Engagement Guidelines at SuMi TRUST
We, as a responsible institutional investor, shall engage with companies with the view to enhance corporate values and encourage sustainable growth subject to “Japan’s Stewardship Code” to which we have announced our commitment, in order to enhance long term investment returns for our beneficiaries and clients. Our analysts at the Investment Research Department will engage directly with companies.
The targeted companies are included in all domestic equity portfolios including active and passive products. For efficiency purposes, we have prioritized companies in our active portfolios. Our prime focus will be on companies involved in corporate scandals, with corporate governance issues and significantly low ROEs.
As it is imperative to understand the exact nature of the situation and status, we shall make every effort to study and understand the governance, capital structure, business strategy and risk management of companies prior to any engagement.
We are mindful not to obtain any material or insider information. Where there are risks of exposure, we will abide by our internal guidelines and procedures accordingly.
We shall engage primarily with company management. Through an all-encompassing engagement process, we shall build trust and share our views on issues concerned.
Our comments and opinions given during engagement shall be approved in advance by the General Manager of the Investment Research Department. The General Manager shall assess whether they are relevant and contribute to value creation and/or sustainable growth of the company. Moreover, they must not be deemed “acts of making an important proposal” as defined in the Financial Instruments and Exchange Law. All comments made by both SuMi TRUST and the company shall be briefly and transparently documented. Furthermore, we shall monitor through publicly available information, the effectiveness of engagements by subsequent corporate actions taken.
Engagement activities shall initially be reported to the “Stewardship Engagement Committee” and shall be appropriately reported to beneficiaries and clients.
Stewardship Engagement Committee
The Committee shall be established to deal with engagement activities. The Asset Management Department has been assigned as the Committee office.
- Committee members consist of General Managers of the following departments: Investment Research Dept., Asset Management Dept., Passive and Quantitative Investment Dept., and the Equity Investment Dept. The General Manager of the Fiduciary Risk Management Dept. shall participate in, and monitor Committee meetings, and evaluate the suitability of its activities.
- The General Manager of the Investment Research Department shall chair the Committee and make any important decisions.
The Committee shall discuss the following matters:
- The content of engagement activities in accordance with “Guidelines on Japan’s Stewardship Code”, amendments and/or withdrawals of guidelines, and any other significant matter concerning engagement activities.
- The suitability of engagement activities based on the monthly report from the Investment Research Department