Responsible investment, known as ESG investment, requires a long-term view and is based on companies’ efforts on environmental, social and corporate governance, as well as financial information. ESG information is called non-financial information, but can be looked at as future financial information since it affects a corporation’s outlook.
Institutional investors believe that they can expect risk reduction and revenue growth in the medium and long-term from firms actively engaging in ESG efforts. Asset owners, including pension funds and insurance firms, are investors with a long-term view and their investment management would be operated based on their investment principles, either in-house or outsourced to trust banks and asset management companies.
Half of the Government Pension Investment Fund’s assets are equities, which are comprised of an equal proportion of domestic and overseas stocks. Similarly, overseas pension funds often buy stock in firms outside of their countries as investment destinations. Foreign investors want to evaluate and see Japanese companies in the same way as investment targets overseas. In this sense, further efforts are essential for Japanese corporations to engage in ESG investment, while working to disclose and distribute information in English.
I sincerely hope the launch of the ESG Consortium will further help Japanese companies and investors promote their involvement with ESG-related activities and their delivery of information in English, as well as strengthen their continuity.