April 12, 2019

Junichi Sayato, Representative Director Executive Chairman and Co-CEO
Hideo Abe, Representative Director, President and Co-CEO
Nikko Asset Management Co., Ltd.

Given that fiduciary principles are the fundamental principles of the asset management business, our conduct as a firm is based on the philosophy that the interests of our customers are of paramount importance. As a responsible institutional investor, we also place Environmental, Social and Governance (ESG) assessments and stewardship activities at the heart of our investment process. At the same time, in order to fulfill our fiduciary duty, we have committed ourselves to upholding Japan’s Stewardship Code and engage in stewardship activities that comply with the code. We constantly strive to contribute to the sustainable growth of investee companies—thereby maximizing the medium- and long-term investment returns of our customers—by continually engaging with investee companies and exercising our voting rights fairly. The attached report provides details of our efforts to meet these aims with a focus on the previous fiscal year.

Independence of Board of Directors

We appointed Mr. Yoichiro Iwama, a former Chairman of the Japan Investment Advisers Association, as an outside director and Chairman of the Board of Directors in May 2018, and Ms. Mari Yamauchi, a visiting professor at Doshisha University, as an outside director in July 2018. With these appointments, half (five) of the ten members of our Board of Directors, which consists of three full-time directors and seven part-time directors, are now outside directors, ensuring that our top-level decisions are taken by an independent Board. Having truly independent outside directors has given us high levels of independence and transparency in our business management and operations as an asset manager.

ESG Global Steering Committee

Alongside our fiduciary principles, which we consider to be the paramount elements of our philosophy and activities as a firm, we have formulated ESG principles as the approach we need to follow in order to put our corporate philosophy into practice. We established a code of conduct for ESG principles and launched our ESG Global Steering Committee in November 2016. Consisting of a large number of observers and members drawn primarily from leaders in our investment management locations around the world, the ESG Global Steering committee meets quarterly to discuss and look into matters including ESG investment initiatives, ways of putting them into practice and new approaches to them, and works to determine and realize such initiatives. The committee also reports the details of its activities to the Board of Directors.

United Nations’ Principles for Responsible Investment (PRI)

Having become the first in the asset management industry to sign the Principles for Responsible Investment (PRI) in 2007, we received the top score of A+ (out of six score bands) in a variety of items assessed in the annual PRI assessment for 2018. In addition to “Responsible Investment Policy”, these included “Listed Equity – Incorporation”, “Listed Equity – Active Ownership”, “Fixed Income – Government Bonds”, “Fixed Income – Corporate Bonds (Financial Industry)” and “Fixed Income – Corporate Bonds (Non-financial Industry)”.

Stewardship Activities Aimed at Creating Shared Value (CSV)

We formulate unique Creating Shared Value (CSV) scores based on comprehensive assessments of companies’ financial positions, market competitiveness and ESG approaches. Our research analysts make the assessments by engaging with companies, and the information is organized in a database for use in our stock selection process. Having already created a database incorporating the results of engagement with 600 companies listed on the Tokyo Stock Exchange and covering the more than five years since August 2013.

Stewardship and Voting Rights Policy Oversight Committee

One of the most distinctive aspects of the framework underpinning our stewardship activities is our Stewardship and Voting Rights Policy Oversight Committee, the majority of whose members are from outside the firm. We established the committee in June 2016 in order to enhance the transparency of our stewardship activities and strengthen our governance, becoming the first firm in our industry to do so. The Stewardship and Voting Rights Policy Oversight Committee monitors and oversees whether activities including engagement by our research analysts and the exercise of voting rights by our internal committees is in line with fiduciary and ESG principles and truly fulfills the interests of customers.


Our report provides details of the organizational strengthening, structural enhancements and stewardship activities we have carried out in the past year in line with each of the principles in Japan’s Stewardship Code, as shown below.

Item Self-assessment
Opening remarks Principle 1 response assessment
Management and supervisory framework for stewardship activities
Conflict of interest management Principle 2 response assessment
Engagement activities and others Principles 3 and 4 response assessment
Proxy voting Principle 5 response assessment
Nikko AM’s corporate governance Principles 6 and 7 response assessment
Past and future initiatives
Message from Stewardship and Voting Rights Policy Oversight Committee

Long-standing, Continued Initiatives

Stewardship activities are long-term initiatives intended to help investee companies grow. We regard them as never-ending, continuous efforts in a similar way to our initiatives to address fiduciary principles and ESG principles. We intend to maintain our focus on our stewardship activities, thereby doing our utmost to help our customers with their medium- and long-term asset building.