Engaging Investments to Combat Climate Change
By David Semaya, Executive Chairman and Representative Director of Sumitomo Mitsui Trust Asset Management
Sumitomo Mitsui Trust Asset Management (SuMi Trust) endorses the Japanese Stewardship Code and is a signatory to the United Nations Principles for Responsible Investment (PRI). As such, the company aims to achieve sound growth and sustainability for companies and of society as a whole by encouraging companies to resolve ESG issues through their business activities. For this purpose, Sumitomo Mitsui joins the World Climate Foundation as a Summit Partner of World Climate Summit in 2022 allowing for increased engagement with various international asset owners and high-level financial institutions that share common values and goals to address climate change challenges and realize the net-zero society.
Setting Goals for a Net-Zero Society
In July 2021, SuMi Trust became a signatory to the Net Zero Asset Managers Initiative (NZAMI) and expressed our commitment to work towards achieving net zero greenhouse gas (GHG) emissions for investee companies by 2050.
Further in May 2022, in accordance with its commitments under NZAMI, we announced 2030 interim targets for GHG emissions from assets under its management. The interim target for 2030 is for 50% of assets under management (approximately Yen 43 trillion as of June 2021) to achieve a 50% reduction in the carbon footprint compared to 2019. We shall expand the base of assets as calculation methodologies such as sovereign bonds are developed.
SuMi Trust aims to both the interim target and its eventual goal of net-zero GHG emissions from the companies it invests in through engagement and the use of its voting rights in addition to collaboration with asset owners, government agencies and other stakeholders - alongside sophisticated investment strategies and the provision of sustainable investment opportunities to its clients.
Embracing Investment Initiatives Around the Globe
At SuMi Trust, we conduct comprehensive global engagements through its three bases in Japan, Europe and the Americas. We undertake a broad range of engagements across a variety of industries to work towards reducing GHG emissions and tackling climate change. So far, we have identified around 100 companies (40 domestic and 60 overseas) that have a significant impact on reducing global GHG emissions as being particularly important to focus on with regard to engagement activity.
In exercising its voting rights, its policies are to oppose proposals for the appointment of directors if the investee company does not respond to an engagement offer or if, despite continuous engagement, the situation has not improved.
SuMi Trustis currently actively involved in a number of initiatives to address climate change. In North America, it participates in the Ceres Working Group on Land Use and Climate Terms of Reference.
SuMi Trust participates in the investor-led initiative Climate Action 100+ serving as a lead manager role as well as a global steering committee member representing Asian-based investors.
Further, SuMi Trust participates in the Asian Utilities Engagement Program conducted by AIGCC (Asia Investor Group on Climate Change), which focuses on Asian utility companies with GHG impact outside of CA100+ coverage, serving as a lead manager in the project.
In March, the company was appointed as the Asian representative member of the NZAMI Advisory Group, which consists of six signatories, and participates in the overall management of NZAMI.
On a global level, SuMi Trust is also active in policy/advocacy engagements, participating in initiatives such as Investor Agenda in the “Global Investor Statement 2021”, as well as IPDD, Investor Policy Dialogue in Deforestation.
At Sumitomo Mitsui Trust Asset Management, we intend to actively participate in global investor initiatives such as NZAMI, as well as collaboratively work with stakeholders and asset owners to enhance the level of activities to achieve a smooth transition towards a low carbon society.
“Following last year’s successful participation at World Climate Summit in Glasgow, SuMi TRUST is excited to be back supporting World Climate Summit in Sharm El-Sheikh for COP27. Being proactive signatories to a number of global and domestic ESG initiatives and one of Japan’s largest asset managers, we leverage the platform to engage with investee companies on their ESG challenges, creating meaningful engagement with influential stakeholders in the process.”
- David Semaya, Executive Chairman and Representative Director, SuMi Trust
About Sumitomo Mitsui Trust Asset Management
Sumitomo Mitsui Trust Asset Management (SuMi Trust) is a part of Sumitomo Mitsui Trust Holdings and has provided investment management services to both domestic and overseas long-term investors such as pension funds, public funds and defined contributions individual pensions, with total asset management of Yen 85 trillion. They invest mainly in listed global fixed income securities and equities. It has long been believed that responding to ESG issues is an integral part of the investment process. As a committed responsible investor, they launched their first SRI (Socially Responsible Investment) fund in 2003 and were one of the founding signatories of the UN Principles for Responsible Investment (PRI) in 2006. SuMi Trust regards stewardship activities such as engaging with companies and exercising voting rights as vital to addressing ESG challenges. Ultimately aiming to improve corporate value of investee companies and enabling them to meet their responsibility to expand investment returns for their clients as part of their stewardship responsibilities.
Learn More: https://eu.sumitrust-am.com
About the author
David Semaya has been the Executive Chairman and Representative Director of Sumitomo Mitsui Trust Asset Management Co., Ltd since 2018. Additionally, he currently serves as Chairman of the ICI Pacific Policy Council. His thirty year career spans three continents in executive leadership roles in financial services across the US, Europe, and Asia. David Semaya has participated in World Climate Summit for the past two years. In Sharm el-Sheikh in November 2022, he will speak at the Investment Session “Financial Transformation - Investor Innovation for Real Economic Impact”.