The Company recognizes that responsible investment is an important part of business operations. We acknowledge the significance of Environmental, Social, and Governance (ESG) factors in reducing risks and creating added value in investments, and are committed to integrating ESG principles as part of the investment process to ensure sustainable growth.
Our policy is aligned with the United Nations Principles for Responsible Investment (UN PRI) and the United Nations Sustainable Development Goals (UN SDGs).
This policy defines the framework for integrating responsible investment into the Company’s investment process, focusing on key asset classes including fixed income and listed equities in both domestic and international markets.
The Company’s responsible investment approach is based on three key principles: Exclusion, Integration, and Engagement.
3.1 Investment Exclusion (Exclusion)
The Company has established investment exclusion criteria to ensure that the investment portfolio aligns with ethical standards, by excluding companies or businesses that are significantly involved in the following activities:
• The production, distribution, or sale of controversial weapons such as chemical weapons, biological weapons, or cluster munitions
• Businesses related to firearms or pornography, where revenue derived from such activities is at a high level
In addition, the Company conducts Close Monitoring of companies operating in high-carbon industries such as coal and fossil-fuel-related businesses, to track their transition toward low-carbon or net-zero targets.
3.2 ESG Integration
ESG factors are incorporated into the investment process, from security analysis and security selection to portfolio construction, using information from multiple sources and considering topics that cover ESG factors, such as:
• Climate change and carbon emissions
• Labor practices and human rights
• Business ethics and corporate governance
The assessment of these factors includes assigning different weights to ESG issues depending on their importance, as the materiality of each issue varies across industries (Materiality Assessment). The assessment results are incorporated into investment decision-making and may influence the duration and overall value of investments within the portfolio.
3.3 Stewardship
The Company acts as an Active Owner, which is a fundamental component of asset stewardship and promoting sustainable practices among investee companies. This includes both engagement and exercising voting rights.
• Engagement: The Company engages and communicates continuously with investee companies to understand their strategies and business direction. Key engagement topics include climate change, human capital management, and corporate governance. Engagement and communication with investee companies are conducted privately (Private Discussion) to prevent misunderstandings and unintended consequences arising from public communication. In cases where concerns may have severe negative impacts on the investee company, the Company may escalate monitoring by raising the issues to the company’s board of directors. If concerns remain unresolved after escalation, the Company may collaborate with other investors or stakeholders (Collective Engagement) as appropriate.
• Voting:The Company will exercise voting rights at shareholders' meetings in accordance with its voting policy, taking into consideration relevant factors as a responsible investor.
The Company supports initiatives for companies to develop strong climate strategies and is committed to contributing to the transition toward a net-zero greenhouse gas emissions economy. This includes seeking investment opportunities in renewable energy and in companies that set net-zero emissions targets aligned with international standards.
This Responsible Investment Policy is overseen by the Investment Committee, which monitor the impact of ESG and climate at a firm level and asset under management. The committee reviews and updates the RI policy on an annual basis.