With the aging and decreasing population in Japan, how to maintain and generate national wealth has become a crucial issue for the Japanese. In order to deal with this issue, a more effective use of capital to create value, that is, a more effective combination of human capital, intellectual capital and financial capital will be required. Companies are the stage for this. Reinforcement of the competitiveness and earning power of every company is believed to be the condition necessary for building the strength to create value in Japan as a whole.
On the other hand, the role of investors is to provide finance to companies that take on such task (internal reserve is one way to accomplish this, in addition to IPOs and capital increase). Return from invested capital will be reinvested, which will promote the creation of more value to companies. As the main body of the investment chain that creates such virtuous cycle, investors are expected to assume the crucial role of “stewardship responsibilities”.
From these perspectives, we want to understand in more depth measures taken by the companies to create values in the long-term, and to hold straight-forward talks with listed companies about the issues that the companies encounter.
With regard to our interests as mentioned above, the implementation of the Corporate Governance Code is expected to create a better environment for “dialogue with shareholders”, but at the same time, as the Japan’s Stewardship Code and Ito Review point out (Notes 1 and 2), institutional investors are required to enhance their “capability” to share knowledge and experience in order to have better dialogue with companies and make better judgments.
We operate the “Forum of Investors Japan” for the purpose of supporting institutional investors acquire skills to appropriately fulfill their stewardship responsibilities toward their investee companies, and thereby realize constructive dialogue between the institutional investors and investee companies, and contribute to the sustainable growth of such companies.
(Note 1) Japan’s Stewardship Code, Principle 7-3
Exchanging views with other investors and having a forum for the purpose may help institutional investors conduct better engagement with investee companies and make better judgments.
(Note 2) Ito Review (p.90)
“In order to enhance their capability for having dialogue with companies, it is important for a platform to be established in which institutional investors can share knowledge and experience, and have frank discussions on this matter. It is expected that this platform will help to provide a shared intellectual basis for dialogue and engagement, including issues such as the depth, appropriate counterparty at the company, and focus of dialogue.