Japan’s JPY12.7trn (€101bn) Pension Fund Association (PFA) has appointed Hermes EOS to deliver and implement the investor’s stewardship activities in relation to the country’s stewardship and corporate governance codes.
The PFA manages assets on behalf of those individuals who withdrew from corporate pension plans after a short period – usually less than 10 years – and provides pension benefits to them.
The PFA is Hermes EOS’s first Japanese client.
Neither the value nor duration of the appointment was disclosed.
The appointment comes after Japan’s first corporate governance code came into effect last June.
The country’s stewardship code, the Principles for Responsible Institutional Investors, was introduced in 2014.
Hermes EOS was involved in the development and promotion of the two codes and, together with Hermes Investment Management, was one of the first signatories to the Stewardship Code.
Daisuke Hamaguchi, CIO at the PFA, said: “We are pleased to have appointed Hermes EOS to aid us in the implementation of the requirements of the Stewardship and Corporate Governance Codes.
“At a high level, our focus is to improve the transparency and efficiency of Japan’s capital markets to attract more investors, not only from within Japan but also from overseas. It is about time the industry started acting as good stewards.”
The appointment follows that of Masaru Arai, who joined Hermes EOS in early February as senior engagement consultant.
He is based in Japan, where he will focus on engagement in the country on behalf of Hermes EOS and its clients.
Masaru is chair of the Japan Sustainable Investment Forum and was previously CIO at Daiwa Asset Management, where he worked for 19 years.
Hans-Christoph Hirt, co-head of Hermes EOS, said: “We are honoured to have been selected by one of Japan’s largest pension funds to provide our stewardship services and look forward to working with Japanese companies on PFA’s behalf.
“This comes at a crucial time for stewardship and corporate governance in Japan, and we are delighted to be a part of these important developments.”
As at the end of fiscal year 2014, the PFA had a 17.2% allocation to domestic equities, according to its website.
Its biggest allocation was in domestic bonds (42%), followed by foreign equities (28.5%), with foreign bonds representing a 12.8% share of the asset allocation for what is referred to as the ‘basic pension’.
The UK has had a stewardship code since 2010, which inspired Denmark to draft its own.
The International Corporate Governance Network (ICGN), meanwhile, is working on a global stewardship code that builds on that in Japan and the UK.
Hemes EOS declined to comment on the tender process.