As a step towards implementing Fiduciary duty in the 21st century’s recommendations, the Japan roadmap sets out recommendations in five categories: stewardship and engagement, corporate governance, ESG disclosure and guidance for pension schemes, corporate disclosure and asset owner leadership.
Stewardship and engagement
- The FSA should provide enhanced oversight of the Stewardship Code. Japanese regulation should provide for mandatory disclosure of proxy voting records. Corporate plans should be encouraged to sign the Stewardship Code.
- The FSA should review the Corporate Governance Code on a triennial basis. It should seek improved disclosure of key ESG issues under the code (such as cross-shareholdings) and continue pressure to enhance corporate governance expectations.
ESG disclosure and guidance for pension schemes
- The Ministry of Health, Labour and Welfare (MHLW) should require pension schemes to disclose how they consider ESG issues in their investment processes and whether they are signatories to the Stewardship Code.
- The Ministry of Economy, Trade and Industry (METI) and the FSA should review the quality and comparability of the corporate disclosure of material ESG information.
- JPX should issue ESG guidance for listed companies.
Asset owner leadership
- GPIF, given its scale, size, and influence, should lead in establishing market norms on stewardship, engagement and corporate governance.
It is an opportune time to engage with Japanese stakeholders on ESG integration and fiduciary duty. The Government of Japan’s policy priorities – under the label Abenomics – include improving investor stewardship and corporate governance. GPIF has signed up to the Principles for Responsible Investment and Japan’s sustainable investment sector is currently growing faster than any other country or region.
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Fiduciary duty in the 21st century: Japan roadmap
Produced in collaboration with UNEP FI and Generation Foundation