Basic Policy on ESG Investment
ESG investment is an investing method that considers environmental, social and governance (ESG) factors, in addition to quantitative financial information. Dai-ichi Life is working on 1) ESG-themed investment premised on profitability and 2) ESG integration with the intention of controlling risk and improving medium- to long-term returns.
System for Promoting ESG Investment
Dai-ichi Life has formulated an ESG Investment Policy, which is revised every year. We implement cross-asset initiatives and continuously improve our ESG investment initiatives and processes through external evaluation in the form of annual PRI assessment. In addition, the Responsible Investment Committee regularly checks the progress of ESG investment, discusses our ESG investment policy, and reviews the assessment result.
Components of the Company's ESG investment method are defined as follows.
|ESG Investment Method||Definitions|
|ESG-Themed Investment||Investment in fields that help resolve social issues premised on secure investment returns|
|Impact Investment||An investment method where Dai-ichi Life makes investment decisions with the intent to increase investment returns and generate social impacts (e.g., structural change in society)|
|Other ESG-Themed Investment||ESG-themed investment not included in impact investment|
|ESG Integration||Systematic integration of ESG factors into the investment process|
|Integration into Research||Systematic integration of ESG factors into analysis and evaluation performed by the Company|
|Positive Screening||Building a portfolio comprised of companies with high ESG ratings|
|Negative Screening||Building a system for excluding certain uses of funds and industries, etc. from the portfolio|
|Dialogue on ESG||Dialogue activities related to ESG issues|
Examples of ESG-Themed Investments
*Items in red are regional revitalization and community activation initiatives.
(Correspondence with the 17 SDG Targets)
|Examples of ESG-Themed Investments|
|Impact investment||Other ESG-themed investments|
|Good Health and Well-Being|
|Clean Water and Sanitation||－|
|Affordable and Clean Energy||－|
|Decent Work and Economic Growth|
|Industry, Innovation and Infrastructure||－|
|Sustainable Cities and Communities||－|
|Responsible Consumption and Production||－||－|
|Life Below Water||－||－|
|Life on Land||－||－|
|Peace, Justice and Strong Institutions||－||－|
|Partnerships for the Goals||－||－|
Examples of Other ESG-Themed Investments
Photo credit: EBRD
|In December 2015, Dai-ichi Life purchased around ¥12.0 billion of Microfinance Bonds issued by the European Bank for Reconstruction and Development (EBRD). The proceeds raised through the Microfinance Bonds will be used to provide investment and loans of business funding for micro or small-sized enterprises in developing countries, which encounter difficulties in obtaining sufficient funding from private financial institutions.|
Photo credit: AfDB
|In November 2016, Dai-ichi Life invested around ¥5.2 billion in the Feed Africa Bond issued by the African Development Bank (AfDB). The proceeds raised through the Feed Africa Bond will be used in projects implemented by the AfDB to secure food supplies.|
Photo credit: Sojitz Corporation
|In July 2017, Dai-ichi Life provided ¥10.0 billion in loans to finance a project to build and operate a large-scale hospital in Istanbul, Republic of Turkey.|
Photo credit: IADB
|In July 2015, Dai-ichi Life purchased US$50 million in EYE Bonds issued by the Inter-American Development Bank. (IADB) The proceeds raised through the EYE Bonds will be used to finance EYE (Education, Youth, and Employment) projects in Latin America and the Caribbean region.|
Photo credit: ADB
|In November 2017, Dai-ichi Life purchased the Gender Bond issued by the Asian Development Bank (ADB) for around ¥10 billion. The proceeds raised through the Gender Bond will be used for projects to promote gender equality and women's empowerment in the Asia-Pacific region.|
|In December 2017, Dai-ichi Life invested around ¥4.4 billion in one of the world's largest desalination projects being undertaken in Australia to cope with water shortages associated with large-scale drought and future population growth.|
Photo credit: Veja Mate Offshore Project GmbH
|In January 2017, Dai-ichi Life invested around ¥3.5 billion in an offshore wind farm construction project in Germany.|
Photo credit: IFC
|In December 2014, Dai-ichi Life purchased around US$100 million in Inclusive Business Bonds issued by International Finance Corporation. (IFC) The proceeds raised through the Inclusive Business Bonds will be used to support initiatives for enabling economic growth that includes low-income earners.|
Photo credit: AfDB
|In September 2017, Dai-ichi Life purchased the Light Up and Power Africa Bond issued by the African Development Bank (AfDB) for around ¥10 billion. The proceeds raised through the Light Up and Power Africa Bond will be used for various projects run by the AfDB, including an energy project that provides access to electricity.|
|In December 2017, Dai-ichi Life invested around ¥4.5 billion in a concession project for the operation and maintenance of a high-speed railway line running 109 km between London and the English Channel in the UK.|
< Perspective drawing of Shin-Yokohama Station >
Photo credit: JRTT
|In November 2017, Dai-ichi Life purchased Green Bonds issued by the Japan Railway Construction, Transport and Technology Agency. (JRTT) The proceeds raised by the Green Bonds will be used for initiatives to reduce CO2 emissions by enhancing the public transport network and encouraging people to use railway lines instead of traveling by car or bus.|
Dai-ichi Life engages in impact investment, an investing method intended to both gain investment returns and create positive social impacts. We conduct ongoing monitoring of companies that have received impact investments with regard to the progress of their initiatives and social impacts. Some of our leading examples are as follows.
Regional Revitalization and Community Activities
Dai-ichi Life has approximately ¥35 trillion in assets under management, sourced from the premiums of approximately 10 million policyholders throughout Japan. As an institutional investor (universal owner) of these assets, we seek to acquire investment returns and to increase the quality of life of the policyholders by actively engaging in regional revitalization and community activation. Examples of our main initiatives to date are as follows.
< Examples of Main Initiatives to Date >
*Click on each item to view press releases.
Main Approaches to ESG Integration
Incorporation in Research
Dai-ichi Life systematically integrates ESG factors into its equity and credit research. We periodically verify the impact of ESG integration on performance and work to develop better research processes incorporating ESG issues over the medium to long term.
Integration in Equity Research
Our equity analysts research companies and evaluate their growth potential from a medium- to long-term perspective. In addition to quantitative financial information, they systematically integrate non-financial information (ESG information) into the research process, including competitiveness of products and services that contribute to solving social issues, such as the environment and energy conservation, and management capabilities. In evaluating non-financial information, it is important to identify information that has an impact on medium- to long-term corporate value. We therefore identify and incorporate material evaluation points for each sector into our evaluation of growth potential. It should be noted that when analyzing non-financial information, Dai-ichi Life also gives consideration to information gained through engagement with its investee companies.
Integration in Credit Research
In addition to quantitative information, our credit analysts systematically consider non-financial information, including ESG issues, when setting internal credit ratings. Specifically, credit analysts for each sector analyze the impact of ESG-related factors on the creditworthiness of investee companies, and if an impact is considered to be significant, the company's internal credit rating is adjusted downward.
Domestic Listed Equity Fund: ESG Fund
Dai-ichi Life invests in Japanese listed companies that excel in their efforts for ESG issues through the ESG Fund* for investing the Company's assets (approximately 280 companies as of the end of September 2018).
- *The Socially Responsible Investment (SRI) Fund was established internally in 2010 and renamed the ESG Fund in 2013. This fund invests in domestic listed companies and is managed in-house (not outsourced).
ESG-Consideration in Real Estate Investment
Dai-ichi Life integrates ESG factors into real estate investment processes.
Specifically, Dai-ichi Life considers environmental issues in new development and property acquisition, while also adopting an ESG viewpoint in our property management, such as by encouraging the installation of efficient equipment during renovations. For more information on these initiatives, click on the link below.
Dai-ichi Life is making use of its many properties throughout Japan to contribute actively to solving social issues. Specifically, we have been working since 2011 to attract daycare and nursery centers to our properties to help eliminate waitlists for childcare services. We have also concluded an agreement with Setagaya City under which we will provide grounds as a shared park for use by local childcare centers for a certain period.
For more information on these initiatives, click on the link below.
Examples of Initiatives to Spread and Promote ESG Investment
As an institutional investor, Dai-ichi Life is actively working to spread and promote ESG.
For example, we participated in discussion as a member of the High Level Meeting on ESG Finance held by the Ministry of the Environment to spread and promote ESG. The meeting has been held seven times since January 2018, and in July 2018, the recommendation – Toward becoming a big power in ESG finance – from the meeting was finalized and released. Details can be found on the Ministry of the Environment's website.
In other areas, we have been participating in meetings to spread and promote ESG investment, such as the Forum for Integrated Corporate Disclosure and ESG Dialogue held by the Ministry of Economy, Trade and Industry*1 and the Research Group on Sustainable Development of ESG Bond Market*2 held by Nomura Institute of Capital Markets Research.
- *1 A forum established by the Ministry of Economy, Trade and Industry in December 2017 to analyze and propose necessary policies to promote disclosure and dialogue between companies and institutional investors.
- *2 A research group established by Nomura Institute of Capital Markets Research in February 2018 to promote joint surveys and research by industry, government, and academia regarding the required response for ensuring stable, continuous growth of ESG bonds and the associated markets by identifying issues from multiple perspectives.
Award from the Minister of the Environment
Dai-ichi Life's ESG investment initiatives were recognized when the Company became the first life insurance company to receive the Minister of the Environment Award (General Division) for the most outstanding initiative in the Principles for Financial Action for the 21st Century (PFA21) held by the Ministry of the Environment in March 2018. The reason for our selection for the award is as follows.
< Reason for Selection >
- Amid growing impetus in Japan for the ESG investment movement that started in Europe, Dai-ichi Life has been promoting investments as an institutional investor based on social responsibility.
- In addition to ESG-themed investment such as impact investment, Dai-ichi Life has been systemizing ESG integration that incorporates ESG factors into the investment process since fiscal 2017.
- Rather than treating ESG investment as a passing trend, Dai-ichi Life revises its ESG Investment Policy each year, and in fiscal 2017, it established the Responsible Investment Meeting and Responsible Investment Committee to create a framework for promoting ESG investment. These are progressive initiatives and Dai-ichi Life is also promoting a change in awareness among stakeholders in and outside the Company.
Annual PRI Assessment
In the annual PRI assessment in 2017, the Company's score in every module was above the median score of the global PRI signatories, and it obtained an A+ rating, the highest possible, in the areas of Listed Equity – Active Ownership and Property. Based on the recent assessment result, the Company will enhance its responsible investing initiatives even further; it has started initiatives such as considering engagement with issuers as a fixed-income investor.
Acquired a Green Star in the GRESB Real Estate Assessment
Dai-ichi Life was awarded a "Green Star" in the GRESB Real Estate Assessment* for its outstanding ESG initiatives for a second consecutive year in fiscal 2018.
- * GRESB (Global Real Estate Sustainability Benchmark) is an investor-driven organization developed by European pension funds, etc. The GRESB Real Estate Assessment is a global assessment framework for evaluating the ESG performance of a real estate portfolio instead of on an individual property basis. This assessment was performed on the portfolios of 903 of the world's leading real estate managers and funds in fiscal 2018. In Japan, 61 companies and funds, most of which are REITs, were assessed this year.