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Global Sustainable Investement Alliance

Japan During the past two years, the sustainable investment market in Japan has suffered the impact of the long-term stagnation of Japanese listed equities, as evidenced by the contraction of the market for publicly offered sustainable investment trusts. The total net assets of these trusts peaked in October 2007 at US$ 10.8 billion, but declined to US$ 4.2 billion, off 74 percent from its peak as of September 2011. However, there have still been developments that warrant attention. Among these developments are: the appearances of funds that operate based on green economy-related themes or invest in green bonds, funds that invest in environment-related companies in rapidly growing regions such as China and other parts of Asia, funds that base investment evaluations on a company’s biodiversity initiatives, and funds that finance microfinance institutions. These funds all represent efforts to preemptively respond to future trends. Another positive development is the rapid expansion of the market for bonds based on themes such as “social contribution,” poverty alleviation, and climate change (impact investment bonds). Over the period from 2008 to the end of 2011, total sales of these bonds reached an impressive US$ 7.0 billion. Japan’s sustainable investment industry is unique because most of its assets under management are impact investing (about US$ 7 billion) and thematic. Following the Great East Japan Earthquake on March 11, 2011, there was a surge in community investment and donation activities to support economic restoration. This demonstrates the progress in individual investors considering how their money is used. These developments are important factors to consider when predicting future trends in the sustainable investment market in Japan. The difference between the sustainable investment market of Japan and those of Europe, Australia, and North America has been attributed to the lack of influence of sustainable investment principles on the markets for public and corporate pension plans. However, in the last two years there have been signs of change. The Guidelines on Responsible Investment of Workers’ Capital released by RENGO, the Japanese Trade Union Confederation, in 2010, have begun to influence the investment community. Since 2011, RENGO has disseminated the Guidelines to its regional subsidiary organizations and encouraged them to adopt similar guidelines for their own pensions. Just as the OECD has encouraged the GPIF (Government Pension Investment Fund), the world’s largest public pension fund, to become active and outspoken in sustainable investment, the RENGO guidelines are an important development in the Japanese pension fund market. In terms of trends in the activism of shareholders, there were no significant developments in relation to shareholder proposals based on ESG factors. One instance that drew a great deal of attention was the general meeting of shareholders of the Tokyo Electric Power Company (TEPCO), the owner of the Fukushima Daiichi Nuclear Power Plant that suffered major damage from the earthquake and subsequent tsunami in March 2011. The company has apologized to the people of Fukushima and broader society. While the meeting agenda proposed by the company was approved, the meeting stirred debate about the fundamental responsibilities Global Sustainable Investment Review 2012 30


Global Sustainable Investement Alliance
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