Driving Japanese investment in ESG

Asset Management One is a recurrent winner of Asia Asset Management’s (AAM) Best of the Best Awards, as well as a pioneer in Japan and Asia Pacific in impact investment and ESG engagement. In December 2020, Asset Management One became Japan’s only founding signatory of the Net Zero Asset Managers or NZAM initiative, and has repeatedly received awards in related categories. This year, Asset Management One’s achievement was recognised with AAM’s award for Best Application of ESG.

As Nobutaka Aoki, chief investment officer at Asset Management One explains, environmental and social issues have a significant impact on capital markets long term, and environmental, social and governance issues should not only be considered as a risk factor, but also as a solid foundation of the company’s business. 

“Threats to environmental and social sustainability may impede corporate growth and lead to the deterioration of customers' interests,” Aoki warns. It is therefore incumbent on the company to do what it can within its business to create a sustainable future: by changing the flow of money and encouraging companies to change their behaviour. To this end, Asset Management One has developed a proprietary materiality map, utilising two axes: the axis of financial materiality, which considers economic return; and the axis of sustainable materiality, which considers sustainability. The company uses this map to achieve sustainability for all stakeholders that are important in a sustainable society.

ESG products

Within the context of its materiality map, Asset Management One has prioritised significant issues for the global environment and society; and three key focus areas have emerged, namely climate change; biodiversity and environmental destruction; and human rights, health, and wellbeing. Based on these three focus areas, Asset Management One incorporates corresponding factors in its product strategies and investment decisions, Aoki explains. This allows the company to mitigate downside risks and identify new opportunities in the investment process. Apart from product considerations, Asset Management One also takes a leadership position in driving the transition away from a greenhouse gas-emitting economy to a Net Zero society. 

Asset Management One’s move in 2020 to become a NZAM signatory member exemplifies its commitment to the goal of net zero emissions by 2050, Aoki adds, which it does through its Net Zero product offerings and active engagements with investee companies. Going forward, he continues, the company will be developing new products focused on social and environmental impact, in addition to economic returns.

Investment opportunities

The Net Zero Asset Managers Initiative for ESG investing does deliver value, Aoki believes, through its focus on three key stakeholder groups: investee companies, clients, and asset management itself, especially relating to the issue of climate change, which the company feels is the most important. Moreover, he adds, “there is no doubt that all stakeholders need to work together to gear up for climate issues”. This is the sense in which a clear commitment to Net Zero emissions by leading global investment managers will be key to accelerating the Net Zero transitions of investee companies through changes in money flow.

Aoki praises the inclusiveness of the NZAM initiative, which unites not only European, but also many American and Asian asset managers, and is expected to further expand ESG investment globally. In Japan, he adds, Asset Management One is trying to lead the initiative as one of the country’s best and most recognised ESG managers. Among its various approaches to improve and lead the charge in this area, the company is engaging and interacting with asset owners by offering them new ESG investing opportunities. Going forward, Aoki believes that Asset Management One’s activities will be a major driver in Japan’s ESG investment.

In conclusion, Aoki remarks, Asset Management One uses the NZAM initiative as a valuable opportunity to exchange opinions and share knowledge with other investors, all working together on Net Zero emissions. The company believes that the information gained through this process will help it to identify the ongoing trends and needs in the broader market. 

Disclaimer: This document is for informational purposes and does not constitute an offer or solicitation of any investment advisory services in any jurisdiction in which such an offer or solicitation is not authorised or legal. Investment involves risks. Please review all financial material carefully before investing. The opinions expressed are based on market conditions and are subject to change without notice.