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Jun 09, 2014

Japan prepares to publish list of adherents to stewardship code

More than 100 asset managers expected to join initial wave of pledges to shareholder guidelines

Japanese stock markets are likely to receive a boost in coming weeks as regulators publish a list of asset managers – expected to number more than 100 – that have signed up to its new stewardship code with the aim of boosting transparency and improving corporate governance.

The first list of adherents to the code, which was modeled on the UK Stewardship Code guidelines introduced in 2010 following the global financial crisis, is to be published in the first half of June, and the Financial Times reports more than 100 asset managers will be on the list. The world’s largest pension fund, Japan’s Government Pension Investment Fund, with $1.3 tn in assets, has announced it has signed up, and others, including JPMorgan, have said they will be on the list as well, according to the FT, which cites JPMorgan fund manager Yasuko Sato.

The code, drafted by a panel of experts assembled by Japanese Prime Minister Shinzo Abe, calls on institutional investors to draft and disclose a corporate policy on how they intend to fulfill their stewardship responsibilities, create a clear policy on managing conflicts of interest, monitor the companies they’ve invested in for stewardship, and seek constructive engagement with companies to solve problems.

Signatories also pledge to institute and publish a clear policy on voting that helps work toward sustainable growth of the companies they’ve invested in, periodically report on how they are carrying out their stewardship duties, and acquire in-depth knowledge of the companies they invest in, along with their business environments. Japan’s Financial Services Agency (FSA), which is overseeing the code, says it will update the list of adherents quarterly, starting with the initial round this month.

The UN Principles for Responsible Investment (PRI) welcomes the creation of the Japanese code, and calls on the FSA to extend it to debt markets and other asset classes. ‘We welcome the Japanese stewardship code and the resultant increase in awareness and benefits of active stewardship to investors in Japanese listed shares,’ says Helene Winch, PRI’s director of policy and research, in an official statement. ‘We feel the code is in line with the practices we encourage in all PRI signatories.’