FT: “Companies fail to buy into Japan’s stewardship code”

“Minuscule adoption of code a hit to Abe corporate governance efforts”

“…..Nicholas Benes, one of the architects of Japan’s corporate governance code and head of the Board Director Training Institute of Japan said: “In order for the stewardship code to function as it was intended and be effective as hoped for, the most important part of the ‘investment chain’ that needs to be signed up are the end asset owners — a large proportion of which are corporate pension funds … they are the ones that dictate policy to the fund managers that have signed the code”.

Unless the corporate pension funds — as the biggest customers of the asset managers — are actively demanding better stewardship, fund managers would inevitably cut corners on engagement and proxy voting, Mr Benes added.

Others argue that corporate pension funds are hiding behind the fact that the asset managers they engage are signatories to the code, in the hope this will distance them from potential conflict with companies they invest in and which their parent does business with.”

“…“It is not what we wanted to see, but somehow, the whole corporate governance issue seems to be running out of steam,” said CLSA’s Japan strategist Nicholas Smith, “it seems some investors are hard to help.” ”

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