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  5. METI Releases the Report on ESG Dialogue between Active Fund Managers and Companies

METI Releases the Report on ESG Dialogue between Active Fund Managers and Companies

To facilitate integrated corporate reporting and ESG investment taking advantage of the Declaration of Active Fund Managers

June 25, 2018

The Ministry of Economy, Trade and Industry (METI) established the Forum for Integrated Corporate Disclosure and ESG Dialogue (hereinafter referred to as the “forum”) to provide an opportunity for companies and investors to hold dialogues in line with the Guidance for Collaborative Value Creation (hereinafter referred to as the “guidance”)*1 .

In response to the proposal submitted by the members of the forum, The Active Fund Manager Subcommittee (hereinafter referred to as the “subcommittee”) was established in January 2018, consisting of personnel responsible for active fund management and decision-making on investment from a variety of investment firms.

The subcommittee compiled discussions summary into a report and on June 25, 2018, METI releases the report.

*1 Note: The Guidance for Collaborative Value Creation is an abbreviation of the “Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation- ESG integration, Non-financial Information disclosure and Intangible Assets into Investment,” released on May 29, 2017.

1. Challenges

In establishing the subcommittee, members of the forum presented an opinion, concerning the problem facing active fund managers*2 who face ever-increasing worldwide pressure due to the rise in popularity of passive fund management, and a tendency towards short-termism and a lack of sufficient discussions among fund managers. With this understanding, the members pointed out that now is the time for active fund managers, who have few opportunities to discuss issues concerning ESG investment and dialogue with companies, to gather and discuss ways to facilitate constructive dialogues with companies, and to make the guidance the shared language to understand and use amongst themselves.


*2 Note: In the subcommittee, an "Active fund manager" was defined as an "Investor who invests stocks by maximizing return on investment, focusing on the characteristics of the company, especially focusing on the difference from other companies".

2. Points of discussion

Among others, the subcommittee discussed the following points.

 

3. Output from the subcommittee

Based on the discussion in the subcommittee, the report shows the following:.

In light of these discussions, the subcommittee has compiled “the Declaration of Active Fund Managers” that welcomes information disclosure based on the guidance and incorporates it into the investment decision process.
In this report, the expectation that the circle of corporate investors and fund management organizations which agrees with the declaration will expand in the future is shown.

4. Report released by the subcommittee

5. References

Reference materials

For details of the Guidance for Collaborative Value Creation, visit the following website (in Japanese).

Related News Release

Division in Charge

Industrial Finance Division, Economic and Industrial Policy Bureau