a company has caused highly adverse effects on society with an increasing risk of corporate value destruction over the medium to long term, we will oppose election of directors of the board. This forms part of AM-One’s escalated engagement steps in our stewardship activities aiming to send a stronger message and further seek accelerated efforts by the company.

3. Policy and Guidelines on Exercise of Voting Rights

Asset Management One has established detailed voting guidelines and criteria for both Japanese and non-Japanese equities, which are published and available below.

(Japanese Equities)

(Overseas Equities)

Asset Management One also exercises its voting rights associated with REIT.

4. Results of Exercise of Voting Rights at Shareholder Meetings

We disclose a summary of our voting results for non-Japanese equities in our annual Sustainability Report. For Japanese equities, detailed voting results for individual meeting and each voting item are published on an ongoing basis and are made available on the website (in Japanese).