the-japan– Four major domestic life insurance companies announced that they will strengthen their commitments to Environmental, Social and Governance (ESG) Investment in the second half of fiscal 2020, focusing on how the companies in which they invest address the environment and other issues.
Taking into consideration the moves of leading institutional investors at the companies, efforts by Japan corporations to address ESG could accelerate.
From 2021, Nippon Life Insurance Co. will incorporate the ESG concept in dealing with total assets of about ¥70 trillion. The company invests about ¥3 trillion to ¥5 trillion in new assets every year, but will proceed with asset replacement based on ESG.
Dai-ichi Life Insurance Co., Ltd. will adopt the ESG concept by fiscal 2023 for its total assets of ¥36 trillion. From this fiscal year, analysts specializing in ESG have been added to the analysis of investments. Meiji Yasuda Life Insurance Co. will make use of ESG evaluations of investment targets carried out by external institutions, while Sumitomo Life Insurance Co. will utilize data on greenhouse gas emissions and other factors to analyze its investment assets.
Europe and the United States have taken the lead in ESG efforts.
BlackRock Inc., the world’s largest asset management company, revealed in January that it would pursue a policy of voting against the appointment of executives and directors of companies that fail to disclose information related to ESG. In addition, BlackRock will stop investing in companies that derive more than 25% of revenue from coal by the end of 2020.
In response to such moves by investors, companies are changing their current stance of aiming to maximize shareholder profits.
French food manufacture Danone has chosen a new corporate model allowed by a revision in French law in 2019 as a “company that fulfills its mission.” The articles of incorporation set objectives such as protecting the earth’s resources and allows for a third party to monitor whether management is in line with the targets.
In many cases, the major life insurers are large shareholders in Japanese companies. As life insurance companies increase their ESG investments, Japanese companies are likely to be forced to strengthen their efforts aimed at reducing greenhouse gas emissions and making contributions to society.