Pension Investment in Japan today: perspectives on SRI Noboru Yamaguchi  Senior Executive Advisor, Fiduciary Service Resea...
<ul><li>Part 1  Research data </li></ul><ul><li>Institute for Policies on Pension & Aging conducted a comprehensive survey...
Table 1: Do you know about CSR? Source: Research Institute for Policies on Pension & Aging
Table 2: Do you know about SRI? Source: Research Institute for Policies on Pension & Aging
Table 3: Do you know about PRI? Source: Research Institute for Policies on Pension & Aging
Table 4: Have you adopted SRI? Source: Research Institute for Policies on Pension & Aging
Table 5: Why did you adopt SRI? Source: Research Institute for Policies on Pension & Aging
Table 6: When did you adopt SRI? Source: Research Institute for Policies on Pension & Aging
Table 7: Ratio of SRI allocation within Japanese equity Source: Research Institute for Policies on Pension & Aging
Table 8: Level of satisfaction With SRI investment process Source: Research Institute for Policies on Pension & Aging
Table 9: Are you satisfied with SRI returns? Source: Research Institute for Policies on Pension & Aging
Table 10: What would be necessary for you to adopt SRI ? Source: Research Institute for Policies on Pension & Aging
Table 11: Why didn’t you adopt  SRI  after considering the option ? Source: Research Institute for Policies on Pension & A...
Table 12: Reasons for not adopting SRI now or in future Source: Research Institute for Policies on Pension & Aging
Table 13: What would be necessary for you to change your mind consider SRI investment? Source: Research Institute for Poli...
Table 14: Have you received any proposals for SRI products? Source: Research Institute for Policies on Pension & Aging
Table 15: What was the selling point of the SRI investment proposal? Source: Research Institute for Policies on Pension & ...
Table 16: How much were you satisfied by the proposal? Source: Research Institute for Policies on Pension & Aging
Table 1 7 : Those who did not receive proposals Source: Research Institute for Policies on Pension & Aging
Table 1 8 : Medium-long term influence of SRI investment Source: Research Institute for Policies on Pension & Aging
Table  19 : ESG environmental, social governance and corporate governance Source: Research Institute for Policies on Pensi...
Table  20 : Institutional challenges  to start SRI investment Source: Research Institute for Policies on Pension & Aging
<ul><li>Part 2  Challenges and conclusion </li></ul>
We experienced various challenges in 2008 <ul><li>Equity: negative return with high volatility, risk premium? </li></ul><u...
Pension funds face more challenges  <ul><li>International accounting rules are going to be revised shortly and they will r...
Conclusions <ul><li>CSR/SRI are well known but PRI is not well known yet </li></ul><ul><li>SRI investment is very limited ...
≪ 当社情報及び当社で取り扱う商品等のリスク・手数料等について≫ 当社で取り扱う商品等へのご投資には、各商品等に所定の手数料等(国内株式取引の場合は約定代金に対して最大 1.365 %(税込み)( 20 万円以下の場合は、 2,730 円(税込...
≪ Disclaimers required in Japan ≫   Investors in the financial products offered by Nomura Securities may incur fees and co...
The Current Situation of Japanese Pension Investment - Japanese Pension Fund Perspective on SRI
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The Current Situation of Japanese Pension Investment - Japanese Pension Fund Perspective on SRI

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Noboru Yamaguchi, Senior Executive Advisor, Fiduciary Services Reseach Center - Nomura Securities Co. Ltd. - Japan.

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  • The Current Situation of Japanese Pension Investment - Japanese Pension Fund Perspective on SRI

    1. 1. Pension Investment in Japan today: perspectives on SRI Noboru Yamaguchi Senior Executive Advisor, Fiduciary Service Research Center, Nomura Securities Co., Ltd TBLI Conference Asia 2009, Yokohama May 27, 2009
    2. 2. <ul><li>Part 1 Research data </li></ul><ul><li>Institute for Policies on Pension & Aging conducted a comprehensive survey on Socially responsible investment (SRI) & Principles for responsible investment (PRI) in Japan. </li></ul><ul><li>The research questionnaires were sent to 1,432 employee pension funds (EPF), defined benefit plans (DB), and tax qualified pension plans (TQPP). </li></ul><ul><li>Response rate was 32.5 % (465 response). </li></ul><ul><li>This data was published in January 2008. </li></ul>
    3. 3. Table 1: Do you know about CSR? Source: Research Institute for Policies on Pension & Aging
    4. 4. Table 2: Do you know about SRI? Source: Research Institute for Policies on Pension & Aging
    5. 5. Table 3: Do you know about PRI? Source: Research Institute for Policies on Pension & Aging
    6. 6. Table 4: Have you adopted SRI? Source: Research Institute for Policies on Pension & Aging
    7. 7. Table 5: Why did you adopt SRI? Source: Research Institute for Policies on Pension & Aging
    8. 8. Table 6: When did you adopt SRI? Source: Research Institute for Policies on Pension & Aging
    9. 9. Table 7: Ratio of SRI allocation within Japanese equity Source: Research Institute for Policies on Pension & Aging
    10. 10. Table 8: Level of satisfaction With SRI investment process Source: Research Institute for Policies on Pension & Aging
    11. 11. Table 9: Are you satisfied with SRI returns? Source: Research Institute for Policies on Pension & Aging
    12. 12. Table 10: What would be necessary for you to adopt SRI ? Source: Research Institute for Policies on Pension & Aging
    13. 13. Table 11: Why didn’t you adopt SRI after considering the option ? Source: Research Institute for Policies on Pension & Aging
    14. 14. Table 12: Reasons for not adopting SRI now or in future Source: Research Institute for Policies on Pension & Aging
    15. 15. Table 13: What would be necessary for you to change your mind consider SRI investment? Source: Research Institute for Policies on Pension & Aging
    16. 16. Table 14: Have you received any proposals for SRI products? Source: Research Institute for Policies on Pension & Aging
    17. 17. Table 15: What was the selling point of the SRI investment proposal? Source: Research Institute for Policies on Pension & Aging
    18. 18. Table 16: How much were you satisfied by the proposal? Source: Research Institute for Policies on Pension & Aging
    19. 19. Table 1 7 : Those who did not receive proposals Source: Research Institute for Policies on Pension & Aging
    20. 20. Table 1 8 : Medium-long term influence of SRI investment Source: Research Institute for Policies on Pension & Aging
    21. 21. Table 19 : ESG environmental, social governance and corporate governance Source: Research Institute for Policies on Pension & Aging
    22. 22. Table 20 : Institutional challenges to start SRI investment Source: Research Institute for Policies on Pension & Aging
    23. 23. <ul><li>Part 2 Challenges and conclusion </li></ul>
    24. 24. We experienced various challenges in 2008 <ul><li>Equity: negative return with high volatility, risk premium? </li></ul><ul><li>Active manager: negative α, manager selection is key </li></ul><ul><li>Foreign exchange risk: strong yen and weak Japanese equity co-existed, we need more advanced risk control </li></ul><ul><li>Rebalancing: implementation was difficult </li></ul><ul><li>Illiquid assets: operational risk, counterparty risk, etc </li></ul><ul><li>Diversified portfolio: We experienced higher correlation than normal. How can we improve this? </li></ul><ul><li>Pension system & liability management should be reviewed, together with investment </li></ul>
    25. 25. Pension funds face more challenges <ul><li>International accounting rules are going to be revised shortly and they will require more transparency and more mark-to-market valuation of assets and liability. </li></ul><ul><li>Maintaining defined benefit employees pension funds (DB/EPF) is becoming more costly for plan sponsors </li></ul><ul><li>Defined benefit employees pension funds (DB/EPF) are very much underfunded </li></ul><ul><li>Pension investment is by nature long term, but in reality the time horizon is getting shorter because of accounting rules </li></ul><ul><li>If we have another three years of negative returns, the future of the defined benefit (DB) system is unclear </li></ul>
    26. 26. Conclusions <ul><li>CSR/SRI are well known but PRI is not well known yet </li></ul><ul><li>SRI investment is very limited (6.9%) </li></ul><ul><li>Pension funds need more information on investment process and track record </li></ul><ul><li>Proposals from managers are limited and explanation of the investment process is unsatisfactory </li></ul><ul><li>Plan sponsor policies and pension fund investment policies are correlated </li></ul><ul><li>To start SRI/CSR investment, we need long-term stability of the pension system and more confidence about the SRI/CSR investment process and returns </li></ul>
    27. 27. ≪ 当社情報及び当社で取り扱う商品等のリスク・手数料等について≫ 当社で取り扱う商品等へのご投資には、各商品等に所定の手数料等(国内株式取引の場合は約定代金に対して最大 1.365 %(税込み)( 20 万円以下の場合は、 2,730 円(税込み))の売買手数料、投資信託の場合は銘柄ごとに設定された販売手数料および信託報酬等の諸経費、等)をご負担いただく場合があります。また、各商品等には価格の変動等による損失が生じるおそれがあります。商品毎に手数料等およびリスクは異なりますので、当該商品等の契約締結前交付書面、上場有価証券等書面、目論見書、等をよくお読みください。 野村證券株式会社 金融商品取引業者 関東財務局長(金商) 第 142 号 加入協会/日本証券業協会、(社)日本証券投資顧問業協会、(社)金融先物取引業協会 この資料は、年金基金運営及び企業財務業務の参考となる情報の提供を目的としたもので、これらに関する特定の戦略や手法をご提言するために作成したものではありません。年金基金運営及び企業財務業務はご自身の判断でなさるようお願いします。この資料は、野村證券から直接提供するという方法でのみ配布致しております。提供されました御客様限りでご使用下さい。この資料のいかなる部分も一切の権利は野村證券に帰属しており、電子的または機械的な方法を問わず、またいかなる目的であれ、無断で複製し又は転送等を行わないようお願い致します。
    28. 28. ≪ Disclaimers required in Japan ≫   Investors in the financial products offered by Nomura Securities may incur fees and commissions specific to those products (for example, transactions involving Japanese equities are subject to a sales commission of up to 1.365% (tax included) of the transaction amount or a commission of ¥2,730 (tax included) for transactions of ¥200,000 or less, while transactions involving investment trusts are subject to various fees, such as sales commissions and trust fees, specific to each investment trust). In addition, all products carry the risk of losses owing to price fluctuations or other factors. Fees and risks vary by product. Please thoroughly read the written materials provided, such as documents delivered before making a contract, listed securities documents, or prospectuses. Nomura Securities Co., Ltd. Financial instruments firm registered with the Kanto Local Finance Bureau (registration No. 142) Member associations: Japan Securities Dealers Association; Japan Securities Investment Advisers Association; and The Financial Futures Association of Japan. DISCLAIMERS This material is: (i) for your private information, and we are not soliciting any action based upon it; (ii) not to be construed as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such offer or solicitation would be illegal; and (iii) based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.   Investors should consider this report as only a single factor in making their investment decision and, as such, the report should not be viewed as identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of the Nomura Group member identified in the banner on page 1 of this report. Further information on any of the securities mentioned herein may be obtained upon request. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this publication, which may arise as a result of electronic transmission. If verification is required, please request a hard-copy version.

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