Japanese Institutional Investors Need to Take Their Own ESG Medicine

Does anyone have any theories as to why institutional investors that support director training in Japan are overwhelmingly foreign, and not Japanese?

The Board Director Training Institute of Japan (BDTI) was established as a “public interest” nonprofit in order to enable Japanese institutional investors to support something badly needed by their home market, director and governance training, on a tax-deductible basis…. so that such training could be offered at high quality yet low price, thereby spreading customs of governance/director training throughout Japan. However, after running BDTI for eight years since obtaining certification, we have noticed a disturbing but continuing reality: over time, more than 95% of BDTI’s donations from institutional investors have come from foreign institutions or fund managers, and less than 5% of donations to BDTI have come from Japanese institutions. Moreover, none of the Japanese institutional donors are “major” (top 30) investing institutions in Japan.

This is a strange result, that has nothing to do with lack of trying on our part. We have met with many Japanese fund managers and institutional investors, yet almost never even receive “nibbles”. In contrast, in the case of many of our sustaining donors, the persons in charge showed interest to support BDTI’s activities in the first meeting. As well, our database of contacts and prospective donors is deep on both the “Japanese” as well as the “foreign” side. (Think of approximately 2,700 frequent “Japanese” contacts and 1,500 “foreign” contacts. ) Moreover, we have more donors who are Japanese individuals than are foreign individuals, so it is not as if all Japanese people do not support the cause of training that can achieve better governance. Just the institutions, it seems.

Why is it overwhelmingly the case that institutional supporters of director training in Japan are foreign, and not Japanese? One would think that Japanese investors would have keener interest to improve the quality of governance in their own home market than foreign investors.

In any event, we are very grateful to our Sustaining Donors, which at this time are the institutions and persons on the list below, as well as a number of others that cannot be listed. Each has donated, on average, more than 300,000 Yen (a bit less than $3,000) per year since commencing donations:

Aberdeen Standard Investments (Japan) Limited
Aflac Life Insurance Japan Ltd.
Asset Value Investors Ltd
Baillie Gifford & Co.
CLSA Securities Japan Co., Ltd.
Cornwall Capital
Cosmo Public Relations
Dalton Advisory K.K.
Employees Retirement System of Texas (ERS)
Fidelity Management & Research (Japan) Limited
Hup Jin Goh
Hibiki Path Advisors Pte. Ltd. (“Hibiki”)
Kathy Matsui
Katsuya Debari
Masaki Gotoh
Misaki Capital Inc. Partner
Misaki Capital Inc.
New Horizon Capital Co., Ltd.
Prudential Holdings of Japan, Inc.
State Street Trust and Banking Co., Ltd.
Third Point LLC
Tsuyoshi Maruki
Usonian Investments LLC
Nicholas Benes

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