Creating a Society Where People Can Live with Security through Sustainable Investments and Financing
Tokio Marine Group gives consideration to the environment, including climate change, as well as to society and governance in its investment and financing operations. We join study and research activities such as UNEP FI Principles for Sustainable Insurance (UNEP FI-PSI), UN Principles for Responsible Investment (UN PRI), Principles for Financial Action for the 21st Century and the Japan Sustainable Investment Forum to solve to various environmental, social and governance issues. We leverage the findings of these activities as one means to execute sustainable investment and financing. Tokio Marine & Nichido, Tokio Marine Asset Management and Tokio Marine Capital lead efforts toward sustainable investment and financing.
Study and Research on Sustainable Investment and Financing
United Nations Environment Programme Finance Initiative – Principles for Sustainable Insurance (UNEP FI-PSI)
UN Principles for Responsible Investment (UN PRI)
Principles for Financial Action for the 21st Century
Japan Sustainable Investment Forum
Efforts for Sustainable Investment and Financing
At Tokio Marine Group, Tokio Marine Asset Management and Tokio Marine & Nichido are taking the leading role in promoting sustainable investment and financing.
Principles for Responsible Institutional Investors (Japan’s Stewardship Code)
Based on the Japanese government’s growth strategy, the “Japan Revitalization Strategy” (Cabinet decision in June 2013), the Council of Experts established within the Financial Services Agency announced in February 2014 the “Principles for Responsible Institutional Investors ≪Japan’s Stewardship Code≫-To promote sustainable growth of companies through investment and dialogue.”
“Stewardship Responsibility” means bearing responsibility for expanding medium- and long-term investment returns for “customers and beneficiaries” (including end beneficiaries)” through constructive “purposeful dialogue” (engagement) by institutional investors based on a deep understanding of investee companies and their business environments to raise the corporate value of these companies and promote their sustainable growth.
The Stewardship Code aims to promote medium- and long-term growth of companies through “purposeful dialogue” (engagement) by institutional investors with their investee companies against a background of relatively low return on equity (ROE) levels of Japanese companies and a re-evaluation of short-termism spurred by the collapse of Lehman Brothers.
- Reference: Japan’s Stewardship Code
- Principle 3. Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities with an orientation towards the sustainable growth of the companies.
- Guidance 3-3. When investors monitor investee companies, a variety of factors, including non-financial ones, may be considered as relevant. Factors may include, for example, governance, strategy, performance, capital structure and risk management (including how the companies address risks arising from social and environmental matters) of the investee companies. Relevance of a factor may depend on each investor’s investment policy and may differ according to specific investee companies. Institutional investors need to use their own judgment in choosing which factors to focus on in light of their stewardship responsibilities. (Excerpt)
In May 2014, Tokio Marine Asset Management announced it would adopt the Principles for Responsible Institutional Investors (Japan’s Stewardship Code) to its active funds using qualitative judgments for investing in Japanese equities. In June 2017, Tokio Marine Asset Management renewed its adoption of the principles based on a revision to the content of the Code.
In May 2014, Tokio Marine & Nichido agreed with the intent of the Japan’s Stewardship Code and also announced it would adopt the Code.
Value Creation through Sustainable Investment
In December 2007, Tokio Marine Asset Management launched Premium World, an environmental investment trust fund that invests in Japanese and other companies involved in activities under the following themes. These themes are related to environmental or social issues arising from the growing economies and increasing population in the world, which need to be sustained or improved.
- Environmental (e.g., global warming and clean energy)
- Water and foodstuffs (e.g., stable supply of water and food and enhanced productivity)
- Medical services and healthcare (e.g., medical techniques and promotion of better health)
For institutional investors, the company launched a socially responsible investment (SRI) fund targeting Japanese companies in January 2006. Leveraging the comprehensive risk management know-how of Tokio Marine Group, this fund aims to obtain long-term and stable added value based on the Group’s unique environmental, social, governance and risk management (ESGR) analysis and evaluation. In the future, Tokio Marine Asset Management intends to fulfill its social responsibilities as an institutional investor and improve investment performance over the long term while giving due consideration to ESG issues in its asset management operations.
Providing a Renewable Energy Fund
In 2012, Tokio Marine Asset Management launched the TM Nippon Solar Energy Fund for institutional investors, including corporate pension funds, to invest in solar power plants as an investment product targeting Japan’s national infrastructure. Meanwhile, in 2017, Tokio Marine Asset Management launched the TM Nippon Renewable Energy Fund that invests in various types of renewable energy that includes wind power, biomass, hydropower and geothermal power in addition to solar power.
These funds are investment products that diversify investments among Japan’s renewable energy generation businesses and provide investment income to investors from sales of electric power.
Japan initiated a feed-in tariff (FIT) system for reusable energy sources in July 2012 with a view to increasing the use of solar, wind and other reusable energy. The system requires all users of electricity, including businesses and households, to pay a surcharge on electricity generated from renewable sources. The TM Nippon Solar Energy Fund, which is based on this FIT system, is designed to return investment income to citizens of Japan through corporate pension funds, the major investor of the fund.
Tokio Marine Asset Management believes that this fund will contribute to the diversification of energy sources. By offering investment opportunities of social significance through this fund, the company strives to fulfill its social roles and responsibilities as an asset management company.
Providing an Engagement-Focused Fund to Invest in Japanese Companies
With the launch of Japan’s Stewardship Code in February 2014, the importance of engagement between institutional investors and companies is further increasing its significance from a viewpoint of responsible investment.
Taking an early start, Tokio Marine Asset Management (TMAM), jointly with GO Investment Partners (GO)*, launched the TMAM-GO Japan Engagement Fund in March 2012. This engagement-focused fund primarily invests in small- to medium-sized Japanese companies having strong core businesses. By promoting engagement with investee companies based on a full understanding of the corporate culture in Japan, the company intends to deepen mutual understanding between investors and Japanese companies and provide increased corporate value over the long term.
GO Investment Partners (GO)
An independent asset management partnership based in London, with its founder being the pioneer in the field of responsible stock ownership. The organization is characterized by its investment strategy that focuses on enhancement of long-term corporate value through amicable engagement with investee companies listed on European stock markets.
Establishing Japan’s First Fund to Invest in Microfinance-Related Assets
We provide microfinance services mainly to low-income earners in emerging and developing countries.