Our Basic Policy and Initiatives for Sustainable Investment
Basic Policy on Sustainable Investment
Sumitomo Mitsui DS Asset Management (SMDAM or “we”) analyzes and assesses the risk response capabilities and sustainability of issuers of stocks and bonds, REIT investment corporations (Notes 1 and 2), and private assets, etc. (Note 3) (hereinafter "investee companies, etc.") by utilizing non-financial information including environmental, social, and governance (ESG). We aim to increase the value of, or mitigate damage to, investee companies, etc. over the medium to long term, and will proactively take the following measures.
- Taking account of the investment philosophy and investment horizon of each investment product, we incorporate analysis and evaluation of ESG and other non-financial information into the investment process, and consider them in making investment decisions. Principal adverse impacts of corporate activities on the environment and society are similarly subject to analysis and evaluation.
- We aim to contribute to enhance the value of investee companies through engagement by communicating the investor’s point of view, sharing sustainability / ESG issues to be resolved for the medium- to long-term value enhancement, and encouraging them to take more appropriate actions.
- We exercise voting rights in consideration of sustainability / ESG theme related engagement.
- We strive to improve the overall effectiveness of Sustainable investments by signing or participating in sustainability / ESG-related initiatives such as the PRI, and will work to collaborate with other institutional investors as necessary.
- We collect information on sustainable investments, including domestic/overseas laws/regulations, trends in ESG product needs of customers and beneficiaries, and the activities of other asset managers, in order to promote effective ESG integration. We also strive to disclose appropriate information to protect the rights of customers and beneficiaries.
In March 2010, we became a signatory to the PRI. As a responsible institutional investor, we will provide high quality investment returns to our clients and beneficiaries through the multifaceted utilization of ESG and other non-financial information. We will also contribute to the realization of a sustainable society by addressing environmental issues such as climate change and natural capital, social issues such as human rights in the supply chain and human capital, and governance-related issues such as the effectiveness of corporate governance, corporate ethics, and organizational culture.
Note 1: “REIT” means Real Estate Investment Trust, and “J-REIT” means a Japanese REIT.
Note 2: “REIT investment corporation” means an investment corporation holding REIT assets or an asset management firm to which an investment corporation has entrusted the management of REIT assets.
Note 3: “Private assets, etc.” refers to investments in infrastructure, real estate, private equity, private debt, etc., and includes business entities, special purpose companies (SPCs), and funds, etc. that hold or operate these assets.
Our Materiality
With our corporate philosophy "Towards The Best Asset Management Firm for Your Better Quality of Life.", we provide high-quality asset management services to our clients and as a responsible institutional investor that plays a role in the investment chain we are actively engaged in stewardship activities.
In order to accelerate such efforts and further contribute to the realization of a sustainable society, we have identified a set of materiality as key management issues fundamental to sustainability. Taking into account the characteristics of the asset management business, our materiality categories consist of "Materiality for Investment Management" and "Materiality for Business Operation". The material issues are identified across three areas: "Environment issues: Safety of Life", "Social issues: Improving Quality of Life" and "Governance."
Initiatives for Sustainable Investment
We initiated ESG evaluation in 2009. Since then, we have continuously enhanced our capabilities of ESG research by various means including set-up of dedicated section in 2016.
Policy development and ongoing monitoring with regard to sustainable investment activities are deliberated at Stewardship / ESG Meeting, Management Meeting as well as Board of Directors’ Meeting and Responsible Investment Committee, internal body of the Board Meeting.
The Stewardship / ESG Meeting, composed of working-level personnel, supports the steady implementation of ESG integration and stewardship activities based on a firm-wide policy, and conducts monitoring aimed at their continuous reinforcement.
Management Meeting is attended by the CEO and executive officers and its role is to discuss the Company’s basic policy on sustainable investments taking into account outcomes of Sustainability Promotion subcommittee and take appropriate measures whenever their monitoring finds it necessary.
The Responsible Investment Committee is organized under the board of directors and it consists of outside directors and others who meet independence standards. The role of the committee is to monitor fulfillment of fiduciary duties including initiatives for responsible investment as well as the status of appropriate understanding and management of potential conflicts of interest, and to make recommendations to the board for further improvement.
＜Organization chart in charge of Sustainable investment＞
