ESG Investment Policy
ESG investment is an investing method that considers environmental, social and governance (ESG) factors, in addition to quantitative financial information. Dai-ichi Life 1) seeks ESG-themed investment opportunities that conforms to Dai-ichi Life Group's themes for solving social challenges* while premised on profitability, and 2) builds a system for ESG integration with the intention of controlling risk and improving mid- to long-term returns. Dai-ichi Life defines ESG investment methods as below.
- * The Dai-ichi Life Group sets three social contribution themes: Promoting Health, Creating an Affluent Next-Generation Society, and Environmental Preservation. For more information, click on the link below.
|ESG Investment Method||Definition||What we did in 2017|
|ESG-themed Investment||Investment in fields that help resolve social issues based on the premise that investment returns are secured|
|Impact Investment||An investment method where Dai-ichi Life makes investment decisions with the intent to gain 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 company analysis and evaluation||
|Positive Screening||Building a portfolio comprised of companies with high ESG ratings||
|Negative Screening||Exclusion of certain companies and sectors from the portfolio from an ESG perspective.||
How We Promote ESG Investment
Based on our ESG Investment Policy, which is revised every year, we implement cross-asset initiatives, and regularly check the progress in Responsible Investment Meeting with the participation of related investment departments. In addition, we continuously improve our initiatives and processes of ESG investment through annual reporting and assessment of PRI.
Examples of Our ESG Investment Initiatives
Since 2017, Dai-ichi Life has engaged in Impact Investment, an investing method intended to both gain investment returns and create positive social impacts, in order to further strengthen our commitment to solving social challenges through financing. In September 2017, we invested JPY 400 million in Gojo & Company, Inc., which conducts micro-finance business in developing countries to improve access to finance. In addition, Dai-ichi Life has also invested JPY 1 billion in Spiber Inc., a company that researches and produces next-generation bio materials and shows promise in helping to solve environmental challenges.
Photo credit:Gojo & Company, Inc.
<Next-Generation Bio Material>
Photo credit:Spiber Inc.
Other ESG-themed Investment
Investment in Social Bonds Issued by Multilateral Development Banks
Dai-ichi Life actively invests in social bonds to provide financial support for the initiatives of multilateral development banks in order to improve investment returns and contribute to solving social challenges. In March 2017, Dai-ichi Life invested approximately JPY 11 billion in Health Bond*1 issued by the Asian Development Bank (ADB), and in September 2017, we invested around JPY 10 billion in Light Up and Power Africa Bond*2 issued by the African Development Bank (AfDB).
- *1 Funds from Health Bond are used for the ADB's health projects to address health challenges in the Asia-Pacific region.
- *2 Funds from Light Up and Power Africa Bond are used for AfDB's energy projects to supply electricity and energy to Africa.
Photo credit: Asian Development Bank
<Light Up and Power Africa Bond>
Photo credit: African Development Bank
<<Our Social Bond Investments at a Glance>>
Project Finance Initiatives to Solve Social Challenges
Dai-ichi Life proactively engages in project finance that helps solve social challenges while also earning investment returns. In addition to investing around JPY 3.5 billion in a construction project for an offshore wind power generation facility in Germany in January 2017, we invested about JPY 5.7 billion in a natural gas processing plant construction project in Qatar in April 2017. Furthermore, in July 2017 Dai-ichi Life provided JPY 10 billion in financing for a hospital construction and administration project in the Republic of Turkey.
<Offshore Wind Power Generation Facility in Germany>
Photo credit: Veja Mate Offshore Project GmbH
<Hospital Construction and Administration Project in the Republic of Turkey>
Photo credit: Sojitz Corporation
Examples of Our ESG Integration Initiatives
Integration ESG Factors into Research Process
In 2017, Dai-ichi Life began a systematic integration of ESG factors into our equity and credit research process. We will verify effectiveness of ESG integration on our investment performance, and work on developing better research processes incorporating ESG issues in the mid- to long-term period.
Integration in Equity Research
Our equity analysts research companies and evaluate their growth potential from a mid- to long-term perspective. In addition to quantitative financial information, non-financial information (i.e. ESG information*1) is systematically integrated into our research process. We believe it is important to identify ‘material’ non-financial information that has an impact on mid- to long-term corporate value. Therefore, we determine material non-financial information for each sector to incorporate into our analysis. It should be noted that when analyzing non-financial information, Dai-ichi Life also gives consideration to the information from engagement with our investee companies.
- *1 For instance, competitiveness and management capability of products/services that contribute to solving social challenges such as energy-conservation technologies
Integration in Credit Research
Our credit analysts have been considering non-financial information including ESG issues in addition to the quantitative financial information, when setting internal credit ratings. In 2017, Dai-ichi Life has systemized how we use ESG issues.
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 our proprietary assets. When selecting companies, the Fund places great importance on long-term sustainable growth and invests in approximately 160 companies as of the end of March 2017.
- * The Socially Responsible Investment (SRI) Fund was raised 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. In 2017, we became the first Japanese life insurer to complete a GRESB Real Estate Assessment* and be awarded Green Star that is given to institutions implementing outstanding ESG initiatives.
- * GRESB (Global Real Estate Sustainability Benchmark) is an investor-driven organization developed by European pension funds and others. The GRESB Real Estate Assessment is a global assessment framework for evaluating the ESG performance of an entire real estate portfolio instead of on an individual property basis. In 2017, 850 of the world's leading real estate managers and funds completed the assessment. In Japan, 53 companies and funds, most of which are REITs, participated in the year.
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 has also been working since 2011 to attract daycare and nursery centers to our properties to help eliminate waitlists for childcare services. For more information on these initiatives, click on the link below.
Dai-ichi Life is systematically implementing negative screening base on our Negative Screening Criteria for ESG Investment. Specifically, we identify companies and sectors where we should avoid investing, according to our social responsibility as an institutional investor, and we build frameworks for excluding them from our portfolio across all asset classes. The exclusion list is regularly reviewed.
With regard to project finance, since fund allocation is limited to a predetermined project, we build frameworks to scrutinize a project to invest in from the aspect of ESG.