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 (PRI), Principles for Financial Action for the 21st Century and the Japan Sustainable Investment Forum to solve to various environmental, social and governance (ESG) 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 investments and financing.
Study and Research on Sustainable Investments and Financing
United Nations Environment Programme Finance Initiatives – Principles for Sustainable Insurance (UNEP FI-PSI)
UN Principles for Responsible Investment (PRI)
Principles for Financial Action for the 21st Century
Japan Sustainable Investment Forum
Creating a Safe, Secure and Sustainable Future through Sustainable Investments
With Tokio Marine Asset Management and Tokio Marine & Nichido taking the lead, Tokio Marine Group has formulated sustainable investment policies and aims for the sustainable growth of investee companies and thus promotes such initiatives as holding constructive “purposeful dialogue” with investee companies and publicly announcing the exercise of voting rights and the results of the exercise of voting rights.
Asset Management Policies
The asset management policies of Tokio Marine & Nichido, Tokio Marine Asset Management, and Tokio Marine Capital are as follows.
Tokio Marine & Nichido
- Asset Management Policy from the Tokio Marine & Nichido Disclosure Report 2018(excerpt)
- Besides focusing on safety, profitability and liquidity in preparation for the payment of insurance claims, Tokio Marine & Nichido also undertakes asset management that contributes to society and public welfare. For this reason, with a main focus on Asset Liability Management (ALM), Tokio Marine & Nichido aims at securing long-term, stable income and carrying out efficient liquidity management under appropriate risk control giving due consideration to the characteristics of insurance products.
Tokio Marine Asset Management
One of Tokio Marine Asset Management’s management principles is to contribute to the development of an enriched and comfortable social life and economic growth of society. To contribute to the development of a comfortable social life and economic growth of society, Tokio Marine Asset Management, in conformance with its fiduciary responsibility, executes responsible investments that focus not only on financial elements of investee companies but that also appropriately consider non-financial elements such as environmental, social and governance (ESG) issues.At the same time, Tokio Marine Asset Management actively calls on investee companies to promote medium-to-long-term growth of these investee companies with the aim of improving medium-to-long-term returns for customers.
Tokio Marine Asset Management incorporates ESG integration, which integratedly ascertains and systematically evaluates financial and non-financial elements, into its investment decision process. This process is commonly applied to all asset classes based on the recognition that ESG integration enables even higher-precision company analysis and investment decisions. Tokio Marine Asset Management regards ESG as an evaluation category that forms the foundation that supports medium-to-long-term returns for customers and has positioned governance as the key focal point in company evaluations while also appropriately considering environmental and social and other non-financial elements.
Tokio Marine Capital
Tokio Marine Capital positions “trust” as the core of its business activities. Tokio Marine Capital recognizes that fulfilling its corporate responsibilities for promoting the permanent development of investee companies and thus realizing a sustainable society will contribute to maintaining and further developing this “trust.”
Tokio Marine Capital handles fiduciary responsibilities on behalf of investors as a private equity fund management firm and will fulfil this social responsibility through its investment activities while promoting investments that earn the trust of investors.
Asset Management Structure
The asset management structures of Tokio Marine & Nichido, Tokio Marine Asset Management and Tokio Marine Capital are as follows.
Tokio Marine & Nichido
At Tokio Marine & Nichido, ESG investment planning is carried out in the Financial Planning Department and sustainable investment and financing initiatives are implemented in collaboration with the Corporate Asset Management Department/Investment Management Department, which execute transactions.
Tokio Marine Asset Management
Tokio Marine Asset Management has strengthened governance of the process for executing voting rights and the monitoring of conflicts of interest by establishing the Responsible Investment Committee, with the responsible director serving as chairperson, and positioning this as the companywide organization that is required to report directly to the Board of Directors (including two independent outside directors). Tokio Marine Asset Management has adopted a structure under which the Responsible Investment Committee composed of directors and asset manager supervisors with abundant experience in asset management discuss and decide overall stewardship activities that encompass policies for the execution of voting rights and promote responsible investing in companywide asset management. The Responsible Investment Group, Investment Research Group, Japan Equities Management Group and Engagement Operation Group all collaborate in constructive “purposeful dialogue” with investee companies and in individual decisions on the execution of voting rights.
Tokio Marine Capital
Tokio Marine Capital has established the ESG Committee and carries out investment activities based on the ESG policies prescribed by the company.
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.
- 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 Japan’s Stewardship Code and also announced it would adopt the Code.
Disclosure of Execution of Voting Rights and the Results of Execution of Voting Rights
Based on the purport of the Principles for Responsible Institutional Investors (Japan’s Stewardship Code), Tokio Marine Asset Management and Tokio Marine & Nichido have clear policies on publicly announcing the execution of voting rights and the results of the execution of voting rights and disclose details of their stewardship activities that include the results of the execution of voting rights.
Tokio Marine Asset Management
Tokio Marine & Nichido
Overview of stewardship activities
Value Creation through Sustainable Investments
Tokio Marine Group contributes to the creation of a safe, secure and sustainable future together with its stakeholders by developing and providing ESG investment products.
Provision of the Tokio Marine Low-Carbon Japanese Equity Fund
Promoting initiatives toward realizing a low-carbon society is an urgent and important issue with the adoption of the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement based on the goals set by the United Nations Framework Convention on Climate Change. Accordingly, as an initiative for contributing to the attainment of these goals, in November 2017 Tokio Marine Asset Management established the Tokio Marine Low-Carbon Japanese Equity Fund comprised of equities of Japanese companies actively working to reduce greenhouse gases. By launching a fund with an investment universe consisting of Japanese companies disclosing their greenhouse gas emissions, we will provide support on the financial side for efforts by Japanese companies to realize low-carbon operations.
Specifically, this fund was established based on the concept of investment targets aimed at securing investment returns that track the performance of the TOPIX index and constructing a Japanese equity portfolio with half the level of carbon intensity* relative to that of the benchmark TOPIX index. This will enable investors to not only achieve broad Japanese equity market performance but to also contribute to supporting a reduction of greenhouse gases and the creation of a low-carbon society.
As part of efforts of Tokio Marine Group, Tokio Marine & Nichido decided to invest in this fund at the time of establishment, as the Group aims to promote initiatives from the financial side that support greenhouse gas reductions by Japanese companies.
Carbon intensity (CO2 emission basic units) here refers to CO2 emissions per sales of each company. The total volume of company CO2 emissions varies significantly by business type and business scale. Therefore, we use this index and compare CO2 emission levels in accordance with the actual state of business activities.
Provision of the Premium World
In December 2007, Tokio Marine Asset Management launched the 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.