“Stewardship Code: 9/2/2014 Message from the FSA – To institutional investors that have yet to accept the Code”, and others

September 2, 2014
[To institutional investors that have yet to accept the Code]

 160 institutional investors have already announced their acceptance of Japan’sStewardship Code (hereinafter referred to as the “Code”) by the end of August2014.

The Financial Services Agency (FSA) would welcome the decision to accept the
Code by those who have yet to do so. The Code allows its signatories to take intoaccount their specific conditions and situations, as far as it is in line with the “aimand spirit” of the Code.

 The acceptance of the Code by asset owners is particularly important becausethey are expected to work as a “driver” for the implementation of the Code.

FSA: “Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code”

1.Purpose The Japan Revitalization Strategy as revised in 2015 (Cabinet Decision, June 30, 2015) states that “we need to work actively to prevail and to promote the adoption of Japan’s Stewardship Code, established and released in February 2014 (“JSC”), and Japan’s Corporate Governance Code, which entered into force in June 2015 (“JCGC”), as ‘the two wheels of a cart’ such that the sustainable growth of companies will be promoted by both sides of investors and companies.

Further improvements of corporate governance, e.g., making governance function not only formally, but also effectively, continue to be a major agenda, and we need to link such efforts to the establishment of a virtuous economic cycle.

In this respect, for the purpose of following up with the prevalence and adoption of JSC and JCGC as well as further improving corporate governance of all listed companies, we hereby announce the establishment of the “Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code” (the “Council”).

2. Organization (1)The Council will be composed of outside experts; including members from corporate managers, local and foreign investors, and academics (the member list will be released later).

RI: “MSCI ESG Research Round Table Report 2015”

Topics covered in the RI Insight/MSCI ESG Research Round Table Report 2015 include:

• The impact of the UK Stewardship Code and other international stewardship codes
• Governance signals of investment risk
• How external fund managers are assessed on stewardship
• Governance practices across Europe and in the US
• Impact of pension fund size on corporate engagement practices
• The asset manager/corporate governance nexus
• Family office and high-net-worth interest
• The growing role of bondholders
• Engagement and co-operation between investors
• Long-term activists

FRC Report : Developments In Corporate Governance And Stewardship 2014

The UK Financial Reporting Council’s report on Developments in Corporate Governance and Stewardship contains many insights useful to Japan as it implements its new Corporate Governance Code and the Stewardship Code. In particular, pages 17-22 on stewardship and engagement, and the quality of stewardship statements, provide food for thought in the sense that progress for the Stewardship Code seems spotty and slow.