Tokyo Japan Stock Exchange Credit: iStock/electravk
Japanese asset managers are intensifying the level of dialogue they have with domestic companies in order to help firms place greater emphasis on improving shareholder returns, Asset Management One (AMO) says.
The asset manager – one of Japan's largest asset managers with $489bn (£363bn) in assets under management – said it has increased its active stewardship programme by directly engaging with over 1,000 of its investee companies over the last year. It said this included active engagement with 672 Japanese companies making up 80% of the TOPIX index.
It said a corporate governance campaign being run by the Tokyo Stock Exchange was also putting greater pressure on Japanese companies to deploy capital more effectively in a bid to increase profitability and deliver stronger returns for shareholders.
And it added that active engagement activities – for example where fund managers meet company boards directly to challenge underperforming management– were playing an increasingly important role in Japan's push for improved corporate performance and competitiveness.
In a statement, AMO said: "Stronger corporate governance is delivering better performance at Japanese companies. As an asset manager we have an important responsibility in helping that process.
"Constructive, open and active dialogue with investee companies is an important part of delivering on that responsibility.
AMO's sustainability report said its active management included 2,167 engagements with Japanese companies – engagements which included efforts to challenge boards and improve short and long-term value creation.
It said some 1,935 of these engagements with Japanese companies took place based on AMO's role as a shareholder and 232 of these engagements took place based on AMO's role as a bond investor.
AMO said it had laid out a clear roadmap to 2030 – setting out expectations for all its portfolio companies. These include the expectations that firms will appoint at least 30% female directors; they will align board remuneration with both financial and non-financial performance; achieve returns above cost of capital; and improve disclosure on capital allocation/cost of capital and climate risks within the next two years.
