Portfolio Insight – Asset Management One
In November, Akira Sugano, CEO of Asset Management One (AMO), travelled to Glasgow to participate in the United Nations Climate Change Conference (COP26) as well as the World Climate Summit. The message he brought with him was one of leadership, active engagement and collaboration – all components of Japan’s transformation to sustainability. ESG and sustainability have become prevalent buzzwords, not only in Japan but globally, proliferating media headlines as well as daily conversations. Due to its heavy dependence on fossil fuels, many critics were sceptical of Japan’s commitment to achieving meaningful levels of decarbonisation. These crit- ics, as well as the world, took notice in October 2020 when for- mer Prime Minister Suga pledged that Japan would achieve carbon neutrality by 2050. The commitment was followed by an interim government plan to achieve a 43% reduction in greenhouse gas (GHG) emissions by 2030 (in comparison to 2013), coupled with an ambitious revision to the government’s energy source plan, decreasing fossil fuel dependency and replacing it with renewable energy. A few months later, in December 2020, the Net Zero Asset Managers initiative (NZAM) was established. The initiative is composed of global asset managers aiming to achieve net zero GHG emissions. As one of the 30 initial signatories and the only Japanese firm amongst the founding members AMO set a precedent. Just shy of its one-year anniversary, NZAM’s mem- bership increased to 220 members by November, representing approximately $57trn (£42.7trn) in assets under management (AUM). NZAM’s signatories have committed to supporting the goal of net zero GHG emissions by 2050, which aligns with global efforts to limit warming to 1.5ºC. These global asset man- agers have also committed to setting an interim target for the proportion of their assets to be managed in line with the attain- ment of net zero emissions by 2050 or sooner, by working with asset owners and clients on decarbonisation goals. AMO has set an ambitious target of ¥30trn (£200trn) worth of AUM (53% of their AUM, as of March 2021) as its 2030 interim goal, on the path to achieving GHG emissions by 2050 or earlier. Perpetuating this call to action amongst the asset manage- ment industry, in early 2021 Mr Sugano spearheaded an pro- ject, redefining AMO’s raison d’etre and corporate purpose: “Creating a sustainable future through the power of invest- ment.” This aptly captures the firm’s aspiration and reflects its commitment to net zero. As an asset manager, AMO is com- mitted to working with all constituents in the investment chain to accelerate the transition towards net zero in three areas:
1. We will strive to increase the amount of assets managed that align with the net zero initiative. This includes offering active strategies which invest in companies possessing the ability to
18 | portfolio institutional | December-January 2022 | issue 109
increase their enterprise value whilst working toward the net zero goals. From quantitative and qualitative perspectives, we will assess investee companies and direct capital to support those demonstrating an active commitment and make solid progress in achieving net zero. For passive strategies, we are planning to launch passive products with a focus on engage- ment to encourage a wider range of companies to act and make the transition towards net zero. This approach will enable AMO to raise awareness and drive action across the entire mar- ket, including companies that have not yet taken the necessary steps, as well as those already working towards net zero goals.
2. Through engagement, the firm is a proactive proponent of encouraging companies to transform their business models towards increased sustainability and decarbonisation. Rather than simply divesting from the companies that are not yet fully aligned with the net-zero scenario, our priority is to engage with them. Our goal is to gain a holistic understanding of the company which allows us to have a constructive dialogue to bring about improvement and positive changes. Where there is no evident progress despite this engagement, we will consider opposing the election of directors at the respective companies.
3. We will continue working with policy makers and other organisations to strengthen ongoing efforts towards achieving net zero goals by 2050. This is exemplified by AMO’s participa- tion in climate change and environment-related study groups and initiatives established by the Ministry of Economy, Trade and Industry and the Ministry of the Environment.
AMO is one of the few Japanese asset managers to join Climate Action 100+ (CA100+), an engagement initiative launched in 2017 to ensure the world’s largest corporate GHG emitters take remedial actions. Together with a US public pension fund, AMO has been co-leading the engagement with a major Japa- nese automotive company, as part of the joint efforts to achieve the CA100+ goals. In this instance, the foreign asset owner offers a more global perspective, while AMO offers a local con- text on ESG. Such collaboration has enabled AMO to build stronger ESG engagement with the company for positive impact and solutions.
In its first sustainability report issued in October, AMO revealed its holistic approach in tackling sustainability issues and provided conceptual guidelines and examples of imple- mentation. To identify issues and better understand their importance to the global environment and society AMO created a framework to analyse and plot these “barriers” based upon sustainable and financial materiality.
When identifying global environmental and social issues, the firm is guided by information sourced from businesses, NGOs
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
