Japan’s Pension Fund Association hires Hermes EOS for stewardship services

The Pension Fund Association (PFA) of Japan has appointed Hermes EOS, the stewardship division of Hermes Investment Management, to develop and implement its stewardship activities.

With ¥12.7trn($112.1bn) AUM, PFA is one of the largest pension funds in Japan.

PFA is the first Japanese client for Hermes EOS, one of the world’s leading stewardship services.

Japan introduced its Stewardship Code – the Principles for Responsible Institutional Investors – in 2014. This was followed by the country’s first ever Corporate Governance Code, which came into force in June 2015.

Hermes EOS was involved in the development and promotion of the two codes and together with Hermes Investment Management was one of the first signatories to the Stewardship Code.

Hermes EOS recently appointed Masaru Arai as senior engagement consultant.

Based in Japan, he will focus on engagements in the country on behalf of Hermes EOS and its clients. Masaru is chair of the Japan Sustainable Investment Forum and previously worked at Daiwa Asset Management for 19 years, seven of which he spent as its Chief Investment Officer.

Prior to that, he worked at Daiwa Securities, specialising in global investment and finance.

Hermes EOS, one of the world’s leading stewardship services, currently advises on $228bn on behalf of its clients. In 2015, the Hermes EOS team engaged with 466 companies on 1,150 environmental, social and ethical, governance, strategy and risk issues.

It is part of Hermes Investment Management, the $33.9bn manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly.

Hans-Christoph Hirt, co-head of Hermes EOS, said: “We are honoured to have been selected by one of Japan’s largest pension funds to provide our stewardship services and look forward to working with Japanese companies on PFA’s behalf. This comes at a crucial time for stewardship and corporate governance in Japan and we are delighted to be a part of these important developments.”

Colin Melvin, Chair of Hermes EOS and Global Head of Stewardship at Hermes Investment Management, said: “The introduction of the Stewardship and Corporate Governance Codes has produced a step change in the relationship between Japanese companies and their shareholders.

“We have already seen a change in our dialogue with Japanese companies. PFA’s appointment of Hermes EOS presents an opportunity to advance the stewardship agenda in Japan and sets a strong example for its peers.”

Daisuke Hamaguchi, Chief Investment Officer at the Pension Fund Association, said: “We are pleased to have appointed Hermes EOS to aid us in the implementation of the requirements of the Stewardship and Corporate Governance Codes.

“At a high level, our focus is to improve the transparency and efficiency of Japan’s capital markets in order to attract more investors, not only from within Japan but also from overseas. It is about time the industry starts acting as good stewards.”

 

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