2021/ 2022

CONTENTS

3 Message from the CEO
5 Evolution of ESG Investments and Our Initiatives
7 12 Topics of SMTAM's ESG
9 Features
9
11
13
15

Addressing SMTAM's TNFD
Current Status of the Palm Oil Problem and SMTAM Initiatives
Participation in the Net Zero Asset Managers Initiative
Diversity and Initiatives Envisioned by SMTAM

21 Purposes of Stewardship Activities
23 2020/2021 Stewardship Activity Focus Topics
25 Stewardship Activity Initiatives
25
29
33
34
40
41
43

Overview
Status of Initiatives by 100 Top-down Dedicated Companies
Engagement that Contributes to Investee Corporate Value
Engagement example cases
Message from the Global Initiative
Activity Report from the New York Base
Exercise of Voting Rights

47 ESG Integration
47
49
53

Overview
Impact Investment Strategy
Fixed Income ESG

57 Disclosure of Climate-related Financial Information under TCFD
65 ReferenceThis is a booklet issued by Sumitomo
Mitsui Trust Asset Management Co., Ltd.
to report on its stewardship activities
and promote clearer communication
and understanding.
Eﬀorts made throughout the Sumitomo
Mitsui Trust Group include striving toprovide stakeholders with value andcollaborating on ESG activities withscope to boost the long-term company
value of the Group over time based ontransparency.
Sumitomo Mitsui Trust Holdingsʼ website(https://www.smth.jp/en/csr/) includes
a full report and provides additional
reports on topical areas other than
Stewardship, such as Natural Capitaland Environmental Real Estate.

Our aim at all times is to be an asset management company
with closer relationships to our clients.
At Sumitomo Mitsui Trust Asset Management,
our top priority is striving to consistently boost the value of clients' assets entrusted to us in themedium to long term and actively promote stewardship activities as part of this aim.

2Realizing opportunities today
to ensure sustainable prosperity for tomorrow.
Your goals are our goals. Your success is our success.
We strive to create the new standard of asset management that
acknowledges the aspirations of all our investors and stakeholders
and work with each of you every step of the way.

Our corporate philosophy was re-established in March 2021.
We defined our ideal image of society as a broad concept

employees from a wide variety of generations voluntarily

for society from the perspective of all employees,

contributed to these activities. Rather than ask all

customers, and various stakeholders, and encapsulated

employees repeatedly to unify our ideas, we understoodthese thoughts into a short sentence. It includes ourthat an ideal organization should be tolerant of different

sincere desire toward all potentials in harmony with ourvalues and seek out common goals. Formulating afounder s ideals, and our desire to warmly cultivate a

corporate philosophy is something that should unite thetruly affluent society

interests and feeling of all employees. Therefore, I felt it

together with our various

stakeholders based on a desire toopen upnew

possibilities for a better future.
The definition of atruly affluent society

was important to have such a process this time, and I
believe that such effort will become part of the culture of

has a wide

the asset management company.

meaning. We understand it to mean new types of asset
management that meet future expectations

with

Activities related to rethinking the meaning of companies

unlimited possibilities according to the times.

and jobs are ongoing worldwide. This is related to

Regarding the process for establishing this philosophy,

rethinking the relationship between myself, the company,

there is one other point I want to emphasize; the activities

and society is the first step and is the start of a majorfor establishing this corporate philosophy involved all

movement.

employees over a period of time. More than 20

At the same time, as a responsible institutional investor,

realizing a carbon-neutral society in 2050. I believe that3

Representative Director and President

Yoshio Hishida

we feel it is our mission to help you reach future goals andWe are also actively participating in overseas

ideals through asset management

engagement activities from the early stages. As for the

To that end, stewardship activities such as contributing to

PRI, we have been a lead manager in the working group.

the enhancement of corporate value through dialog with

As of the end of September 2021, we are members ofinvestee companies and promoting ESG-related activities

16 international ESG promotion organizations and areare extremely important. Therefore, our desire is toengaging in related activities all over the globe. Whilecontinue making efforts and improvements.

we are collaborating with overseas asset owners andasset management companies, we express our opinions

We have been dealing with companies and society for years

as a Japanese asset management company, and actively

as a signatory of the United Nations Principles for

implement advanced ESG activities from other countries

Responsible Investment (PRI) since their establishment into reflect a global ESG perspective in engagement with

2006. In addition to the Japanese shares impact investment

Japanese companies.

fund that launched in October 2019, we already establishedan impact investment fund for foreign shares, and are readyThis Stewardship Report for this year will introduce the various

to provide these to our customers. In addition, ESG

activities that we have been engaged in over the past year. I

standards were determined in the proposal for thehope that you will appreciate our activities, which are being

appointment of directors in the guidelines for exercisingcarried out in cooperation with many employees andvoting rights for Japanese shares in January of 2021.

stakeholders.

4Evolution of ESG Investments and Our Initiatives
With the evolution of ESG investments around the world, we are one of the ﬁrst companies topromote proactive initiatives, including product development.
As a responsible institutional investor in favor of the Japan Stewardship Code, and as a body that has signed the UN PRI,
we aim to achieve sustainable growth and sustainability for the company and all of society by encouraging companies
to resolve ESG issues through business excellence.
Today, both throughout the world and in Japan, there is a major change occurring. Companies themselves areseriously considering the balance between solving social issues and achieving business results, and there is a call for
how businesses should get there. As an asset management company, we take this change seriously, and will identify
and invest in companies that will grow at a new stage, to continuously pursue the balance between solving social
issues and gaining a return on investments.

Since theEvolution of
ESG Investments

1920s

Initial ethical investment● Choice of investees based on

1960s
SRI as a social movement● Cooperation with social movements including

human rights, labor, and the environment

religious and ethical motives

1920

1960

2003
Our initiatives

Started oﬀering publicly oﬀered
investment trusts of Japanese shares SRI for
Individual investors

2004
Started oﬀering SRI funds to
DC plan2006
Signed PRI (Principles for
Responsible Investment)

5

2010
Started oﬀering publicly oﬀered
investment trusts ofChinese shares SRI

2014
Accepted Japan Stewardship Code
(SSC)

2006

Presented the concept of ESG in

PRI (Principles for Reasonable Investment)
for the ﬁrst time in the world

2015

Adopted the Sustainable Development
Goals (SDGs) at the UN Summit

2010s

1990s to 2000s
Both ﬁnancial and non-ﬁnancial
assessments

Integrating the environmental andsocial impact of investments● Integrating the environmental and social impact ofinvestments as well as investment returns● Merging ﬁnancial and non-ﬁnancial (ESG) assessments● Integrated an assessment of the company's response to

ESG issues and ﬁnancial impact

1990

2000
2006 SRI

2010

2015 ESG

Developed impact
investment products
Set Seeds in Japanese Stocks(Commercialized in 2020)

Introduced ＭＢＩＳ® for non-ﬁnancial
information assessment

act2019 Imp

nd asstment fu ts
pact inve
vestmened an imd ESG inDevelopanISR
ion ofan evolut

2020

2019

2015

2020

Launched Quality Growth, a strategy
for managing Japanese shares(Research ROE enhancement)

Set Global Shares Impact Fund Seeds
Accepted the revised SSC

2021
Listed on SMT ETF Carbon EﬃcientIndex Japan Equity

2017
Established the Stewardship
Development Department
Established the Stewardship
Activities Advisory Committee
Accepted the revised SSC

Sponsored by Tokyo

Tokyo Financial Award

ESG Investment Categoryout of 40 ﬁnancial institutions across 10 countries

Award-winning Company

2019

Received the Tokyo Financial Award ESG Investment
hosted by Tokyo Metropolitan Government (February 2019)6

SMTAM s ESG12 Topics
SMTAM promotes top-down engagement with 12 ESG topics*.

E nvironment
Climate Change Issues

S ocialNatural capital andresource protection

Human rights

Reduction of greenhouse gas
emissions and decarbonization
Promotion of corporate activitiesaligns with the Paris Agreement

Reducing food waste loss andaddressing water resource
shortages
Corporate activities that incorporate
biodiversity

Elimination of child labor andforced labor of migrant workers
Comprehensive supply chain
management from a humanrights perspective

Environmental destruction /Pollution control

Environmental
business opportunities

Human capital

Addressing illegal deforestation
and agricultural land development
Addressing the marine plastic
issueTechnology development thathelps reduce environmental load
Expansion and promotion ofenvironmentally-friendly products
and services

Establishment of diverse work
styles
Improvements to human resource
education and individual
productivity

Promotion of
corporate activities

Governance

Proper disclosure of ESG information
Corporate activities that contributeto better capital efficiency
Backcasting based on a long-term
visionStable andfair governance system
Better governance of company
misconduct
Better management discipline
Review and strengthening of group
governance systems* See pages 29-32

7

Governance reform
Better board of directors skill set
Promotion of diversity management
Improving the effectiveness ofthe board of directors

Review of Our Activities
During the Past Year

Future Activity Policy

Addressing
Climate Change

We promoted the formulation of anaction plan and reset goals that aligns
with the Paris Agreement in regards to
the reduction of greenhouse gas
emissions, which is causing natural
disasters to intensify. In particular, wehave taken a stronger stance withcompanies that are regarded as having
high emissions.

We have positioned it as the most important
issue. Therefore, we will encourage early
efforts to effectively stop the increase in
GHG emissions due to the resumption of
economic activities after the COVID-19
pandemic. We will also encourage thedevelopment of an effective action plan thataligns with the government s moreaggressive emission reduction targets.

Natural capital andresource protection

Discussions were held mainly aboutindustries and companies that have alarge impact on the shift to corporate
activities that take the protection ofnatural capital and resources into
consideration.

Maintaining and ensuring natural capitaland biodiversity are important
obligations. We encourage companies
to take actions and make efforts to theextent possible in order to eliminate theeffects of external diseconomies.

Environmental destruction /Pollution control

We have strengthened dialogs withcompanies connected with the marine
plastics issue to prevent marine
pollution and realize biodiversity and arecycling-based economy.

To realize a recycling-based economy, it
is essential to strengthen cooperation
between industries and companies at
each stage of the supply chain. We willhold talks that include the value chain
and encourage actions toward therealization of a recycling-based economy.

Environmental
business opportunities

We discussed with companies about
supporting technological development
and expanding products and services
that contribute to reducing environmental
load.

It is essential to find balance between
resolving environmental issues andachieving economic returns in order toachieve social and corporate
sustainability. We will hold dialogs foraccomplishing this.

We confirmed whether child labor andforced labor of migrant workers exists inthe supply chain, and discussed
methods for checking human rights
issues with the Board of Directors.

We will encourage the establishment ofa system where the Board of Directors
can continuously check for human rights
issues.

Sustainable local society

Discussed on business model reforms
targeting better sustainability of local
infrastructure.

The progression of depopulation and aging
appear to be irreversible. We are encouraging
companies to shift to a business model that issustainable within their community.

Human capital

Talks were held on the progress of work
style reforms related to the spread of
remote work due to the COVID-19
pandemic, and on measures forconnecting DX promotion to improve
human productivity.

By deepening work style reforms such as
by establishing remote work and further
promoting DX, we will make effort toimprove human productivity and thereby
improve profitability.

Health and safety

We confirmed the status of employee
health maintenance and management
during the COVID-19 pandemic andefforts for handling this pandemic as asocial issue. We discussed efforts andimprovement measures related to medical
access by pharmaceutical companies.

In addition to countermeasures for the
COVID-19 pandemic, we will focus on theissue of drug-resistant bacteria, which is often
overlooked because of the current pandemic,
and have constructive talks on topics such as
new therapeutic agents, new businessmodels, and in-hospital preventive measures.

Supply chain management

In response to production suspensions at domestic
and overseas factories due to the COVID-19
pandemic and heavy rains, and issues with partsprocurement, we have discussed the sophisticationof supply chain management from the perspectivesof infectious diseases and natural disasters.

In addition to confirming the effectivenessof supply chain restructuring that has beenpromoted due to the COVID-19 pandemic,
we will urge companies to further enhancetheir sophistication and strengthen risk
management for after COVID-19.

Promotion of
corporate activities

While encouraging information
disclosure, materiality identification, andthe setting of KPIs, we reviewed theeffective use of funds and unprofitablebusinesses, and discussed measures for
improving capital efficiency.

A backcast perspective based on along-term vision is more important for acompany's medium-term management
plan. As external uncertainty increases,
we encourage companies to takeactions for resolving problems based ona long-term perspective.

Stable andfair governance system

We strongly urged companies facing
misconduct to prevent recurrence andstrengthen governance. In addition, we
continued to emphasize the need to
improve management discipline by
reducing cross-held shares andabolishing takeover defense measures.

We will continue to urge companies
involved in misconduct not to repeat suchactions and to strengthen their governancesystem. We will encourage corporate
actions for improving management
discipline and continue discussing issues
related to group governance.

Governance reform

Discussions were held on the skill set of
the Board of Directors, active participation
by women for achieving diversity, andefforts to enhance the effectiveness of
the Board of Directors.

We will continue holding discussions inorder to establish a truly effective Boardof Directors allowing achievement ofintermediate goals backcasted based onwhere the company should be, and toachieve functional management.

ESG12 Topics

E（Environment）

Sustainablelocal society
Addressing depopulation inr u r a l areas and aging public
infrastructure
Sustainable social infrastructure
and business model

Health and safety
Transitioning to wellness
management
Improving global medical access
Addressing issues with drug-resistantbacteria

Supplychain management
Resolving issues with labor,
the environment, and society
Addressing the intensifying of
natural disasters and the spreadof infectious diseases

S（Society）
Human rights

G（Governance）

8

Purposes of Stewardship Activities

Features

Current Status of the Palm Oil Problem and SMTAM Initiatives

Addressing SMTAM's TNFD

Feature1

2020/2021 Stewardship Activity Focus Topics
Participation in the Net Zero Asset Managers Initiative

TNFD Taskforce on Nature-related Financial Disclosures

Initiatives for addressing issues with natural capital（This article is based on facts and schedules known as of the end of August 2021.）

Blessings from nature such as resources are often utilized ineveryday human life and economic activities based on thepremise of regeneration. For example, rainwater andreservoirs are used for water, but such can be depleted if
used excessively. For human society to maintain sustainablegrowth, it has become necessary to manage resources thatwere viewed as a blessings from nature. Therefore, ourcompany recognizes the importance of assessing whether
investee companies are sustainably using the naturalenvironment.

Forum, natural capital accounts for an estimated US$44
trillion in economic activity, which is more than half of theworld's gross domestic product (GDP). So, it is believed that

Challenges related to natural capitalthe deterioration of the natural environment will be

Just as with climate change, the deterioration of the natural

something that interferes with the sustainable growth of theenvironment could pose significant corporate and financial

economy and society. In recent years, biodiversity, whichrisks. Various social and economic activities are supported

supports ecosystems and is a part of natural capital, hasby the many blessings received from nature. Natural capitalbeen declining. The World Wildlife Fund (WWF), an NGO

is a term that considers forest resources, water resources,that addresses environmental issues, estimated thatsoil resources, air resources, and biological resources as

biodiversity declined by 68% in the nearly 50 years from

capital. According to a 2020 report by the World Economic

1970 to 2016. According to a report by the British
government, when compared to other economic capitaltrends, the overall decline in natural capital is significant.

Living Planet Index
1.2
Living Planet Index
1.0

The impact from the destruction of ecosystems and the loss

0.8

95% confidence interval upper limit

global framework to prevent these with the goal of recycling.

2016：0.32

For example, regarding biodiversity, at the 15th meeting of the

95% confidence interval lower limit

0.4

Conference of the Parties to the Convention on Biological
Diversity (COP15) being held in October this year (2021) in

0.2

Kunming, China, consideration was given to revising the Aichi
Targets that were set at COP10 in Nagoya in 2010. Our goal
1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

（Source: Created by our company based on WWF data）* The Living Planet Index is an index released by the World Wildlife Fund (WWF) thatmeasures trends related to biodiversity. Between 1970 and 2016, mammal, bird,
amphibian, reptile, and fish populations have declined earth wide by an average of 68%.

9of natural capital due to economic activities is expected tocontinue growing. Therefore, we are currently developing a

0.6

0.0

Establishing a framework for protecting domestic andforeign natural capital and the launch of TNFD

is to reverse the loss of biodiversity by 2030 and bring abouta world that coexists with nature by 2050.
In Japan, the National Biodiversity Strategy was formulated in2008 based on the Basic Act on Biodiversity. Since 2020,

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Diversity and Initiatives Envisioned by SMTAM

studies have already been underway for formulating the next

In addition, since the purpose of this framework is to disclosenational biodiversity strategy.

and verify the overall impact on natural capital, disclosure is

In response to these movements, there is an increasing trend

done gradually, and priority is given to businesses that are

to require companies to disclose how corporate activities are

considered to have a large impact. For now, attention will be

impacted by natural capital and how corporate activities

focused on the disclosure status of sectors related to theimpact natural capital as part of their business strategy. In

agricultural supply chain, which have a major impact on the

addition, the Taskforce on Nature-related Financial

environment (daily necessities, retail sector, etc.). However,Disclosures (TNFD) was launched in June 2021. The goal of

the overall market is assumed to have a major impact on the

the TNFD is to develop an information disclosure framework

natural capital of the value chain, so it is believed thatby the end of 2023 similar to TCFD, which is an information

corporate information disclosure will be required for all

disclosure framework for climate change.

sectors.

Whereas the TCFD is mandated by governments, the TNFD

Policy and schedule for our initiatives

is lead by the United Nations Environment Program FinanceInitiative (UNEP FI), the United Nations Development

We have long been working on the conservation and

Program (UNDP), the Global Canopy (NGO in the UK), andregeneration of natural capital as an important environmental

the World Wildlife Fund (WWF). It was started voluntarily

issue, and have engaged in activities related to palm oilbased on initiatives in the private sector. Since September

production, and government activities and recommendations

2020, we have been the only Japanese investment institution

related tropical rainforest conservation in Brazil andto participate in this informal working group that is a

Indonesia. In the future, we will also promote activities for

preparatory working group for the launch, and havedisclosing information based on the TNFDs of investee

contributed to the launch of the TNFD through discussions

companies and participation in global collaborativeo n f r ame w o r k d e ve l opment a nd fut ure ma na geme n t

engagement activities.

methods.
In addition, as the only Japanese investment institution* that
Similar to TCFD recommendations, the TNFD discloses thehas committed to the TNFD, we will utilize our knowledge toenvironmental impact of companies on the natural

hold lectures and study sessions about the TNFD andenvironment and the financial impact that changes in theparticipate in discussions between the public and private

natural environment have on companies including physicalsectors on the contents and detailed rules for the TNFD asrisks for the loss of natural capital that companies depend on

domestic enlightenment activities in order to proactively

in their economic activities, transition risks caused mainly bycontribute to its smooth implementation and utilization fromstricter regulations, and systemic risks related to ecosystem

2023.

destruction, and scenario-based verification will be conducted.

* As of June 2021

TNFD: Schedule up until practical utilization
Phase

Preparation phase

Establishment Phase Ⅰ

Verification Phase Ⅱ

Examination Phase Ⅲ

Communication Phase Ⅳ

Introduction Phase Ⅴ

Period2020 to 2021

2020 to 2021

2022

2023

2023

2023

・ Consultation with relatedparties including ﬁnancial
authorities and dataservice providers in morethan 20 emerging
markets and developed
markets

・T N F D f r a m e w o r k
disclosure

・Announcement of
guidance for TNFD
framework utilization

・ July 2020
TNFD unoﬃcially launched

Activity
contents

・ September 2020
Informal working group
activities initiated by 62
ﬁnancial institutions,companies, governments,
etc.
・ January 2021
Statement of support
by President Macronof France

・C o m p o s i t i o n o f a
30-member task force
・ Start of TNFD framework
implementation

・ Veriﬁcation of the
TNFD framework inemerging markets anddeveloped markets
・ Framework reﬁnement

・ June 2021
Oﬃcial launch of TNFD

（Source: Created by our company based on the TNFD Secretariat（June 2021））

10

Purposes of Stewardship Activities

FeaturesAddressing SMTAM's TNFD

Feature2

Current Status of the Palm Oil Problem and SMTAM Initiatives

2020/2021 Stewardship Activity Focus Topics
Participation in the Net Zero Asset Managers Initiative

The Problem with Palm Oil

Current situation of the palm oil problem, which includes various issues such as
natural capital and human rights, and our initiatives

What is palm oil?

supply chain. In 2002, NGOs and other organizations set up
the RSPO (Roundtable on Sustainable Palm Oil) as a way to

When people hear about palm oil, many respond that they

resolve these by providing opportunities for related parties

have heard of it, but do not really understand what it is. Palmto discuss sustainable palm oil production that gives

oil is a vegetable oil made from the fruit of the oil palm,

consideration to the environment and human rights. We have

which is native to West Africa. In addition to being used forbeen participating in the RSPO since 2016, and through thatmany purposes such as breads and confectioneries,

framework, we have engaged in activities with palm oil

margarine, instant noodles, and other foods, it is also used in

producers and financial institutions that lend money todetergents and cosmetics. It is a cheap vegetable oil with abusiness operators to resolve related issues.

much higher yield than other vegetable oils, and currently

The goal of the RSPO is to

has the highest production of all vegetable oils in the world.

sustainable palm oil the norm. In addition to compliancetransform markets to makewith relevant laws and regulations, this also requires
However, there are a number of issues related to the palm

economically sustainable, environmentally appropriate, andoil production process, including environmental problems

socially beneficial palm oil production.

and human rights and labor issues related to the supply
chain, and climate change issues due to deforestation. It has
become an important theme in the goal of achieving virtuallyzero greenhouse gas emissions by 2050

PRI (Principles for Responsible Investment) Activities
through the Palm Oil Working Group- Engagement with Financial Institutions In 2016, we joined the PRI Palm Oil Working Group (WG) as

Our initiatives related to the palm oil problem

11

a PRI signatory, becoming a lead manager, and havecontinued to play an active role. This WG was established in

Activities through RSPO

2011, making it the oldest PRI WG. It was established

Since 1990, palm oil has grown into a major industry in the

because of major social issues related to Palm oil

ASEAN region. However, there are problems throughout the

production, including in the large-scale destruction ofRainforest destroyed by the laying of roads for palm oil production plantation development (Malaysia)

RSPO (2019)

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Diversity and Initiatives Envisioned by SMTAM

rainforests and biodiversity, poor work environments, anddetermined it was necessary to engage with multiple

conflicts with local residents over land development.

stakeholders in addition to investee companies.

In 2018, the WG determined the need to strengthen its
engagement activities with ASEAN financial institutions. The

In September 2020, we sent a letter to the government

main purpose is to encourage financial institutions that havetogether with 35 overseas investment agencies stating

an important role in supplying funds to the palm oil supply

concern that the economic stimulus measures based on the

chain to strengthen monitoring of palm oil producers to

law could result in deforestation. We received individual

ensure compliance. In November 2018, WG members,

replies to the letters from the country s Deputy Foreign

including our company, visited financial institutions in the

Minister and the Minister of Environment and Forestry. At theASEAN region to clarify the financial industry s role insame time, we privately engaged with the Ambassador totransitioning to a sustainable palm oil sector, and requested

Japan. We expressed our opinion that (1) long-term investors

better monitoring by financial institutions.

are concerned with the transparency of the application

Multi-engagement activities- Engagement with the Indonesian Government -process, not with the bill itself, and (2) special consideration
should be given to protect forest conservation measures. The
government recognized that, when enforcing the law, it

In November 2020, the Indonesian government passed anshould be aware of various stakeholders such as investors

Omnibus Law to accelerate business by simplifying laws

and environmental groups, and that the balance between

and regulations to boost the economy. In the bill stage, we

e c o n o m i c s ti m u lu s an d e n vi r o n m e n tal c o n s e r v a t io n ,were concerned that enforcement of the law could lead toespecially measures to prevent deforestation, should be

the destruction of forests. Since cooperation between the

carefully considered when determining detailed

government / public policy agencies and private companies /

implementation rules.

public enterprises is essential for addressing social issues, weFuture approach policy for resolving issues
The number of companies, including those in Japan, that are
Examples of engagement activities by the PRI Palm Oil WG
Target company Malaysia: CIMB Group (Finance)

currently strengthening their efforts to tackle the palm oil
problem is increasing (joining RSPO, JaSPON*, etc.). Although
the number of products with the RSPO certification (logo) is

Made decision to strengthen engagement with ASEAN ﬁnancial institutions
In 2018, the WG decided to strengthen its engagement activities with ASEAN ﬁnancial
institutions. The purpose was to encourage ﬁnancial institutions that have an important rolein supplying funds in the palm oil supply chain to strengthen monitoring of palm oil
producers, etc., to ensure compliance.

Engagement with CIMB
We initiated engagement with the CIMB Group, which is a representative ﬁnancial group in
Asia that has a major presence in ASEAN, by (1) clarifying their role as a ﬁnancial institution
for transitioning to a sustainable palm oil sector, and (2) requesting that they strengthen
monitoring of palm oil producers, etc., to ensure compliance.

increasing on products such as shampoos, soaps, detergents,
and cup noodles due to growing interest by consumers,
there is still much work needed to resolve problems that are
seen in the entire palm oil supply chain.
To resolve such issues, it is extremely important that
consumers take an interest and understand the importanceof palm oil being manufactured in a way that shows
consideration for the environment and society. As a
responsible institutional investor, we will continue making

Corporate action
・ Based on continuous engagement, the said company formulated policies that they would(1) become the ﬁrst ﬁnancial institution in the region to include EES (environmental,
economic, and social) issues into risk assessment, (2) add sustainable ﬁnance policies toefforts to resolve these issues by working on a wide range oftargets both upstream and downstream in the palm oil
supply chain.

the examination items of lenders, and (3) formulate a policy to promote better monitoring
to ensure compliance by palm oil producers.
・ In December 2020, they declared that coal-related loans would be phased out by 2040.
This made them the ﬁrst ﬁnancial institution in Malaysia to announce such a withdrawal
with a clearly deﬁned schedule.

Plans for the future
As we expand the scope of our engagement to other ﬁnancial institutions in ASEAN, wehave already seen a positive responses with sustainability activities from the top groups in
ASEAN, while we are still helping middle and lower groups to understand the importanceof sustainability activities by ﬁnancial institutions. Our policy is to engage with ﬁnancial
institutions in the ASEAN region to resolve issues related to palm oil.

* Japan Sustainable Palm Oil Network: This is a platform aimed at helping improve
environmental and social issues related to the palm oil industry by contributing to
the promotion of sustainable palm oil procurement and consumption in theJapanese market.

12Purposes of Stewardship Activities

FeaturesAddressing SMTAM's TNFD

Feature3

Current Status of the Palm Oil Problem and SMTAM Initiatives

2020/2021 Stewardship Activity Focus Topics
Participation in the Net Zero Asset Managers Initiative

Net Zero Asset Managers initiative

In July 2021, we participated in the Net Zero Asset Managers Initiative（NZAMI）with
the goal of contributing to a smooth transition to a low-carbon / decarbonized society.

;Background of participation with NZAMI

before the Industrial Revolution. We will contribute toachieving this goal by participating in NZAMI as a new

NZAMI is a global initiative by asset management companies

initiative. We understand that investment institutions play alaunched in December 2020 that is working to achieve net

major role in addressing climate change, which is one of thezero greenhouse gas emissions from investee companies bybiggest issues facing the international community.

2050. As of July 2021, 128 asset management companies
from around the world are participating, and the total assets
under management has reached US$43 trillion.

Targeting Japanese stocks first
Our policy is to achieve zero greenhouse gas emissions by

Climate change has long been one of the most importantinvestee companies through engagement with companies,

ESG issues facing the world, and it is starting to impact theexercising voting rights, and by developing and providing

corporate value of investees. The Japanese Government

investment products among other activities. Participation inalready announced a policy targeting carbon neutrality by

NZAMI requires the fulfillment of three commitments (Chart 1),

2050, and similar declarations have been made by otherand 10 Efforts that are required for that purpose have beenmajor governments. In the investment industry, asset owners

stipulated (Chart 2). Based on this, as an interim goal for 2030,

such as pension funds have taken the lead in targeting zero

we will target Japanese stocks held by the Company (about

greenhouse gas emissions, but management companies also

1/4th of the total assets being managed by the Company) as

need to be on the same page.

of 2030. Our plan is to reduce greenhouse gases by 46%
compared to 2013, which is the plan by the Japanese

We support the purpose of the Paris Agreement, whichgovernment, and then gradually expand the target assets.

endeavors to limit the increase in global averagetemperature to 1.5°
C, which is well below 2°
C, compared toSpecifically, we will promote engagement through validationof the greenhouse gas emission reduction plans by investee

Chart 1 : Three Commitments Required by NZAMI Participants

companies and through research on technologies required for
virtually zero emission by 2050, and strengthen our voting
policy in regards to climate change. We will also strengthen
engagement with stakeholders related to investee companies
including voting advisory companies and data service
providers. By providing investment products for securities
issued by companies that are connected to reducing
greenhouse gas emissions, we will provide investment
opportunities for such companies while also supporting theirfinancing.

Commitment a

13

Commitment b

Commitment c

Collaboration with asset owners

Setting intermediate goals

Review of intermediate goals

Work in partnership with asseto w n e r c l i e n t s o ndecarbonisation goals,
consistent with an ambition toreach net zero emissions by
2050 or sooner across all assets
under management ( AUM )Set an interim target forthe proportion of assets
to be managed in linewith the attainment of net
zero emissions by 2050
or sooner

Review our interim target
at least every five years,
with a view to ratchetingup the proportion of AUM
covered until 100% ofassets are included

In June 2021, we listed SMT ETF Carbon Efficient Index
Japan Equity on the Tokyo Stock Exchange as a product forinvesting in companies working on greenhouse gas emission
reduction. The ETF has the same risk/return as TOPIX, but the
carbon efficiency is 19% higher than TOPIX (as of the end of

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Diversity and Initiatives Envisioned by SMTAM

Chart 2 : 10 Efforts to Fulfill Commitments

at AIGCC (Asia Investor Group on Climate Change). In

Assets in line with commitment (b)addition, we participated in the launch of the Ceres (Coalition1

Set interim targets for 2030, consistent with a fair share of the 50% global reduction in
CO2 identiﬁed as a requirement in the IPCC special report on global warming of 1.5°
C

2

Take account of portfolio Scope 1 & 2 emissions and, to the extent possible, material
portfolio Scope 3 emissions

3

Prioritize the achievement of real economy emissions reductions within the sectors
and companies in which we invest

4

If using oﬀsets, invest in long-term carbon removal, where there are no technologically
and/or ﬁnancially viable alternatives to eliminate emissions

5

As required, create investment products aligned with net zero emissions by 2050 andfacilitate increased investment in climate solutions

Across all assets under management

6

Provide asset owner clients with information and analytics on net zero investing andclimate risk and opportunity

7

Implement a stewardship and engagement strategy, with a clear escalation and voting
policy, that is consistent with our ambition for all assets under management to achieve
net zero emissions by 2050 or sooner

8

Engage with actors key to the investment system including credit rating agencies,
auditors, stock exchanges, proxy advisers, investment consultants, and data andservice providers to ensure that products and services available to investors are
consistent with the aim of achieving global net zero emissions by 2050 or sooner

9

Ensure any relevant direct and indirect policy advocacy we undertake is supportive ofachieving global net zero emissions by 2050 or sooner

Accountability

10

Publish TCFD disclosures, including a climate action plan, annually, and submit themto the Investor Agenda via its partner organizations for review to ensure the approach
applied is based on a robust methodology, consistent with the UN Race to Zerocriteria, and action is being taken in line with the commitments made here

for Environmentally Responsible Economies) Working Groupon Land Use and Climate Terms of Reference in North
America. Furthermore, as part of our policy on advocacy
activities, we support and participate in The 2021 Global
Investor Statement to Governments on the Climate Crisis
addressed to governments of each country through theInvestor Agenda.

As a responsible institutional investor,

we will contribute to a smooth transition toa low-carbon / decarbonized society bymeans of stewardship activities.
At this point, we prioritize the reduction of greenhouse gas
emissions by investee companies, and do not promoteso-called carbon offset*2, where all or part of the amount thatcannot be reduced are compensated using other methods.
This is because we believe that if investee companies use
such methods to survive, it will not lead to a review of theirbusiness models and reliable emission reductions. In
addition, we will not simply withdraw from investment

March 2021). Before that, in May of the same year, we began(divestment) to exclude companies with high greenhouse gas

selling the investment trust Decarbonization-related Global

emissions from investment targets. Withdrawal from

Equity Strategic Fund. This fund invests in the shares ofinvestment is an easy way to eliminate the company scompanies connected with decarbonization (companies thatinvolvement, but we believe that even if the assets weare expected to contribute to the reduction, absorption, andmanage can be decarbonized, it will not result inremoval of greenhouse gas emissions).

decarbonization in the real world. It is our unwavering policy
since we began stewardship activities nearly 20 years ago towork with companies to encourage improvement. ThroughExpanding the target to foreign stocks

stewardship activities, we will focus on activities such as

Our policy is to expand target assets to include foreign stocks

engagement with investee companies.

based on what we learn from our efforts with Japanese stocks.
In addition to our own engagement activities with overseas

As a responsible institutional investor in favor of the Japan

investee companies utilizing our three bases in Japan, Europe

Stewardship Code, and as a signatory of the United Nations(London), and the United States (New York), we are proactively

PRI, we aim to achieve sustainable growth and sustainability

tackling climate change issues through various collaborations

for investee companies and all of society by encouraging

based on global initiatives.

investee companies to resolve ESG issues through businessexcellence. Going forward, we will add activities throughCurrently, with CA100+ (Climate Action 100+) , in addition

NZAMI to continue our efforts in tackling climate change

to being a part of the Global Steering Committee, we are theissues and promoting a smooth transition to a low-carbon /lead manager (an organization that engages on behalf ofdecarbonized society.

*1

participating investment institutions) of engagement withmultiple Asian companies. We are also the lead manager ofthe Asian Utilities Engagement Program (CA100+
collaborative engagement program for Asian public interest
companies with high emissions from non-target companies)*1 See page 69 for each initiative such as CA100+.
*2 Making up for all or part of greenhouse gases that cannot be reduced despite
eﬀorts through eﬀorts such as aﬀorestation, forest protection, and clean energy
projects (purchase of emission credits).

14

Purposes of Stewardship Activities

FeaturesAddressing SMTAM's TNFD

Feature4

Current Status of the Palm Oil Problem and SMTAM Initiatives

2020/2021 Stewardship Activity Focus Topics
Participation in the Net Zero Asset Managers Initiative

Diversity Envisioned by SMTAM
We have placed diversity as an important agenda for engagement.

Why is diversity so important and what can be done to promote it?
We interviewed Ms. Mami Sasaki, one of our External Directors

who has been successful in the ﬁnancial industry since the start of women s advancement.

Kyoko Hara

Mami Sasaki

Keisuke Fukunaga

Sumitomo Mitsui Trust Asset Management Co., Ltd.
Stewardship Development Department

Sumitomo Mitsui Trust Asset Management Co., Ltd.
External Director

Sumitomo Mitsui Trust Asset Management Co., Ltd.
Chief Stewardship Oﬃcer

15

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Diversity and Initiatives Envisioned by SMTAM

Fukunaga

Ms. Sasaki is the chairperson of our Fiduciary

experts who have a wealth of overseas experience, so

Duty Advisory Committee (hereinafter referred to as the FD

discussions become very lively. I believe that diverse

Advisory Committee). Today, I d like to talk with Ms. Hara,

experience greatly benefits the board of directors and thewho is in charge of diversity-related initiatives, about gendercommittee.

diversity,

which is one of the topics we focus on withengagement.
SasakiThank you for giving me this opportunity to speakwith two people who are working actively this field each an

Management commitment and action
̶The driving forces behind diversity promotion

every day. I ve been working since the beginning of

Fukunaga

women s advancement and have experienced all stages ofdiversity in your career?

life as a woman, so I think there is something I can add to

Sasakithis discussion.

respecting the individuality of the people who work here is

Have you ever realized the importance of

A company is built on employees. So, I think thatat the core of everything. It is especially important toDifferent ideas and perspectives are important
Fukunagaconsider this at the management level.
Fukunaga

To promote corporate diversity, we feel it sEngagement is an important part of ournecessary to take two measures; to promote a change in

stewardship activities. There are two reasons why diversity is

corporate culture and an awareness by executives andsuch an most important issue. The first is that diversity

employees, and to establish a system that allows for lifes tr e n g t h e n s th e m o nit oring f unct ion of t he boa rd o fstage and work mobility. The commitment of top

directors, and the second is diversity enhances business

management is an important driving force for this.

competitiveness through innovation and the acquisition of

Sasakiexcellent human resources. As an External Director, Ms.

understanding by top management and my supervisors at

Sasaki, have you seen the importance of diversity in thethe time. In my generation, it was difficult for women to

Board of Directors?

take responsible positions without commitment by top

SasakiIn my own career, I was shown much

In addition to myself, our External Directors include

management. Responsible positions require

Professor Emeritus Yonezawa from a Graduate School, andcommensurate career development and experience. It

Mr. Iwase, a former Deputy General Manager of thewas very helpful to have the experience of working while

Metropolitan Police Department. This was the first time in myhaving future goals.

career working with someone from a police background. Mr.

Fukunaga

Iwase views things from a completely different perspective. I

received a major assignment?

feel that having people with different backgrounds on the

Sasakiboard of directors is extremely beneficial in terms of properly

half of the 1980s. At that time, some in the company

steering the company.

complained to my supervisor saying, Why are putting such a

Fukunagayoung woman in charge of this?

I have also been inspired when I receive

How did the people around you react when you

I was put in charge of a major customer in the latter

But his response was,interesting questions from external directors at the FD

because of her ability. At that time, there were still many

Advisory Committee. I have seen where receiving basic

people who felt that way even at foreign-affiliated securities

questions that are often overlooked and points that I nevercompanies. Some also said that it would be easier to work

expected lead to new ideas.

with me if I were a man. However, I have never felt that way.

SasakiBy only working with people from the financial

Although I faced such responses from time to time, I justindustry, you get blinded by the common sense of therecognized that there are people like that. I continued

industry. The FD Advisory Committee includes outside

working without worrying about it.

16

Purposes of Stewardship Activities

FeaturesAddressing SMTAM's TNFD

2020/2021 Stewardship Activity Focus Topics

Current Status of the Palm Oil Problem and SMTAM Initiatives

Participation in the Net Zero Asset Managers Initiative

Mami Sasaki
Sumitomo Mitsui Trust Asset Management Co., Ltd.
External Director

Joined The Fuji Bank, Ltd. (currently Mizuho Bank, Ltd.)
After served as Managing Director of Morgan Stanley (Morgan
Stanley Japan Limited, currently Mitsubishi UFG Morgan Stanley
Securities Co.,Ltd.). Joined Credit Suisse First Boston Securities(Japan) Limited as Managing Director and Head of Fixed Income
Sales. External Board Director of Daito Trust Construction Co.,
Ltd. since 2015. Served as an External Director of Sumitomo
Mitsui Trust Asset Management Co., Ltd. since October 2018.

Fukunaga

Do you mean that such a view existed even at

an objective analysis has not been made. This made me realize

foreign-affiliated companies?

again that it s necessary for companies to systematically

SasakiThat s how it was in Japan. However, in New York,

provide experience and training so that both men and womenwhere the head office is located, there was already a move

have the abilities needed for being promoted. In your case, Ms.

toward the promotion of women. People often talk about a

Sasaki, your boss gave you the opportunity and time to gain

quota system, and I think it is best to just set goals and giveexperience.

promotions. However, I think that simply introducing a quota

Sasakisystem will raise questions about what to do when an

don t actually want to be promoted. I think it is necessary for

unqualified woman takes a position. In Japan, that could bemanagement to find out why women individually do not wanta problem.

to take on responsible positions, collect detailed information,

Fukunaga

I often hear from corporate management that womenSince the employment system in Japan is notand then implement necessary measures. Japan has

flexible, it may be more difficult for companies to maketraditional expectations for women, so it s not easy fordecisions.

women themselves to escape from these. I felt that way

Harawhen I was raising children. We face the dilemma of

The other day, our president Mr. Hishida was theIfacilitator at a panel event of 30% Club Japan Investor Group as

haven t done this while unconsciously also thinking I must

chair. One panelist said, The ability of women has not been

do this. I was very aware of the restrictions imposed byvisualized, and there are no skills for objectively finding femalesocial norms and was very conscious of prioritizing andmanagerial candidates. Companies tend to look at job

balancing my daily work and private time within my limited

experience, but there are many factors. We must increase theschedule.

size of the human resource pool by evaluating the requirements
for managerial positions using objective factors, and develop
people who do not yet have the necessary experience and

17

The essence of diversity is respect for individuality

skills. When I heard that, I thought it made sense. She alsoHarasaid, The reason why self-awareness of women is so low ishome and society are gradually changing. For example, thethat women who are asked to be promoted are afraid because

generation of children whose mothers were pioneers like Ms.

People s expectations about the role of women in theStewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Diversity and Initiatives Envisioned by SMTAM

Sasaki welcome the idea. Do you feel that diversity is changing

Hara

in companies and society?

are like and this is what men are like is not diversity.

SasakiClassifying stereotypes that this is what womenYes, very much. Now, no one in the top managementof a company really believes that diversity is unimportant.
However, compared to Europe and the United States, there

The importance of role models

are fewer things in Japan that require understanding and

Sasakirespect as far as individuality and differences. In Japan, thewho came before me. In my generation, there were noword individual has not always had a positive connotation.

women in Japan who could be role models. But at the New

Diversity means understanding and respecting individuality

York headquarters I mentioned before, there were womenand the differences of each person. That is the starting point.

who were holding positions of responsibility and juggling life

When investors talk to business owners, I think it isevents. By talking with them, I came to feel that I could doimportant to deepen mutual understanding in order to movethe same. I think it is very important to have role models.

toward true diversity.

One problem in Japan is that there are few role models.

Hara

Hara

The reason why collaboration with a variety of

My thinking today is based on role model women

Today, I think people who have been active like Ms.

people leads to better performance is not because they

Sasaki are role models. As investors, I think that having

can give opinions from a female perspective. Rather,

women as External Directors not only gives diversity to theoverseas research shows that discussion are deepened

board of directors, it is also a role model for promoting

and new ideas are born based on the premise that it isgender diversity in the entire company. But what do you

necessary to explain something clearly because thisthink from the standpoint of actually being an External

person has a different background. So it is necessary to

Director at multiple companies?

thoroughly prepare to ensure mutual understanding and to

Sasakiexpect different opinions. Instead of saying,

everyonethat easy. A person with a career that fits in well with a

I hope that s true. But to be honest, I don't think it sboth the person who iscompany can be a role model, but how much impact can a

explaining and the people who give their opinions prepare

successful woman have as an external director withwell and do research. This deepens the work. When thesecompletely different education and experience? If a company

overlap, innovation becomes possible from a new

appoints an external director with the hope that they will beperspective. As you just mentioned, respecting

a role model, I think they should select someone with that inindividuality is important. I realized that it is difficult to see

mind to some extent.

the benefits of diversity when you take an external stanceHara

that it is still missing in Japan and diversity is notinstitution fits in nicely.

progressing, and it is better to appoint women.

Sasaki I think it is possible for me to serve as a role model atalready understands, right?,

SasakiAt our company, Ms. Sasaki's experience at a financial

Encouraging active participation by women andour company. However, I don't know if I can be a role model if

promoting women are only a small part of diversity. That

I m among people with completely different backgrounds. In thatalone is not enough. I myself sometimes am expected tosense, there is a movement toward appointing female external

say something from a woman s perspective. Of course, it's

directors, but it is also important to make sure that those whookay for others to think that what I say is from a woman s

are being appointed really meet the needs of the company.

point of view, but, although I am a woman, I don t thinkHara

that what I say is from the standpoint of representing

hired simply for diversity regardless of their needed skills. I

women. Rather, I feel it is just a statement from my point of

think it s very important to select candidates for directors

view, a statement as an individual. I have never felt that I

with an awareness of diversity while considering the skills a

made a certain business decision as a woman .

company wants directors to have.

It s bad for both companies and women if someone is18

Purposes of Stewardship Activities

FeaturesAddressing SMTAM's TNFD

2020/2021 Stewardship Activity Focus Topics

Current Status of the Palm Oil Problem and SMTAM Initiatives

Participation in the Net Zero Asset Managers Initiative

Keisuke Fukunaga
Sumitomo Mitsui Trust Asset Management Co., Ltd.
Chief Stewardship Oﬃcer

Joined Sumitomo Trust and Banking (currently Sumitomo
Mitsui Trust Bank) in 1991. Since 2001, he has been ahigh-tech analyst and is in charge of voting rights in the AssetManagement Department, and has been involved in research
and analysis from the perspectives of corporate earning
power and governance sophistication.
With Sumitomo Mitsui Trust Asset Management since 2018
after the group's investment departments were integrated.
Current position since 2019.

Fukunaga

Regarding the skills of directors, skill matrix

strengthen monitoring. Finally, gender diversity isdisclosure was added to the recent revision of theespecially important in industries that handle consumer

Corporate Governance Code, but we have already been

products where women are customers. I talk to companies

asking companies to do this through engagement. We

from these perspectives, but some companies do not

feel that constructive discussions begin with what skills aquickly understand the need.

company believes their directors need to have. Based on

Sasakithat flow, we have discussions such as on the skills anddifferences and individuality. This is a basic requirement.

human resources that a company lacks, and who should

Actually, there is research showing how world trends

be appointed as an external director. When it comes torequires diversity, which benefits companies in the future,

div ersit y, it s no t just about appointing women. W e

so failing to understand this is a serious problem. It is

discuss what kind of diversity is really needed for themeaningless if they understand this logically, but do notcompany. However, women make up half of the world,

follow through with actions and hearts. It s necessary forso it is something that should be taken up as a gateway

managers to take action based on what they understand.

to diversity.

It will be important to recognize that failure to act will be

Top management must be able to respecta serious disadvantage for a company. This is clear when

Understanding and action on
diversity is essential for top management.
Fukunaga

19

considering how students who have been educated froma young age about things like SDGs do not want to workfor companies that do not respect individuality and

There are four types of companies where

diversity. It would be good if those in older generations

board diversity is especially important. The first are

could share the same values. However, I think we must

TOPIX100 companies that represent Japan. This is

be prepared to not have excellent employees in theessential as a global standard. The second are companies

future.

with sluggish performance. In this case, it is an effective

Fukunaga

measure for recovering business performance. Third are

generation and management to understand how the younger

companies with misconduct. This is necessary to

generation thinks.

I totally agree with that. It is important for ourStewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Diversity and Initiatives Envisioned by SMTAM

Kyoko Hara
Sumitomo Mitsui Trust Asset Management Co., Ltd.
Stewardship Development Department
Senior Stewardship Oﬃcer
Joined Sumitomo Mitsui Trust Asset Management in 2018 afterworking as a fund manager and analyst at an asset managementcompany of a securities group company. Involved withe n g a g e m e n t , v o t in g , an d E S G - r el a t e d a c t i v i t i e s a t t h e
Stewardship Development Department. Has been a member ofthe 30% Club Japan Investor Group since its inception in 2019,and is an active core member together President Hishida, who
serves as the chair.

Expect inclusion at SMTAM
Fukunaga

SasakiRegarding global initiatives, I think that we are very

active. For example, we have expressed opinions on behalf

In addition to the 30% Club Japan Investorof Japan related to deforestation in Brazil. In terms ofGroup, of which the president is the chair, we are also

diversity, we are the only Japanese asset management

participating in 30% related initiatives in the United Kingdom

company participating in initiatives at three bases in Japan,

and the United States, which are leading the way in

the United States and Europe. In Japan, our president himself

promoting diversity, and we are working globally from threeis carrying the flag and is very active. We are also workingbases in Japan, the United States, and Europe. We've beenenthusiastically on our internal activities. For example, we

getting all kinds of information from overseas, and in the U.S.

listen to feedback from the field on what we should be doing

and the U.K., major companies have gone beyond the stage

when creating our corporate philosophy. It has been threeof appointing female directors and have moved on to

years since we integrated the investment management

appointing female CEOs and increasing the number ofbusinesses of the group trust banks, so I think we need todirectors from diverse racial and ethnic groups. In the U.S.,

take our own acceptance of diverse values and respect for

NASDAQ has announced that diversity should include race

individuality to another level.

and LGBTQ+.

Fukunaga

Sasakifurther promote diversity with regard to women such as by

I think it is important for all people to be able toThank you. We are continuing to make effort towork in a situation where they feel comfortable, so it is very

introducing a mentor system.

important for a company to show that it agrees with various

Sasakivalues in order to promote diversity, and I think this can be

people with different skills, and I think that there are adone immediately.

variety of values. Therefore, in the future, I think it s

Fukunaga

important that we focus on inclusion.

I believe that we are participating as a core

We have mid-career hires, people from banks, andmember in a number of global initiatives including diversity,

Fukunaga

and we intend to put more effort into stewardship activities.

experiences today, which will no doubt lead to theWhat is your impression from an external perspective, Ms.

sophistication of our stewardship activities. We look forward

Sasaki?

to hearing your frank opinions in the future.

Thank you for sharing your meaningful

20Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Purpose of stewardship activities

Supporting Value Creationin the Investment Chain
Sustainable growth of investee companies drives growth in earnings,
and growth in earnings drives growth in dividends and wages which, ultimately,
beneﬁts household economies and the growth of the economy as a whole.
All of this together is known as the investment chain.
At SMTAM, we actively utilize our role as an asset manager
in the investment chain to support our investee companies create value,leading to maximum returns for our clients, while at the same time
contributing to the achievement of SDGs.

21

Stewardship Activity Initiatives

ESG Integration

Reference

Disclosure of Climate-related Financial Information under TCFD

Clients and Society

Sustainable growth

Medium-to-long-term investment return growthPursuing SDGs in partnership with investor

for growth of the global economy

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Total commitment to our clients and our world

22

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Stewardship Activity Focus Topics for 2020/2021
At SMTAM, we believe we have an important role to play in the investment chain as a responsible institutional
investor. Towards that end we are fully committed to the Stewardship Code and Corporate Governance Code, as
reflected in our domestic and overseas engagement efforts, exercise of voting rights and various other activities.
Below is a brief summary of the activities SMTAM was involved in between October 2020 and September 2021.

2020

9

11

Participated in the TNFD* (Taskforce on Nature-related Financial Disclosures)
Participated in a working group that handles engagement and makes recommendations on the disclosure ofnatural capital information.

Stewardship Report 2020/2021 published

Participated in Investor Action on AMR*
Joined as signatory of the organization that handles collaborative engagement and recommendations
to pharmaceutical and agricultural supply chain companies connected to the issue of resistant bacteria.

30% Club Japan* media event
Company President Hishida,
who is the Vice Chair (at that time, Chair as of June 2021) addressed.

ESG Disclosure Study Group* webinar
Mr. Horii, Managing Executive Officer of the Company, participated as a panelist.

2021

1

Revision of Guidelines for the Exercise of Voting Rights for Domestic Shares*See page 44

CDP* Award
President Hishida gave a lecture on The Perspective of Signatory Financial Institutions as a representative investor.

2

Signed a statement issued by the Access to Medicine Foundation (AtM)*
Signed a statement of support requesting the fair and equitable supply of COVID-19 vaccines globally.

Participated in the symposium
Movement around companies toward Biodiversity COP15
Participated as a panelist in a symposium sponsored by the MS&AD Insurance Group Holdings, Inc.

23

Stewardship Activity Initiatives

2021

3

4

5

6

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Attended webinar sponsored by ICJ Inc.
At the webinar for issuing companies sponsored by ICJ Inc., Mr. Fukunaga, Chief Stewardship Officer of the
Stewardship Development Department, explained how the Company exercises its voting rights.

Joined JETI-sponsored webinar
Participated as a panelist in the Leadership by Japanese Institutional Investors on Climate Change Stewardshipwebinar sponsored by the Japan Energy Transition Initiative.

Joined a new Ceres* working group
Participated in the newly launched Working Group on Land Use andClimate Terms of Reference as a founding member.

Supported the letter for G20 by the Investor Agenda*
Agreed with The 2021 Global Investor Statement to Governments on the Climate Crisis addressed to governments of each country,
including the Government of Japan, by the investor organization The Investor Agenda by UNEP-FI, PRI, CDP and others.

Participated in a new AIGCC* program
Launched collaborative engagement demanding that five major electric power companies in Asia to reduce carbon
dioxide emissions, strengthen information disclosure, and strengthen governance of climate-related risks.

ListedSMT ETF Carbon Efficient Index Japan Equity on the TSE

ETF which investor can see the degree of carbon efficiency improvement of a portfolio comparedto TOPIX. This visualized the significance of the efforts for social contribution through investment.

79Signed the Net Zero Asset Managers Initiative*
Initiative by global asset management companies with the goal of achieving net zero greenhouse gas emissions
from managed assets by 2050.

ICGN Governor (Director) inauguration
Appointed to the Board of Directors of ICGN, which is a network that disseminates opinions on
corporate governance, makes policy recommendations, and introduces best practices.

* See pages 69-70

24

Features

Purposes of Stewardship Activities
Overview

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Engagement that Contributes to Investee Corporate Value

Striving to maximize investment returns as a responsible
institutional investor.
As a responsible institutional investor, we pursue our three key pillars of stewardship activities that are built aroundengagement, the exercise of voting rights and measures for addressing ESG challenges.
Our aim is to use stewardship activities as a means of helping investee companies improve their corporate value,
thereby helping us to maximize medium-to-long-term investment return on the assets of our clients.
Underlying all of this is our commitment to uphold our fiduciary duties.
Because we believe that appropriate management of conflicts of interest related to stewardship activities helps us
better to fulfill our fiduciary duties. We are constantly working to manage our conflict of interest management
capabilities.

Maximize investment return
Improving the corporate value of investees

Help improve corporate value

3

2

1

Addressing
ESG Issues

As an investor, we call for investee
companies to tackle ESG issues andgenerate sustainable growth andadded value.

Exercise of
Voting Rights

The exercise of voting rights provides
opportunities to call for a minimum
standard of governance. We exercise
voting rights appropriately and inaccordance with a highly transparent
decision-making process.

Engagement

Engagement activities provide
opportunities to seek best practices
from companies, and we express
our views to contribute to theenhancement of corporate value
over the medium to long term.

Platform to support

1 ,2 , and 3[Upholding our fiduciary duties] [Conflict of interest management]
We promote initiatives aimed at providing client-oriented products
and services in line with the Policies regarding the Fiduciary Duties of the Sumitomo Mitsui Trust Group.

25

Stewardship Activity Initiatives
Engagement example cases

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Activity Report from the New York Base

Reference
Exercise of Voting Rights

1

Engagement

At SMTAM, we view engagement activities as opportunities to seek best practices from companies, and we communicate ourviews so as to contribute to the enhancement of corporate value over the medium to long term.
Gaining a proper understanding of a company's state of management and business situation is crucial to engagement.
The ESG experts in our Stewardship Development Department work together with industrial corporate analysis professionals in
the Research Investment Department to conduct in-depth engagement from both an ESG and business perspective, utilizing our
proprietary MBIS®* non-financial information evaluation tool.
We use our networks in Tokyo, New York and London to have our own engagement with investee companies. We also
conduct various activities and engage with stakeholders outside our investee companies through a wide variety of initiatives.

Exercise of Voting Rights

2

At SMTAM, we view the exercise of voting rights as an opportunity to call for a minimum standard of governance and consider it
to be one method of governance-related engagement.
We emphasize three key points when exercising voting rights: (1) high-quality governance that respects shareholder interests;(2) efficient utilization of shareholders' capital for sustainable growth; and (3) appropriate action in the event an incident occursthat damages corporate value.
We disclose our guidelines for the exercise of voting rights based on these criteria.
We also actively pursue engagement with companies with respect to the exercise of voting rights.

Addressing ESG Issues

3

It is important to address ESG issues which can affect investee companies' medium-to-long-term growth.
ESG issues reside in non-financial domains and do not manifest themselves in financial reporting, but they may have aconsiderable impact on corporate value over time.
It has long been our practice to actively address ESG issues, and when the Principles for Responsible Investment (PRI) were
established in May 2006 in order to prompt institutional investors to factor ESG considerations into their investment
decision-making processes, SMTAM was among the founding signatories.
We have also participated in various international initiatives which originated with the PRI and which led to expanding ESG
activities being undertaken worldwide.
As a signatory to the PRI, we endeavor to pursue upside potential and curb downside risk by incorporating ESG factors into ourinvestment decision-making process and aim to achieve maximize medium- to long-term returns for our clients.

* See page 47

26

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Overview

Engagement that Contributes to Investee Corporate Value

Stewardship Promotion Framework
Stewardship promotion is principally the responsibility of the Stewardship Development Department, which works in conjunction with highly experienced
analysts in the Research Investment Department.
Within Japan, we execute inhouse stewardship, as well as join the platform provided by the Institutional Investors Collective Engagement Forum (IICEF)
to pursue joint engagement.
Outside Japan, we dispatch representatives from Tokyo to meet with overseas companies, as well as rely on the inhouse engagement efforts of ourLondon office; additionally, we carry out engagement through global initiatives and undertake collaborative activities.
All stewardship activities are reviewed and reported to the Stewardship Committee and to the Stewardship Activities Advisory Committee, the majorityof whose members are independent, outside experts.

Executive Officer in charge of Stewardship
Development Department(Authorized decision maker)

Stewardship Activity Advisory Committee*1

Inquiry

Comprised of three independent,
external experts (the majority of members)

Recommendationand one SMTAM representative

ReportStewardship Committee
Engagement

Engagement policy and activity reporting

ReportExercise of Voting Rights

Policy approval and results reporting for the exercise of voting rights

Addressing ESG Issues

ESG activities policy and activities reporting

Global initiative-driven activities*3

ReportStewardship
Development Department

Collaboration

Research
Investment Department
Corporate analysts, Credit analysts

Collaboration

Host meetings, etc.

Listed company

Institutional Investors
Collaborative
Engagement Program

Collaborative

Program participation

Collaborative
Engagement Forum

engagement

Global 3-pole system*4
Collaborative engagement(domestic)

US Subsidiary
SuMi Trust AssetManagement Americas*2

UK Subsidiary
SuMi Trust International *2*1 Please refer to our website for previous meeting minutes
https://www.smtam.jp/company/policy/stewardship/activity̲status/*2 A subsidiary wholly owned by SMTAM*3 See pages 69-70 for a list of activities*4 The 15 employees who engage in stewardship promotion (including those in London and New York) are mainly composed of analysts,
fund managers, and overseas expatriates. They have an average of 20 years of investment experience.
(As of the end of September 2021)

27

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Reference

Activity Report from the New York Base

Exercise of Voting Rights

Conflict of interest management
The Sumitomo Mitsui Trust Group has established and publicly released its Policies regarding the Fiduciary Duties of the Sumitomo Mitsui
Trust Group. We promote initiatives aimed at providing client-oriented products and services in line with these policies. As we step up ourstewardship activities, we believe that proper management of conflicts of interest relating to these activities will contribute to deeply
embedding fiduciary duties into the way we do business; hence, we have put in place a conflict of interest management system.

●Conflict of Interest Management System

Board of Directors

Executive Officer in chargeof Stewardship
Development Department

Inquiry/
Recommendation

Fiduciary Duty Advisory Committee

Inquiry/
Recommendation

Sumitomo Mitsui Trust Holdings

Discussion/Enhancement

SUMITOMO MITSUI TRUST ASSET MANAGEMENT

Board of Directors
Management meeting

Inquiry/Recommendation

Preliminary discussion

Conflicts of Interest Committee
Conflicts of Interest Management
Enhancement Committee

Fiduciary Duty Discussion Panel (cross-company)

Stewardship Activities
Advisory Committee

Discussion/Enhancement
Supervision

Stewardship Development Department

Discussion/Enhancement

Group companies

Each operation department

Sumitomo Mitsui Trust Bank

Conflict of interest management/Monitoring

Middle Offices

Board of Directors

×Management meeting

Preliminary
discussion

Conflicts of Interest Management
Enhancement Committee

Corporate Sales Division

Restriction on personnel transfers, information exchange and interaction

Regarding possible conflicts of interest related to stewardship activities, we will conduct strict management according tocompany rules including conflict of interest management rules, investment management business rules, and other related rules
in order to put the interests of customers (beneficiaries) first.
We have also disclosed an overview of the policies determined in these conflict of interest management rules.
https://www.sumitrust-am.com/conflict-interest-management-policy
The Stewardship Committee meets monthly, and the Stewardship Activity Advisory Committee (hereinafter referred to as theAdvisory Committee) meets quarterly. At these meetings, deliberations are held on revisions to guidelines on exercising voting
rights and reports are made on stewardship activities. Reports on stewardship activities are also made to the Board of Directors
and the FD Advisory Committee once a year.
At the Company, the Executive Officer in charge of the Stewardship Development Department has exclusive authority over the exercise of
voting rights independent of the executive authority of other departments, which eliminates any possible conflicts of interest regarding theexercise of voting rights. Specifically, conflicts of interest include other departments exercising influence on the investment department
based on, for example, the importance of a business partner or the size of transactions. The Advisory Committee consists mainly of
external experts with guaranteed independence. This organization deliberates on various inquiries made by the Executive Officer in chargeof the Stewardship Development Department, and then makes a report. They establish, amend, or abolish company guidelines on
exercising voting rights, approve or disapprove proposals not stipulated in the guidelines, determine the appropriateness of interpreting
the guidelines in individual proposals, and verify or improve the process for determining whether to implement a proposal that could
cause a conflict of interest. The Executive Officer in charge of the Stewardship Development Department makes decisions on various
matters while respecting reports from the Advisory Committee, and if the committee submits a report on improvements to the exercise of
voting rights, prompt necessary corrective and improvement measures are taken while respecting the report to the extent possible.
Regarding all proposals to the parent company, Sumitomo Mitsui Trust Holdings, Inc., and regarding proposals for candidates as officers ofinvestee companies who have a close relationship with the Company or the parent company (active officers, persons who were in important
positions, etc.), in order to manage conflicts of interest, we consider the advice of voting advisory companies based on the guidelines forexercising voting rights, and properly deal with conflicts of interest after confirmation is made by the Advisory Committee before exercising
voting rights. At general meetings held from July 2020 to June 2021, determinations were made using the above process for 15 companies.

28

Features

Purposes of Stewardship Activities
Overview

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Engagement that Contributes to Investee Corporate Value

Status of top-down engagement initiatives
In 2019, an ESG investment policy was established at management meetings and ESG materiality was identified.
Based on this materiality, in 2020, we set 12 specific ESG engagement topics and promoted top-down engagement
activities after discussions at Stewardship Committee meetings and consultations and reporting at Stewardship
Activities Advisory Committee meetings.

Setting goals and targets, and the engagement process
ESG Materiality (Important Issues)

2019
E

S

G

Climate change

Human rights and community

Corporate actions

Natural capital

Human capital

Organizational design

Pollution and waste

Safety and responsibility

Stability and fairness

Opportunities related toEnvironment issues

Opportunities related to Social issues

Governance improvement

Risk

Opportunity

ESG Engagement Topics*

2020

E nvironment

S ocialClimate Change Issues

Human rights

Natural capital and resource protection

Sustainable local society

Environmental destruction/
Pollution control

Human capital

Environmental business
opportunities

Health and safety
Supply chain management

Governance
Promotion of corporate actions
Stable and fair governance system
Governance reform* See pages 7 and 8

29

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Reference

Activity Report from the New York Base

Exercise of Voting Rights

Selection of target companies for top-down engagement based on ESG topics and setting goals and targets

Corporate ESG issues

Target (Middle term)

Established in accordance withcorporate ESG management level

Goal (Long term)

Backcast

After selecting around 100 target companies from among investee companies from the top
down analysis according to each ESG topic, engagement activities will be promoted by setting
goals (long-term goals) for each ESG topic and setting targets (interim goals) by backcasting
based on the ESG issues and ESG management level of each company. Setting effective goals
and targets, and effective engagement are possible based on our deep understanding andknowledge about companies and industry trends

that has been accumulated throughnumerous engagements up until now, and knowledge on global trends related ESG gained
through domestic and foreign initiatives that we are actively participating in from our threebases in Japan, the United States, and Europe.

Stage management and monitoring
Engagement progress is managed in four stages according to the ESG topic, and further measures are then implemented
and the resolution of issue is monitored.

Stage management(1) Issue setting(2) Issue presentation(3) Issue sharing(with person in charge
at the company)

Monitoring(4) Issue sharing(with management)(5) Implementation of measures(6) The resolution of issue

・ Identifying important ESG issues with investee companies and setting specific topics (issues)
・ Setting targets (intermediate goals) by backcasting from topic goals

・ Issues are presented during interviews with companies and engagements are held continuously
for sharing issues

・ While sharing issues with the person in charge at the company, engagements is escalated to the
management for implementing measures and resolving issues

・ Issues are shared with management and best practices are introduced・ Internal examination is promoted for implementing measures and resolving issues

・ Corporate policy statements (corporate actions) are confirmed
・ Progress is monitored

・ Target achievements are confirmed and shared with the company
・ If the progress is insufficient, consideration is given when exercising voting rights

Improving corporate sustainability and corporate value
30

Features

Purposes of Stewardship Activities
Overview

Status of Initiatives by 100 Top-down Dedicated Companies

2020/2021 Stewardship Activity Focus Topics
Engagement that Contributes to Investee Corporate Value

Composition of top-down engagement topics

G

GovernancereformClimate Change Issues
Promotion of
corporate activities

Environmental
destruction/
Pollution control

Supply chain
management

E

Health andsafetyHuman capital

S

Environmental business
opportunities

Sustainable local society
Human rights

Trends according to topic
According to topic, environmental business opportunities are 23%, climate change issues are 21%,
corporate activity promotion is 16%, and human capital is 14%.

We will actively engage in about business-related opportunities and risks.
Balance among E, S, and G
According to ESG, E (environment) is 52%, S (society) is 25%, and G (governance) is 23%.
We have well-balanced engagements focusing on important issues related to E and S with investee companies.

Alignment with other topics
Setting sub-topics for target companies in addition to the main topics allows us to have engagement over a wider area.
We are involved in multifaceted engagement at the same time as our main engagement activities including theadvancement of women, reduction of strategically held shares, and human rights in the supply chain.

31

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Reference

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Activity Report from the New York Base

Exercise of Voting Rights

Progress in 2020 (July 2020-June 2021)
We have taken advantage of many opportunities such as Shareholder Relations (SR), Investor Relations (IR), and opportunities forengagements on the exercise of voting rights, and have taken steps with engagement by proactively approaching target
management.
In fiscal 2020, many companies escalated to Step 3 (Sharing issue awareness with people in charge at the company) and Step 4(Sharing issue awareness with management).
We will continue engagements in fiscal 2021. In particular, for companies at Step 4, we will work to escalate them forward to
Step 5 (Implementation of measures) and Step 6 (Issue resolution).
At the same time, we will keep an eye on alignment with other important ESG issues, add bottom-up engagement from abusiness perspective and risk approach engagement elements/activities, and encourage positive corporate activities.

E

Average progress
End of June 2020

1.8 step

End of June 2021

3.6 step

Progress in engagement(Composition ratio) 70%
60%

Case of infrastructure Company A
for supporting local society
Selected Sustainable local society from ESG12 Topics

S

End of June 2021

50%

End of June 2020

40%

Long-term goal: Transforming to a sustainable infrastructure

30%
20%
10%
0%

S

step1

step2

step3

step4

step5

step6

Medium-term target: Initiating discussions with stakeholders startingwith detailed disclosure of business balance

Average progress
End of June 2020

2.6 step

End of June 2021

3.5 step(1) Issue setting

February2017

Set Business a proﬁt/loss improvement
related to declining population
as an issue

Progress in engagement(Composition ratio) 60%
50%(2) Issue presentation40%

February
2017

Presented issue to person in charge

30%
20%
10%
0%

G

step1

step2

step3

step4

step5

step6

(3) Issue sharing(with person in charge
at the company)

AugustPresented our philosophy at

2018a Company A executive training camp(4) Issue sharing(with management)

MarchCompany A announced new business2019

venture with long-term vision(5) Implementation of
measures

May

Average progress
End of June 2020

1.7 step

End of June 2021

3.9 step

Progress in engagement(Composition ratio) 70%
60%
50%

2020

Company A disclosed 'Business a'balance details Launched a jointcommittee with stakeholders

40%
30%
20%
10%
0%

(6) Issue resolution
step1

step2

step3

step4

step5

step6

July

Company A determined measures

2020

for improving Business a balance32

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Overview

Engagement that Contributes to Investee Corporate Value

Engagement which contribute to create corporate value ofthe investee companies
We set our engagement targets as all brands held, with mainly TOPIX composition brands, and unto this time, wehave engaged with a broad range of companies representing roughly 90% of the market capitalization of the First
Section of the Tokyo Stock Exchange.
Our mission is to raise the level of medium-to-long-term corporate value and of the overall market and secure excess
returns which will help us in maximizing medium-to-long-term investment returns for our clients. In order to achieve thisgoal, we are also focused on making our engagement activities more efficient and effective by identifying the challenges
that each of our investee companies face.
Our approaches consist of the (1) market cap approach, (2) risk approach, and (3) top-down approach. We selecttargets of the market cap approach on the basis of management situations, importance of management issues, andmarket capitalization, among other matters. The risk approach targets companies for which opposition votes were
casted in the exercise of voting rights (low ROE, etc.) and companies that have engaged in misconduct. We selecttarget companies for the top-down approach on the basis of the 12 topics established premised on our ESG materiality.

SMTAM Engagement Process
Prepare opinions
To achieve effective engagement, our analysts use non-financial information analysis results andthe like to help them identify management issues and formulate effective and coherent opinions.

Pre
pa
r

We first submit the opinions formulated by each analysts to an internal review.
This both helps improve and standardize opinion quality among the analysts.

ns
inio
op

Rec
or
d

a

nitor
mo

e

Check in advancend

Express opinionspioRecord and monitor
After the meetings, we record investee companies responses to the analysts opinions.
We monitor the companies for any changes in management and then utilize this information

ni

ad

ss

va

re

acquire insider information is signed and mutually recognized.

nce

At each meeting, a written oath stating the analysts will not make any material proposals nor

Exp

Our analysts meet with investee company executives and express their opinions.

on

c
Che

s

k

in

when identifying management issues for the next engagement.

Transition of ratio of the number of companies taking corporate action* to the numberof companies engaged (Accumulation)（Unit: Company)
300
250

32％
Number of companies taking corporate action (Accumulation)

285

252

35%
30%
25%

200
150

26％

Ratio of companies taking corporate action

34％

18％
14％

19％

201

20%

16％

15%

141

100

99

10%

64

50

5%

35
0

End of June 15

End of June 16

End of June 17

End of June 18

End of June 19

End of June 20

End of June 210%* Only actions that are in harmony with the opinions expressed by our company are counted. * See pages 34-36 for specific examples.

33

Stewardship Activity Initiatives
Engagement example cases

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Activity Report from the New York Base

Reference
Exercise of Voting Rights

Engagement Example Cases - Domestic
C A SE 1
Company A in the manufacturing sector

Greenhouse gas emissions reduction
Corporate governanceAnalyst's Perspective
Since there is growing interest in climate change all over the world, companies with high absolute greenhouse gas emissions are being lookedat more strictly, making it necessary for them to address this issue. In addition, since there are listed subsidiaries, the independence of theboard of directors at these subsidiaries needed to be ensured.

Opinion from SMTAM
It was good that their integrated report disclosed analysis of
scenarios based on TCFD, but it may also be necessary to disclose
the financial impact and the company's plan for reducing greenhousegas emissions.
Reducing greenhouse gas emissions may require the use of
low-carbon raw material a in the medium term and switching todecarbonized b in the long term to reach the goal of zero
greenhouse gas emissions.
It may be necessary to consider a recycling method that emits lessgreenhouse gases than one that uses fossil fuels as a raw material.

SMTAM guidelines for the exercising of voting rights necessitate thatthe ratio of external directors for listed subsidiaries and relatedcompanies, be at least 1/3 to ensure independence. As of June
2019, they do not meet the criteria, so there is room for
improvement.

Company Response
Industry groups have set targets for reducing greenhouse gas
emissions, but individual companies have not set specific targets.
We also notice an issue with TCFD financial impact disclosure. We
want to work on formulating a specific reduction plan and actively
disseminate and disclose information.
Although it is technically possible to use low-carbon raw materiala , there are issues with mass procurement and manufacturing
productivity.
We are strongly aware of achieving carbon zero by 2050, but this isdifficult to achieve based on current manufacturing methods, so weare considering a recycling manufacturing method.

We also have a strong awareness of the importance of ensuring theindependence of the board of directors of listed subsidiaries, andwould like to begin selecting personnel.

Company Action
In August 2020, they decided to implement a new manufacturing
facility using recycling at overseas bases.
In March 2021, they announced their long-term environmental vision.
They set a goal of ▲30% greenhouse gas emissions by 2030 andcarbon neutrality by 2050.

In June 2020 and June 2021, two listed subsidiaries increased their
number of independent external directors to more than one-third of
the board of directors, and a voluntary nomination andcompensation committee was composed of a majority of
independent external directors.

Evaluation by SMTAM / Future Policy
Although certain engagement targets have been achieved with the announcement of the long-term environmental vision, we will request thatthey disclose a roadmap that includes specific measures to achieve 2030 targets.
Our policy is to continuously urge that the scope of targets be expanded such as with overseas business, the disclosure of financial impact wheninternal carbon pricing and border carbon tax are introduced, and the reflection of ESG indicators in remuneration for executives.

34

Features

Purposes of Stewardship Activities
Status of Initiatives by 100 Top-down Dedicated Companies

Overview

CASE 2Company B in the
non-manufacturing sector

Addressing social issues
Promotion of ESG information
disclosure (Social)Engagement that Contributes to Investee Corporate Value

CASE 3Company C in the
non-manufacturing sector

Cross-shareholding policy
Business strategy

Analyst's Perspective

Analyst's Perspective

In addition to setting goals and improving disclosure related to social issues
that increase corporate value over the medium to long term, as an advanced
company, we believe it is necessary to set goals in regards to gender
diversity and improve external communication.

As a company viewed as having cross-held shares, we thought it wasnecessary for them to clarify their holding policy.
We also thought it was necessary to further address the changing businessenvironment and improve the sustainability of their core businesses.

Opinion from SMTAM

Opinion from SMTAM

ESG materiality is being disclosed,
but not KPIs. In the past, Company
B s non-financial value wascomprised of social capital such as
human capital and intellectual
capital. Therefore, it seems
necessary to disclose KPIs andoutcomes that will impact futurefinance by resolving social issues.

To promote diversity among theboard of directors, as an advanced
company, it may be necessary to
set targets for female managers on
par with the ratio of female
employees, disclose their genderpolicy, and take specific actions.

Company Response
Currently, business results areshown as outcomes, andmateriality is not set based on
medium- to long-term strategies. As
pointed out, there are no KPIs thatcan be used as pre-financial
information, and nothing connected
to outputs or outcomes isdisclosed, so we would like toorganize and consider disclosure ofthese items.

Even on a consolidated basis, thegap of the gender ratio is about
10% when comparing all employeeswith managers, mainly due todomestic divergence. We willcontinue to improve the work
environment by providing more
opportunities for helping
supervisors see the need to review
work-life balance and introduce full
remote and full flex working styles.
We will consider how to improvedisclosure of gender-related
information, which was pointed out
in the past.

Company Action
In May 2021, they announced their commitment to addressing issues withsociety and employees.
・ Regarding their commitment to society, they announced outcomes such as
cutting the time it takes for job seekers to get a job in half by fiscal 2030.
・ As for their commitment to employees, they announced a goal to increase theratio of female senior managers, managers, and employees in the group to
about 50% by fiscal 2030.

35

2020/2021 Stewardship Activity Focus Topics

A securities report from a certain
company stated, we are expecting
an order from company C
regarding the purpose andsignificance of cross-held shares. It
may be necessary to clarify in the
Corporate Governance Report thatit does not interfere with theintention to sell cross-held sharesand that construction orders are
not related to cross-held shares.

It is necessary to change thebusiness model of the C1 businessbased on the medium- to long-term
trend of population decline andlabor shortage. In particular, due tothe COVID-19 pandemic, it may benecessary to accelerate theexamination of business model
conversion for departments with
deficits, which continue to exist
through cross-subsidization.

Company Response
We will consider stating that
construction orders are not related
to cross-held shares such as byreferring to the disclosures incorporate governance reports byother companies.

・ Regarding the best way to handle
business after the current
pandemic, we believe thatchanges in people's values are nottemporary, so it is important to
respond to changes in people s
behavior. Business demand may
not return to the same level as
before the pandemic, so we wantto consider how users select our
products to increase market
share.
・We recognize that using
cross-subsidization to coverdeficit is not sustainable, and weare considering a sustainablebusiness model.

Company Action
In June 2021, the Corporate
Governance Report stipulated that
it would not interfere with theintention to sell cross-held shares.

At a meeting with the president in
February 2021, a review of the
deficit business was announced,
and at the financial results briefingin May 2021, specific measures forconverting the business model
were announced.。

Evaluation by SMTAM / Future Policy

Evaluation by SMTAM / Future Policy

Although the engagement targets we set were achieved, our policy is tocontinue encouraging positive initiatives and hold other engagements onmodel sustainability management.

The engagement targets we set were completed and our policy is
to continue confirming the progress of set goals.
Our policy is to continue monitoring the shift to a sustainablebusiness model.

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Disclosure of Climate-related Financial Information under TCFD

Message from the Global InitiativeC A SE 4
Company D in the
non-manufacturing sector

Management strategy
Promotion of ESG information
disclosure (Environment)

Activity Report from the New York Base

CASE 5Company E in the
non-manufacturing sector

Reference
Exercise of Voting Rights

Promotion of ESG information
disclosure (Environment)
Addressing environmental pollution

Analyst's Perspective

Analyst's Perspective

It is necessary to disclose a decarbonization plan in regards to resource-related
businesses, which are relatively high compared to other companies in the same
sector.
It also seems necessary to disclose concrete measures for environmental targets
that are consistent with the Paris Agreement, and to improve TCFD disclosure.

It is necessary to disclose targets for reducing greenhouse gas emissions.
There was an accident resulting in pollution to the environment, so it isnecessary to take measures to prevent recurrence and in regards tobiodiversity.

Opinion from SMTAM

Opinion from SMTAM

What risk control measures will
they take in regards to their D1business, which emits a large
amount of greenhouse gas, andtheir D2 business where there isconcern over a decrease indemand? In addition to controllingrisks, it may be possible toconsider using this as a business
opportunity.

Goals were set to reducegreenhouse gas emissions in half by
2030 (compared to 2020) and toachieve net zero by 2050 in
response to climate change, but it
seems necessary to review thebusiness portfolio based on the
introduction of internal carbon
pricing. It may be necessary to
clarify their climate change
response policy and enhance TCFD
disclosure.

Company Response
One issue is reducing theenvironmental load from our D1business, but this must be
considered while keeping an eye
on the economic conditions ofemerging countries. We are awareof risks related to declining
demand and price drops in the D2
business, but there is still a certain
amount of demand, so we will
prepare to respond flexibly. As forbusiness opportunities, we aremaking investments with various
R&D projects.

The 2050 Net Zero target includes
a wide range of feasible items, but it
is not clear whether certain items
will be included in the calculation
for the reduction amount. Theinternal carbon pricing system will
be used not only for new projects
but also with existing projects forevaluating contribution to reduction.
As for TCFD, we want to consider
enhancing disclosure including
Scope3. In addition to selecting
stranded assets and calculating PL
impact, we will consider whichbusinesses should be minimized andcreate new business for offset in our
TCFD scenario analysis.

Company Action
In June 2021, they announced thesale of equity interest in theiroverseas D1 business.

In August 2020, they introduced
internal carbon pricing, and Scope3
was announced in their integrated
report.

It may be necessary to set
greenhouse gas emission targets
for 2030, to show a clear roadmap
for reduction, and ensure objectivity
by acquiring SBT (Science Based
Targets*) certification.

* An initiative to encourage companies
to set reduction targets that are basedon scientific knowledge with the goalof limiting the rise in global averagetemperature caused by climate change
to 1.5 degrees Celsius compared tobefore the Industrial Revolution.

As for the accident that cause
environmental pollution, it may benecessary to thoroughly implement
measures to prevent recurrence,
consider how to avoid reputation
risk, and comprehensively fulfillingsocial responsibilities while working
to recover natural capital.
[Utilization of IICEF]
Regarding the response to theaccident, we had an engagement
was held on supply chain
management and information
dissemination through theInstitutional Investors Collective
Engagement Forum (IICEF).

Company Response
We are in the process of
formulating an environmental
roadmap for up to 2030, and we
recognize the need to provide
objective support.

Although we have no legal liability
for the accident, we must consider
measures that take into accountthe balance between medium- tolong-term loss avoidance byfulfilling social responsibility andavoiding reputation risk. We willconsider improvements tooperation management for
preventing recurrence.

Company Action
In June 2021, they disclosed their
Environmental Vision including goals of
reducing the greenhouse gas emission
intensity of the transportation businessby 45% by 2035, together with acapital investment plan for achieving
this goal. They also announced efforts
to acquire SBT certification.

In September 2020, they announced
efforts to contribute to a fund anddonated to local NGOs in order torepair the environment at theaccident site and help thecommunity.

Evaluation by SMTAM / Future Policy

Evaluation by SMTAM / Future Policy

The engagements we held were completed, and some engagement targets
such as D1 project reductions and improvements to climate-related
information disclosure were achieved. Our policy is to continue dialogs on
the implementation status of measures to reduce greenhouse gas emissions
in half by 2030.

The engagements we set have completed, and we will continue to confirm
the progress of goals. Our policy is to continue engagement on reducing
conventional businesses and to review their business portfolio that takes
new environmental business opportunities while also considering medium- tolong-term energy mix trends and environmental risks.

36

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Overview

Engagement that Contributes to Investee Corporate Value

Engagement Example Cases - Global
At SMTAM, our emphasis on ESG engagement activities extends worldwide. We focus on (1) engagement activities
that are based on action principles or guidelines, such as the PRI, (2) activities aimed at addressing misconduct andother problems in accordance with international norms, and (3) independent activities aimed at promoting greater
efficiency in corporate management and the establishment of outstanding corporate governance. Target companies
were selected by referring to information from collaborating organizations and initiatives, and activity policies andgoals were set based on our ESG engagement topics.

C ASE 6

Archer Daniels Midland

CASE 7(US, food)Environmental destruction / Pollution control

37

Ameren (US, Electricity)

・ Promotion of ESG information disclosure (Environment)
・ Corporate governanceEngagement Specialist's Perspective

Engagement Specialist's Perspective

・ Since they play an important role in Brazil's stricter stance on forest
conservation and cultivated land conversion by partner farmers, it isnecessary to strengthen supply chain management and set deadlines.
・ It is possible to utilize their knowledge of direct talks with the Brazilian
government regarding the development of the Amazon basin.

We reviewed greenhouse gas reduction targets (80% reduction by 2050
compared to 2005), which were behind those in the industry, and felt it wasnecessary to improve corporate governance for that purpose.

Opinion from SMTAM

Opinion from SMTAMIn February 2021, the following opinions were expressed in an engagement
letter to give support to a shareholder proposal made by Ceres/PRIEngagement partners.
・ It seems necessary to establish a deforestation-free supply chain and set a
deadline for achieving this in the Cerrado region of Brazil.
・ It seems they should disclose the status of their response to thestrengthening of due diligence for import products to Europe.

・ In May 2020, Ceres members submitted a shareholder proposal requesting
the chairperson of the board to appoint independent personnel tostrengthen measures for reducing greenhouse gases, but this was rejected.
・ However, it may be necessary to set more ambitious goals and disclose
information on improving corporate governance and reducing greenhousegas emissions by appointing an independent person as the board of directors
chairperson.

Company Response

Company Response・ In the same region, especially in regions with serious deforestation
problems, traceability has been improved by using satellites. At the
moment, we have achieved 100% traceability with direct procurement. This
has not been achieved for indirect procurement, which accounts for about
10% of total procurement, but we have confirmed our total commitment toforest conservation.
・ One problem with realizing a deforestation-free supply chain is that it is notpossible to know the situation at the farm level, which is an indirect
supplier. There could be illegal activities at the farmer level, but indirect
suppliers cannot currently be completely excluded in terms of business
operations.
・ In the UK, import restrictions require proof that harvesting is not done
illegally, but this can be overcome by confirming the farmer s license.

Because of reviewing the environmental governance system, the approvalrate for shareholder proposals was only 29%. However, greenhouse gas
emission reduction targets are under review and are planned to beannounced in September 2020. Coal-fired power generation is inexpensive,
but we are planning to gradually phase it out, and will be considered inbalance with various factors such as fuel purchasing power and supply
stability.

Company Action

Company Action

・ In March 2021, they announced the goal of achieving 100% traceability andeliminating deforestation from the supply chain by 2030.
・ We received a letter in which the company stated that it would disclose
information related to climate change within the TCFD framework in the2020 Sustainability Report (which is not yet published).

・ In September 2020, they announced their greenhouse gas emission
reduction goal of achieving Net Zero by 2050.
・ At talks held in December 2020, explanations were given as to how they(1) carried out a top-down review, (2) found potential locations of wind
power generation, and (3) improved efficiency by upgrading gas power
generation.

Evaluation by SMTAM / Future Policy

Evaluation by SMTAM / Future Policy

Preventing deforestation, achieving 100% traceability in the supply chain, andclarifying the schedule is a step forward. We will continue to monitor thesituation and have dialogs for realizing this.

It was determined that progress has been made in changing the greenhousegas reduction target to net zero and disclosing it. Moving forward, the policy
will be to monitor specific progress toward achieving net zero and progresswith low carbonization of the gas business.

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

C ASE 8ArcelorMittal

Activity Report from the New York Base

Reference
Exercise of Voting Rights

CASE 9(Luxembourg, Steel)・ Climate Change Issues

・ Promotion of information disclosure (Environment)

Vale (Brazil, Resource mining industry)・ Addressing companies with misconduct
・ Corporate governanceEngagement Specialist's Perspective

Engagement Specialist's Perspective

As a leader in the global steel industry, it is believed that encouraging
initiatives related to greenhouse gas reduction efforts and information
disclosure would benefit industry efforts.

We felt it was necessary to strengthen corporate governance as a measure
to prevent misconduct from recurring.

Opinion from SMTAM

Opinion from SMTAM

For the global steel industry to overcome environment-related issues, major
involvement by the governments of each country will needed in the future.
Examples would include investment in advanced technologies such ashydrogen and carbon dioxide storage (CCS, etc.). From this perspective, it
may be necessary to promote discussions with governments and industry
groups, and information disclosure of those activities is needed to
stakeholders.

In 2019, an accident involving a dam owned in the Brumadinho region ofBrazil resulted in many victims and major environmental destruction, as well
as a large financial loss. Since then, they have been working to strengthen
corporate governance such as through organizational reforms, but it may benecessary to further strengthen the independence of the board of directors
to prevent misconduct including accidents, and to strengthen emergency
response in the event of an accident.

Company Response

Company Response

・ While investing a large amount to deal with environmental problems inthe steel industry, where profitability is difficult, we believe thatg o v ernmen t supp or t is e s s en t ial t o ensur e in v e s t men t e f ficienc y
acceptable to shareholders. But government efforts are being promotedin the steel industry even in Europe where it is advanced.
・ Production of electric furnaces will need to increase in the future, butsome blast furnaces will still need to be produced. The key is to increase
the strength of crude steel for electric furnaces, and to improve thestructure of the entire iron scrap supply chain to ensure high quality
scrap.
・ Our first goal is to achieve decarbonization in Europe by 2030. In otherregions, we are aiming to achieve decarbonization by 2040 as a realistic
goal based on the policies of each region.
・ We will seriously consider strengthening information disclosure.

・ After the accident, the board of directors was under increased pressure tostrengthen their industry experience, and the whole process for appointing
directors was reviewed by an external consultant.
・ In addition to establishing two risk-related committees with highly
independent directors from outside the company to be responsible for
accident recovery and internal investigations, the roles and functions ofexisting committees were reviewed. An audit committee chaired by anindependent director was established in March 2020, and in June of thesame year, a Chief Compliance Officer (CCO), who is also in charge of thewhistle-blower organization, was appointed to have a system for reporting
directly to the board of directors meeting that is independent frommanagement.
・ We are also preparing to establish a nomination committee for directors by
the 2021 annual meeting. Some directors are nominated by the controllingshareholders, but there are no substantial connections. In addition, after aperiod where the changing of directors requires the agreement ofshareholders, it will change to personnel with greater independent.

Company Action

Company Action

We have confirmed a positive commitment to reduce greenhouse gases. They
also shared recognition of the issue that the support of policy makers in eachcountry and efforts involving the entire supply chain are needed for
implementation.

・ Sharing awareness of moving toward strengthening the independence of theboard of directors, preventing misconduct, and strengthening responses toemergencies.
・ In July 2020, they announced the establishment of a nominating committee,
which is composed mostly of external and highly independent directors withexperience and technical knowledge.

Evaluation by SMTAM / Future Policy

Evaluation by SMTAM / Future Policy

・ We will continue engagement for helping ArcelorMittal achieve greenhousegas reduction.
・ At the same time, our policy is to support the development of steel productsthat have low environmental impact (zero carbon steel) by engaging withthe regulatory agencies in each country and related industries.

・ We will continue engagement to improve the independence of the board of
directors, to prepare for risks, and monitor ability to respond to incidents.
・ Our policy is to support the reduction of greenhouse gases and strengthen
efforts related to biodiversity.

38

Features

Purposes of Stewardship Activities
Status of Initiatives by 100 Top-down Dedicated Companies

Overview

C ASE 10

SK Innovation

Engagement that Contributes to Investee Corporate ValueC A S E 11
(Korea, Petrochemical) (CA100 + / Lead)・ Business strategy

・ Climate Change Issues

39

2020/2021 Stewardship Activity Focus Topics

Pfizer(US, Healthcare)・ Access to Medicine
・ Business strategy

Engagement Specialist's Perspective

Engagement Specialist's Perspective

Their main business involves manufacturing and selling petroleum products.
Based on the size of its impact on climate change issues, it is necessary toreview their business structure over the medium to long term.

・ Although they show strengths in specialty areas such as access tom e di c in e ( A t M ) a n d a n t i m i c r o b i a l r e s i s t a n c e ( A M R ) in e m e r g in gcountries, there is still room for improvement.
・ However, we believe it is necessary to confirm their supply policy withregard to COVID-19 vaccines for low-income countries.

Opinion from SMTAM

Opinion from SMTAM

It seems it would be good for them to make effort to reduce or withdraw
from business related to the manufacture and sale of petroleum products andto expand into the battery business for electric vehicles (hereinafter referred
to as EVs). They should also aim to transform their business structure overthe medium to long term while disclosing their efforts to address climatechange issues.

・ They have been criticized as having an AtM strategy that drug makers
European companies. Regarding AMR compliance measures, eliminate
volume incentives for sales staff could be a potential solution. There seems
to be room for improvement in both cases.
・ As for COVID-19 vaccines for low-income countries, since shareholder
proposals requesting that these be provided at cost have been submitted
to major pharmaceutical manufacturers, it seems necessary to distributethe vaccine globally without bias in response to the pandemic.

Company Response

Company Response

Overall, the SK Group has the goal of making its business green. The strategic
outline is summarized in Green Balance 2030 in harmony with the TCFD
framework where SK Innovation plans to transform its business to contributeto strengthening the EV battery business to realize a circular economy.

・ Our AtM strategy is positioned as the core of our social responsibility
activities, and our policy is that the entire company, including officers, becommitted. Based on our policy to further strengthen industry leadershipfrom now, we will continue efforts to improve pricing and distribution incountries and regions facing problems.
・ As for marketing, we have already removed quantity incentives and operatingcompensation in the UK, and are considering moving to a similar system inother markets. Pfizer's AMR approach seeks to establish proper use undercomprehensive oversight, with a portion of sustainable corporate bondproceeds being donated to the industry initiative AMR Fund. KPI standards for
manufacturing processes are now being set, and when completed, these will be
used within the industry as standards for independent certification bodies. We
have also formed an initiative to monitor resistant bacteria and are expanding
the monitoring system to include emerging countries, and we are sharing data.
・ We are already providing COVID-19 vaccines to low-income countries atcost, and are also caring for transportation for the last mile including
refrigeration equipment.

Company Action

Company Action

・ In July 2021, they announced their commitment of net zero greenhouse gas
emissions by 2050.
・ In August of that year, they announced the separation of both EV battery andoil development businesses.
・ They implemented information disclosure in harmony with the TCFD
framework.

・ In 2021, they developed and supplied COVID-19 vaccines to emerging
countries at cost via international organizations.
・ The number of cases involving sustainable initiatives integrated intobusiness strategies including strengthening local business bases fora c c e s s t o e m e r g in g c o un t r i e s h a s in c r e a s e d, an d t h e y imp r o v e dsignificantly according to the Access to Medicine Index * announced in
January 2021, moving from 11th place the previous year to 4th place.

Evaluation by SMTAM / Future Policy

Evaluation by SMTAM / Future Policy・ In addition to CA100+ engagement, engagement by the Company
Chairperson, Mr. Semaya, was also successful.
・ Our policy is to confirm their progress toward zero greenhouse gas
emissions by 2050 through engagement.

Based on activities through AtM and initiatives for AMR strategies, we plan tocontinue engagement in order to enhance corporate governance andbusiness strategies, and to improve corporate value (both financial andnon-financial).

* The Access to Medicine Index is a rigorous research project conducted every two years where data focusing on the drug access initiatives of 20 major global pharmaceuticalcompanies is collected, verified, scored, and analyzed.

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Contribution

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Activity Report from the New York Base

Reference
Exercise of Voting Rights

Comment on the Sumitomo Mitsui Trust Asset Management
Stewardship Report 2021/2022

The latest IPCC report, published in August 2021, found that

Climate Action 100+ is an initiative led by five investor

achieving the Paris Agreement s target of limiting temperature

networks * 1 and comprising 617 global investors who arerise to 1.5℃ will require robust, immediate, and sustained

responsible for more than $55 trillion in assets underactions to reduce carbon emissions. The report has forecasted

management across 33 markets*2. The initiative is overseen by

five scenarios between 2021 to 2040 ‒ from strong climate

a global Steering Committee that aligns the initiative schange mitigation measures to BAU. The results revealed that,strategic priorities, governance and structure.

regardless of the scenarios, the temperature rise is likely to

Sumitomo Mitsui Trust Asset Management (SMTAM) is anexceed 1.5℃. However, it is projected that if countries canintegral signatory to Climate Action 100+ and are the Asia

take strong and decisive actions immediately, global average

investor representative on the global Steering Committee andtemperatures could again fall below the 1.5℃ threshold in thea member of the Asia Advisory Group.

following decades.

SMTAM, as an investor signatory, is responsible for engaging
the companies in which they invest in to improve their climatechange governance, reducing emissions, and strengthening
climate-related financial disclosures. SMTAM has taken thelead for engagement with several major Asian companies andhave also assisted Climate Action 100+ more broadly withinsights and expertise on local business culture and customs.
SMTAM is also a part of the AIGCC Asian Utilities
Engagement Program (AUEP), which complements and runsin parallel with Climate Action 100+. Under the AUEP,
investors are seeking to collaboratively engage with Asia s
systematically important electric utilities to increase the(Source: AIGCC Website)

effectiveness of climate engagement. The utilities sector willplay a critical role in enabling the transition anddecarbonization of other sectors which are dependent on
utilities.

The Asia Investor Group on Climate Change (AIGCC) is an

SMTAM has also announced its participation in the Net

initiative to create awareness and encourage action among

Zero Asset Managers initiative (NZAMi). It is heartening to

Asia s asset owners and financial institutions about the risks

see that SMTAM is accelerating multi-way conversations andand opportunities associated with climate change and low

encouraging close collaboration bet ween investors,

carbon investing. AIGCC also plays a significant role in global

companies, and governments in Japan, in other Asia markets,

investor initiatives on climate change, including Climate Action

and beyond.

100+ and the Investor Agenda. AIGCC helps to facilitate theinvolvement of Asian asset owners and managers - helping
Asian investors to work cooperatively is crucial in driving theseactions and achieve significant progress on climate change
across our industry.
Outlining strong targets and having a clear roadmaps forreaching net-zero emissions, together with rigorous policies
from governments and collaborative engagement withcompanies, can create enormous new investment

AIGCC looks forward to continuing to work closely with
SMTAM on its commitment to combating climate change.
I wish SMTAM every success in its endeavors.

IGCC and ＡＩＧＣＣ
ＣEO
Rebecca Mikula Wrightopportunities in net zero emissions industries andinfrastructure and help us meet our common Paris Agreement
goals.

*1 PRI, IIGCC, Ceres, IGCC, and AIGCC*2 As of the end of July 2021

40

Purposes of Stewardship Activities

Features
Overview

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Engagement that Contributes to Investee Corporate Value

Activity Report from our New York Base
It has been over a year since this base was established. Looking back on what has been accomplished, I would liketo give an overview of our activity status.

By means of individual engagements, we hold dialogues

Masaru Okubo

addressing social issues, climate and environmental issues,
gender diversity, medical access, and information disclosure,

SMTAMA Senior Stewardship Oﬃcer

which our Group is systematically addressing as important

Has worked in international equity investment
since 1998. Has been stationed for 16 years in
New York, Silicon Valley, and Edinburgh, UK.
Has accumulated knowledge throughdiscussions with many global companies.

issues. We also hold talks on value creation andsustainability by addressing social issues with investee
companies in our global equity impact investment portfolio.
In addition, we combine our efforts in engagement and

In July 2020, Sumitomo Mitsui Trust Asset Managementproxy voting to promote the improvement of corporate

Americas (SMTAMA) was established as a wholly-owned

governance, as well as the above-mentioned social issues.

management company in the midst of the COVID-19

As for collaborative dialogs, we engage along with global

pandemic. It began engagement activities with companies

initiatives to encourage companies to strengthen efforts on

based in Americas and ESG-related research activities. Sinceissues such as deforestation, water risk management,

the economic lockdown due to COVID-19 was implemented

working conditions, etc., which have significant impact on

in New York City, we launched our stewardship activities

companies sustainability. As we learn global expertise on

online. However, we had built our IT infrastructure andthese issues through the collaboration, we share to build theoperational processes to accommodate restrictions on officeknowledge with Tokyo.

work, operations started relatively smoothly.
Talks were held with Archer Daniels Midland (ADM: Major
US grain firm; strengths include soybeans, cotton seeds, and124 engagement meetings in the first year
We conduct individual engagements for a wide range ofcorn, which are the raw materials for cooking oils) insectors including energy, finance, consumer goods,

February 2021 asking stronger actions to stop deforestation

healthcare, and IT. Also we participate in collaborative

related to their agricultural supply chain in Brazil. We held

engagements through global initiatives. We conducted a

discussions to support shareholder proposals submitted bytotal of 124 engagements over one year period since July

Ceres-PRI engagement partners calling for strengthening.

2020.

Afterward, they announced a goal of having zero

Our Company(SMTAMA)

Collaboration

Engagement

Multi-engagement

ADM
Brazilian

Ceres・PRI

41

Pursuing results

Pursuing results

through collaboration

through multi-engagement

Government

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Activity Report from the New York Base

Reference
Exercise of Voting Rights

deforestation with a timeframe, and the proposal was

issuing companies and exchanged opinions on how to

withdrawn. This is an example of how we try to make impact

efficiently disclosure ESG information, which is valuable forby combining engagement and proxy vote, in addition toinvestors. We also engage with environmental initiative,

collaborating on the global initiative platforms. At the same

CA100+, supporting the publication of the engagement

time, we are participating in multifaceted engagement withstrategy report as part of investor reviewers. In September

the goal of advancing solutions , including holding talks with

2020, we joined when Ceres Biodiversity Working Groupthe Brazilian government about deforestation.

was established, and expanded the information network on
business sustainability risks related to deforestation in Brazil

Multi-engagement and collaboration among three global bases

and other countries, and on engagement strategies for

Through ESG research activities, in addition working withcompanies.

NGOs in the US, such as Ceres, Council of Institutional
Investors (CII), and The Thirty Percent Coalition, we are also

Future Activities

collaborating with European organizations, such as FAIRR and

Finally, regarding the water resource issue, since it is strongly

Access to Medicine through our London base to assess ESG

connected to climate change and biodiversity, we consider it

issues on US companies . We are participating in virtual

to be a major part of the natural capital topic, which is one

conferences and seminars hosted by these organizations,of our focus areas. Since it can be a corporate sustainability

and through these networks. We share trends and updates

risk, especially for the food and beverage, apparel, andon environmental and social topics, financial markets andsemiconductor industries, we are also working as anregulatory trends, and corporate governance with Tokyo. In

important engagement agenda for American companies.

*

the United States, problems related to systemic racial
discrimination surfaced on the back of the pandemic,

Ceres recently launched a water risk assessment project.

requiring companies to respond. The discussion of board

The goal is to come up with effective engagement strategies

room diversity began to include race and ethnicity, and thisfor complex issues that are highly regional and involvehas been reflected in some state laws and stock exchange

human rights issues. We are also considering participating as

rules. This is mainly a particular issue in the United States,

a member of the investor group aiming to further strengthen

but cannot be ignored by global companies. Therefore, we

dialogs for gaining knowledge and addressing issues.

are monitoring the responses by companies and investors asa member of The Thirty Percent Coalition, and sharing theinformation.
In June 2020, the US Department of Labor proposed tighter
regulations for ESG investment and proxy voting by corporate
pensions. We worked on collecting information with CII,
which opposes this since it would weaken shareholder rights.
We supported PRI, which shared our view, and submitted
opinions during the public comment period. Additionally, weare collecting information on the development of
non-financial information disclosure by companies throughthe talks with and the participation in conferences organized(Person at the center and on the right of the photo are local employees)

by standard setting organization, such as SASB (currently
VRF). At these conferences, we joined in discussions with

* See pages 69-70

42

Features

Purposes of Stewardship Activities
Overview

Status of Initiatives by 100 Top-down Dedicated Companies

2020/2021 Stewardship Activity Focus Topics
Engagement that Contributes to Investee Corporate Value

Introducing criteria for exercising voting rights onimportant issues that are likely to impact corporate value
Purpose of Exercise of Voting Rights
As a responsible institutional investor, we position the exercise of voting rights on entrusted assets (hereinafter referred to as
exercise of voting rights ) as one of our important stewardship activities. The purpose of exercising voting rights is to maximize
the medium- to long-term investment returns for customers (beneficiaries) by improving the corporate value of investee
companies and promoting sustainable growth. Please visit our website for more details.
https://www.sumitrust-am.com/responsible̲investment/proxy̲voting/

Reforms for Addressing the Spread of the Novel Coronavirus
In May 2020, we published the "Policy on exercise of voting rights and stewardship activities in light of the spread of novel
coronavirus."
In order to protect a sustainable economic society in the midst of stagnating economic activity to contain the spread of thenovel coronavirus, we recognize that it is extremely important for companies to ensure sufficient liquidity in hand and tomaintain their business activities. Therefore, we do not mechanically apply our guideline for the exercise of voting rights on
topics regarding dividend of surplus, which is on the assumption of a normal economic environment, but rather we set a policy
for voting decisions with due consideration to ensuring corporate liquidity in hand. We are maintaining this policy during 2021,
but will more closely examine targets by comparing the response in 2020. We list companies that applied and agreed to theabove policy regarding a surplus standard in documents for disclosing individual voting records.
https://www.smtam.jp/company/policy/voting/result/

Approval or disapproval based on customer standards
In the disclosure materials for individual voting records, proposals based on customer standards that differ from our standards
are clearly indicated with * in the Other Voting Records column. This applies to about 10% of the total number of proposals.

Enhancing Visibility for Approvals and Disapprovals in Voting Activity
Principle 5 of Japan's Stewardship Code, which was revised in March 2020, says that in particular, institutional investors should
disclose their voting rational with respect to either for or against vote, which are considered important from the standpoint ofconstructive dialogue with the investee companies, including those perceived to have conflicts of interest or those which need
explanation in light of the investors' voting policy.
We have published reasons for voting "against" company proposals, however since the disclosure of individual voting records inJuly 2020, we also began publishing all reasons for voting, regardless of it is "for" or "against," on proposals perceived to haveconflicts of interest or those which need explanation in light of investors' voting policy. We introduce the details of proposals
which need explanation in light of the investors' voting policy in the section below.

43

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Reference

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Activity Report from the New York Base

Exercise of Voting Rights

Proposals which Need Explanation in Light of the Investors' Voting Policy(proposals that are not stipulated in the guideline, and those that are decided differently from the guideline)

8028 FamilyMart October 2020 General meeting
Proposals
No

Proposal

Voting record

1[Company proposal]
Reverse stock splits

Against2[Company proposal]
Partial amendment to the articles ofincorporation (Change in the total number
of issuable shares, abolition of unit shares)

AgainstBackground/reason
・ ITOCHU made a tender offer to make it a wholly owned subsidiary. Proposal to purchasethe remaining shares of minority shareholders after the tender offer and make it a wholly
owned subsidiary.
・The two companies are listed as parent-subsidiary, and the board of directors ofFamilyMart took a neutral position in the vote in spite of special consideration is required
for the interests of minority shareholders.
We were against this because we determined that the explanation of the validity of themerger consideration, etc., did not sufficiently meet company guidelines.

6502 Toshiba March 2021 General meeting
Proposals
No

Proposal

1[Shareholder Proposal]
Appointment of a person to investigate
the status of the business and assets
of a joint-stock company as stipulated
i n Article 316, Paragraph 2 of theCompanies Act.

Voting record

Background/reason

For・ The investigation method by the company is to have the Audit Committee appoint an external
law firm, but this is limited to internal investigations, so there were concerns about objectivity.
In addition, the purpose of the investigation was mainly to confirm in-house materials andrelated parties, and it could be debated as to whether the investigation was sufficient.
・ Since there have been a number of scandals related to governance including an issue withfraudulent accounting in the nuclear power plant business, we agreed with the shareholder
proposal that it is necessary for the company to conduct a rigorous investigation in order toremove any concerns about investor governance.

5009 Fuji Kosan June 2021 General meeting
Proposals
No

Proposal

3[Company Proposal]
Approval to introduce a response policy
for the tender offer, etc., targeting thecompany's shares by the Aslead Strategic
Value Fund and the Aslead Growth
Impact Fund

For

4

[Company proposal]
Gratis allotment of stock acquisition rights

For

Voting record

Background/reason
・ Regarding takeover defense measures implemented in the event of an emergency, based on
the determined substantial shareholder value including future prospects, the decision wasmade to exercise takeover defense measures together with the pros and cons of invoking the
takeover defense measures regardless of whether the formal requirements are met.
・ In the medium-term management plan, the company set the goals of having at least 1 billion
yen in ordinary profit and ROE of at least 8% for the fiscal year ending March 2024, and it was
explained that if the medium-term management plan can be realized, it will be possible toachieve a stock price that exceeds the tender offer price in the future.
・ On the other hand, while the purchaser did not explain the specific management plan, ENEOS,
a major customer, expressed concern about the Tender Offer due to the possibility of thepurchaser taking control since concerns about the impact on business relationships cannot beignored.
・ Based on this, we agreed to implement takeover defense measures and to invocate
countermeasures.

Guideline Revisions for the Current Fiscal Year
We revised the guideline in January 2021 (published in December 2020). The main points of the revision are shown below.
Criteria

BeforeAfter

Our View

Composition of theboard of directors,
appointment of directors[General Rules of Exercise]
In principle, for any of the following
cases, we vote Against.
(Remaining information is omitted)[General Rules of Exercise](1) In any of the following cases, we will dissent inprinciple from the proposals (Remaining information isomitted)(2) In any of the following cases, we will consider dissent
from proposals
・ In case where the company , having significant issue
such as ESG themes, does not engage or have notmade improvement of the situation despite
continued engagement
・In case where the company, having cross shareholding
excessively, does not engage or have not madeimprovement of the situation despite continued
engagement

To clarify our stance that we may vote
Against depending on the engagement
status, added a clause that even whena case does not violate the quantitativerequirements stipulated in [Decision
Criteria for Exercise of Voting Rights] if
it is an important issue that is likely toaffect corporate value.

44

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Status of Initiatives by 100 Top-down Dedicated Companies

Overview

Engagement that Contributes to Investee Corporate Value

Record of exercising voting rights for Japan-listed companies
Voting Record (all company proposals)
Company proposals
July 2020 - June 2021

For

AgainstAbstention

Opposition ％20,321

4,719

0

18.8%

Proposals concerning capital policies

1,800

Proposals concerning remunerationfor executives

1,232(excluding those related to articles of incorporation)

Proposals concerningcompany systems

Other proposals

21,393

Total proposals

25,0409

Proposals concerning articles
of incorporation

606

Breakdown of voting record on company proposals
Proposals concerningcompany systems
Appointment/dismissal of directors
For

Proposals concerning
capital policies

1,800

Proposals concerning
remuneration for executives

19,384

Disposal of surplus funds

1,579

Remuneration for executives*3

Appointment/dismissal of
corporate auditors

100％

1,908

100％

Appointment/dismissal of accounting auditors
For

50％

For

100％

66

66

100％

Introduction/renewal/abolishment of
takeover defense measures
For

3

For
0％

For

34

50％

Shareholder proposals

100％

153

50％

100％

100％

92

Against

91

1

50％

100％

9

Other proposals

Against

572

0

60

50％

0％

606

153
Against63

Other proposals concerning capital policies*2

Proposals concerning articles
of incorporation

100％

Against0％

For

Payment of retirement benefits forresigning executives

0％

1,079
182

50％

For

1,232
Against

897

0％

0

50％

0

50％

100％

Against0％

Against

101

0％

101

For

21

Restructuring-related*1

239

50％

Against1,558

0％Against

1,669

0％

For

4,025
50％

For

(excluding those related to articles of incorporation)

Against15,3590％

21,393

Against

5

4

0％

50％

100％

*1 This includes mergers, business transfers
and acquisitions, share swaps, sharetransfers, and corporate splits*2 This includes treasury stock acquisitions,decrease in statutory reserves, new shareallocations to third parties, decrease incapital, reverse stock splits, and issuanceof class shares*3 This includes amendments to remunerationfor executives, issuance of stocko p t i o n s , introduction/alteration of
performance-linked remuneration systems,
and executive bonuses

For

AgainstAbstention

Opposition ％

10

203

0

95.3%

Factors that affect the result of exercising voting rights and the opposition ratio
Regarding the comparison of the opposition ratio to company proposals over the same period during the previous year, the opposition ratio decreased due to company
efforts to strengthen the corporate governance system such as by increasing the number of external directors at investee companies.
With regard to stock lending transactions, we set loan limits for securing voting rights. For voting rights secured in shares outside of the loan limits, we exercise said rights inaccordance with our policy on the exercise of voting rights In daily processes, our fund manager confirmed positions such as the number of lent stock.

45

Stewardship Activity Initiatives

ESG Integration

Engagement example cases

Disclosure of Climate-related Financial Information under TCFD

Message from the Global Initiative

Reference

Activity Report from the New York Base

Exercise of Voting Rights

Record of exercising voting rights for foreign-listed companies
Voting Record (all company proposals)
Company proposals
July 2020 - June 2021

For

AgainstAbstention

Opposition ％40,638

5,377

0

11.7%

Proposals concerning capital policies

9,334

Proposals concerning remunerationfor executives

4,836

Proposals concerning articles
of incorporation

1,866(excluding those related to articles of incorporation)

Proposals concerningcompany systems

Other proposals

19,468

Total proposals

46,015

10,511

Breakdown of voting record on company proposals
Proposals concerningcompany systems

19,468

Appointment/dismissal of directors
For

For
100％

Appointment/dismissal of
corporate auditors
For

For

50％

100％

Board of Directors(limits on number of directors, etc.)
For
0％

344

100％

Appointment/dismissal of
accounting auditors
For

For
100％

Proposals concerning articles
of incorporation
For
0％

1,866

100％

196

1,627

179

Shareholder proposals

100％

17

50％

For

239

50％

AgainstAgainst

9,591

0％

100％

10,511Other proposals

Against100％

189

Takeover defense measures

0％

3

50％

1,343

50％

For

14
Against

11

0％

100％

Against

1,154

0％

For
100％

519

50％

Presentation of retirement benefits

36

50％

Against

518

0％

100％

1,037

Stock options

AgainstMergers, corporate splits, conversions toholding company, business transfers, etc.

32

50％

963

503

50％

For
100％

3,785
Against

3,282

0％

6

927

0％

Against

2,277

0％

2,309

1,718

50％

For

For

AgainstEstablishment of share buyback frameworks

18

50％

100％

1,712

0％

Against

326

50％

4,836

Remuneration for executives

655

Profit disposal and loss disposition plans

158

Proposals concerning
remuneration for executives

Against4,459

0％Against

786

0％

944

5,114

Shareholders' equity

2,082
50％

9,334

(excluding those related to articles of incorporation)

Against13,7890％

15,871

Proposals concerning
capital policies

920

50％

100％

For

AgainstAbstention

Opposition ％

1,416

378

0

21.1%

46

Purposes of Stewardship Activities

Features

Impact Investment Strategy

Overview

2020/2021 Stewardship Activity Focus Topics
Fixed Income ESG

ESG Integration
We have identified 12 important sustainability challenges as ESG materialities. In our investment decisions, we takethe ESG investment evaluation into consideration, which is compared with the ESG materiality and incorporates
quantitative evaluations based on both SMTAM and external data in line with portfolio characteristics. Following this,we carry out ESG integration.

ESG Materiality
We have identified important sustainability challenges as ESG materialities. We take into consideration the
SDGs and the SASB (Sustainability Accounting Standards Board; currently Value Reporting Foundation).

E (Environment)

S (Society)

G (Governance)

Climate Change

Human Rights & Community

Behavior

Natural Capital

Human Capital

Structure

Pollution & Waste

Security & Liability

Stability & JusticeEnvironmental Opportunities

Social Opportunities

Governance Improvement

Risk

https://www.un.org/sustainabledevelopment/
Opportunity

MBIS®*1

Management group (Checklist 5 items)

M

Management

B

Business FranchiseI

Industry

S

Strategy

Organizational ability (Checklist 5 items)
Diﬀerentiating factor (Checklist 5 items)
Client base (Checklist 3 items)
Market growth potential (Checklist 2 items)
Competitive environment (Checklist 5 items)

Overall MBIS score

External ESG vender scores

ESG materiality

ESG Score

Skillful investment (Checklist 5 items)
Skillful withdrawal (Checklist 5 items)

The MBIS® is our proprietary, non-financial information evaluation tool which we have used since 2015 to evaluate domestic stocks and fixed incomes. Our analysts use
this to help them gather, analyze and evaluate non-financial information which cannot be expressed in terms of financial data for the companies they cover; suchinformation includes the level and sustainability of added value for a company's products and services, the governance system which supports the added value thecompany provides, and the company's impact on the societal and environmental foundations which sustain its growth. MBIS ® is an acronym which stands for"Management" (M), "Business Franchise" (B), "Industry" (I) and "Strategy (S). It is the "M" which comes into play when evaluating efforts aimed at risks associated with ESG
issues, and it is the S which comes into play when evaluating efforts aimed at commercializing and monetizing the opportunities associated with ESG issues. We utilize
external ESG data vendors for evaluation to the issuer. We incorporate the concept of the SDGs and the 17 goals into our evaluation.

*1 MBIS® is a registered trademark of Sumitomo Mitsui Trust Bank.

47

Stewardship Activity Initiatives

ESG Integration

1

ESG materiality

ESG screening

All active products: Screening by ESG related issues

Sumitomo Mitsui Trust
Research Institute

ESG investment evaluation(non-financial information)

External ESG data vendors, etc.*2

ESG integration

Reference

Disclosure of Climate-related Financial Information under TCFD

Quantitative assessment based on proprietary and external data in light of SMTAM materiality

Domestic stocks

Domestic fixedincomes

Foreign stocks

Foreign fixedincomes

J-REIT

2

2

3

3

4

Evaluation by®
MBIS

Evaluation by®
MBIS

In-house
ESG scores

In-house
ESG scores

In-house
ESG scores

Reflection toinvestment
decisions

Consideration in line with portfolio characteristics

Investment and risk committee

ESG monitoring

In-house ESG Score

J-REIT

We grant in-house ESG scores to domestic stocks

In J-REIT investment , we conduct ESG integration utilizing ESG scoring granted by Sumitomo Mitsui Trustof companies that are not covered by analysts,

Research Institute. Evaluations under ESG scoring by Sumitomo Mitsui Trust Research Institute assesses four

foreign company stocks , etc. and domestic

major aspects : the ESG promotion framework and initiatives related to the environment, society, andcorporate bonds. Using ESG materiality as a base,governance. Each item has its own checklist by which it is scored.

we identify the ESG issues of investee companies
and then utilize external ESG vender data andother resources to perform three-tiered scoring.
This score is taken into account when

(1) Owned property
quality screening

qualitatively assessing earnings and valuation in
the case of stocks , or credit worthiness or
spread in the case of corporate bonds, and it isthus reflected in investee selection.

(2) Management company
strategy(4) Financial status evaluation

Strategy for
generatingexcess return
Portfolio decision(3) Individual investment
unit valuation(5) Other qualitative evaluation

ESG evaluation
ESG evaluation by SMTAM
External ESG evaluation

Sumitomo Mitsui Trust Research Institute
Provision of ESG evaluation for all listed companies*2 We use data such as from external ESG data vendors as references for our own ESG quantitative evaluations. We have engagement with ESG vendors at least once a year to
confirm and improve service contents based on what we use (universe expansion, higher data accuracy, better information on misconduct, etc.).

48

Purposes of Stewardship Activities

Features

Impact Investment Strategy

Overview

2020/2021 Stewardship Activity Focus Topics
Fixed Income ESG

Impact Investment Strategy
Impact investment refers to an investment strategy where both economic and social return are pursued throughinvestment, and is characterized by measuring and disclosing social returns. The following figure shows the
positioning of impact investment where the vertical axis is the Economic return, which is the investment profit
obtained by improving the corporate value of the investee, and the horizontal axis is the Social return gained throughefforts to address social issues. We believe it is important to evaluate and invest in companies from a long-term

Emphasis on social return

Traditional investment
Maximizing return on investment has high priority
Social return has low priority

ESG
investment

Various investment
methods

In v e s t m e n t r e t u r n

Economic return

perspective in order to properly address social issues and gain return on investment.

Impact investment
Investment return + Social /Environmental improvement Impact

Charities
Focused investment

Social return

Impact of improving society and the environment

SDGs and Impact
The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015. The SDGs include 17 goals with
169 specific targets. In our impact investment strategy, we have a strong awareness of resolving social issues that lead toachieving SDGs.
It is said that US$5-7 trillion in annual funds are needed toachieve these goals, and we believe that using private funds
and corporate business power are essential.
The Japan Government recently declared that it is aiming torealize a carbon-neutral and decarbonized society by 2050. In
the future, we expect national efforts to achieve the goals set
forth in the SDGs to expand globally.

49

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Focus on practical business ability in addressing social issues
The table below lists nine issue resolution areas that we have set based on the relationship between long-term world
structural changes, the social issues that arise from these, and the goals of the SDGs. We believe that these present great
growth opportunities for companies while also being impact opportunities for addressing social issues through business.

Nine issue resolution areas being considered by SMTAM
Long-term world structural changes

Global issues

Population structure

Medical system, shortage of resources,
food, and water, disease,healthy life expectancy(World population increase,aging, population increase inemerging countries)

Climate change

Major SDGs

Large-scale disasters, disease,shortage of resources, food, and water

Diversiﬁcation

Increased social unrest,
sustained growth inhibition(Values, culture, working styles, gender)

Widening disparity(Gender, region, income, education)

Environmental pollution

World growth rate slowdown

Health hazards,
shortage of resources, food, and water

Declining employment opportunities,
sluggish income growth rate

Issue resolution areas
New healthcare
Sustainable food chain
Transition to green energy
Recycling society
Employment and education
Eliminating disparity
Clean nature(Oceans, water, forests, soil, air)Sustainable cities / Strong infrastructure

R&D, technology infrastructure,
productivity improvement

We envision the following as examples of businesses that contribute to resolving social issues and that are expected to
expand over a long period of time.
・ New healthcare that addresses threats from infectious diseases that have become a reality due to the worldwide spread of
COVID-19
・ Businesses that spread green energy to curb global warming, which worsens every year
・ Businesses related disparity elimination and education for achieving the slogan for SDGs, Leaving no one behind・ Businesses that make cities and the natural environment sustainable
・ Businesses that promote R&D and productivity improvement for supporting sustainable world development
On the other hand, to address unresolved issues through business, we believe that corporate innovation and practicalbusiness skill premised on coexistence with the limited global environment are important. To evaluate the practical businessskill of companies, in addition to evaluating financial information, we feel it is also important to evaluate non-financial
information such as management and company organizational strength, and business strategies, which are what we focus on.
The following page includes an overview and explanation by a fund manager on the characteristics of each investment
strategy for the Japan Equity Impact Investment Strategy and Global Equity Impact Investment Strategy.

50

Purposes of Stewardship Activities

Features

Impact Investment Strategy

Overview

2020/2021 Stewardship Activity Focus Topics
Fixed Income ESG

Japan Impact Equity Strategy
Engagement is one of the most important process to maximize impact and financial return through companies
long-term positive changes

３．Engagement with management team to maximize positivesocial and environmental impact alongside the mitigation

Kuniyuki Sugiharaof negative impact
The third feature is the engagement with management team.
We hold regular meetings with management team from

Senior Portfolio Manager,
Equity Investment Unit

long-term perspective and encourage changes to drive
positive impact by leveraging our knowledge andexperiences.
Engagement is one of the most important process in our

１．Concentrated portfolio which invests in companies where business

impact investment. Portfolio managers closely work with oursolutions to SDGs drive corporate value over the long -term

ESG specialists and corporate analysts who are specialists in

I would like to explain three features of our Japan Impact Equity

industrial sector and jointly engage with management team.

Strategy. The first is invest in companies where businessIn the engagement, we discuss how to drive positive impact

solutions to social and environmental issues drive corporate

through business, how to control negative impact, and how

value over the long-term. We focus on practical business ability,

to improve ESG factors that are potential long-term businessthe materiality and long-term growth potentials of the businesses

risks. Through such engagement, we encourage changes into address social and environmental issues, and the commitment

investee companies, and promote activities that maximizeof management team to tackle those issues. When evaluating

impact and result in investment returns.

these, we conduct extensive research including interviews withmanagement team, and assess companies using MBIS®, which is
our unique corporate evaluation framework. Through thisprocess, we identify companies that have long-term growthpotential by providing sustainable solutions to social andenvironmental issues through their own business.
２．Impact KPIs to measure the impacts on social andenvironmental issues
The second feature is to set Impact KPIs. In our impact
investment strategy, each company has Impact KPIs that are
the indicators to measure the degree to which social andProcess construction process
All listed stocks in Japan
Evaluation of corporate practical businessability and growth potentials

environmental issues are addressed through its own
business. This allows us to quantitatively understand the

Impact evaluationsocial return from providing solutions to social andenvironmental issues, which we believe is as important asfinancial performance for improving corporate value. Next,
we evaluate the positive/negative impact that companies
create based on the Impact KPIs . Each investee company ismonitored through the Impact KPIs with relevant financial
data from long-term perspective.

51

Stocks with
impact KPIs
Portfolio

Stewardship Activity Initiatives

ESG Integration

Reference

Disclosure of Climate-related Financial Information under TCFD

Global Equity Impact Investment Strategy
Building a portfolio by combining engagement, quants, and research skill to address social issues and achieve
investment returns.

issues are evaluated for each area using items centered on
non-financial indicators in order to select companies that

Yoshiki Takeda

have a high feasibility of resolving a social issue. Target

Head of Global Equity,
Equity Investment Unit

３．Measuring and anticipating impact KPIs, interacting withcompany groups for investment are then determined.

companies, and increasing investment confidence
The third feature is to measure impact KPIs relating to social
return which is achieved by providing solutions for social

１．Identifying social issue-solving areas

issues, and then to engage in dialog with the company. We

A common feature of Japanese and global equity

have ongoing discussions with them on the importance of

impact investment strategies is making long-term

addressing social issues, management commitment, attitude

investment in companies that have the resolving of

toward information disclosure, sustainability, and business risk.

social issues as a growth driver. We believe it isThis increases the likelihood of achieving social andpossible to identify company growth potential, such as

economic returns and helps reduce investment risk.

products and services that will be in high demand in

Fund managers, quants analysts who are professionals at

the future, by focusing on and then identifying social

analyzing data, corporate analysts who are professionals at

issues resulting from long-term structural changes andcorporate research, and ESG specialists work together totheir solutions.

engage in the growth of investee companies and to maximize

The social issue-solving areas is determined through ainvestment returns through them.

consultation with ESG specialists including fundmanagers, analysts, and workers living overseas, and by
utilizing the knowledge gained through our participation

Overview of Investment Process

in global initiatives .
*ESG research

２．Selecting investment targets through quantitative analysis

ESG(quants analysis)
The second feature is identifying companies whose growth isexpected to materialize by providing solutions for social
issues through a three-step quantitative analysis (quants
analysis). The first step is to assess ESG rating as an indicator

Engagement
Exercise of Voting Rights
FM

AN

Quants research
Corporate research

ESG

FM

QA

AN

to measure the degree of commitment to social issues andconsider that companies with higher ESG assessment havegreater potential to contribute to social issues. The second

Investment decision

Impact KPIFM

step is to identifying companies that are actively addressing

FM

AN

ESG

identified social issues using RBICS data, which is about
1 , 7 0 0 i n d u str y o r p r oduct s ca t egories wit h it s s ale s
contributions provided by FactSet. In the third step, thecompetitive advantages of a company in resolving social

FM

Fund managers

QA

Quants analysts

AN

Corporate analysts

ESG

ESG specialists* As a signatory asset manager to international guidelines and principles on corporate conduct, we engage with investee companies while cooperating with the United Nations,NGOs, and other organizations to implement activities in keeping with our signatory commitments. See pages 69-70 for more details.

52

Purposes of Stewardship Activities

Features

Impact Investment Strategy

Overview

2020/2021 Stewardship Activity Focus Topics
Fixed Income ESG

Fixed Income ESG
We have been promoting engagement and ESG integration for fixed income management. In addition to an overview
of fixed income ESG integration, the following will explain recent trends in ESG bonds along with some ofcollaborations between credit analysts and fixed income fund managers through their dialogs .

Significance of ESG integration in fixed income management and equity investment respectively
Comparing the significance of ESG integration for bonds and stocks,
and points of investment
Bonds

StocksDue to the difference in product characteristics shown on theleft, there are differences between stocks and bonds
investment related to the significance of ESG integration andMaturity ofinvestment target

Yes

No

investment points. Although bondholders do not have voting

How to use
ESG evaluations

Consideration for
creditworthiness evaluation

・ Qualitative evaluation
・ Valuation assessment (Capital cost, etc.)

rights, as a direct funder, we believe that they have an

Return on investment

Fixed at the time of investment
based on assumption that
default will not occur

・ Corporate growth through ESG・ Downside risk reduction

bondholder, while we have the right to ask investee
companies to take measures for medium- to long-term growth

Point

Based on ESG factors,
・ Credit evaluation andwhether defaults occur

important position for corporate management. Therefore, as a

Based on ESG initiatives,
・ Expansion of non-ﬁnancial value
and exchange to ﬁnancial value
・ Capital cost reduction and stability

and to reduce downside risk, we also believe we have
responsibilities to request social contribution.

The following explains the rights and responsibilities we bear in mind for fixed income ESG investment.

ESG integration for fixed income management
ESG information is used for the following flow in fixed income

The following figure shows Security selection determination

management.

through spread evaluation and ESG evaluation

for theprocess in (3) on the left.

(1) Select non-investable securities
Stewardship
Development
Department[Take ESG into consideration and identify non-investable securities]
Prohibit investing in companies that manufacture inhumane weapons.
This applies to all assets.

Relationship between spread evaluation and ESG evaluation when
making investment decisions
ESG evaluation

Have an outlook for the spread with a top-down approach and decide on a
position building policy based on spread situation judgment considering a credit cycle.

(2) Evaluate creditworthiness
Credit analysts[Give in-house rating with ESG factors taken into
consideration when evaluating creditworthiness]
・ Take ESG factors into qualitative judgment.
(Evaluate using MBISⓇ and in-house ESG scores.)・ Set G (Governance) as the center of focus.

Fund managers

Build portfolio(4) Evaluate portfolio, etc.

Fund managers

53

For securities with low ESG scores, fund managers andcredit analysts work on engagement cooperating with
relevant departments.
Change investment decisions depending on the status ofinitiatives to address ESG issues in investee companies.

ＣA

Can be owned

Actively invest
SpreadOvervalued

BargainB

D(3) Evaluate spread[Take ESG factors into evaluation of spread level]
Based on the required spread level depending on the in-houserating of the company, give comprehensive consideration to
ESG factors, liquidity, and supply/demand,and judge appropriate spread level for the company.

High

Improve ESG evaluation
through engagement

Sell / Not owned

LowA

Actively invest

It is a bargain and has a high ESG evaluation, so active investment is likely (purchase/hold).
B

Improve ESG evaluation through engagement

It is a bargain, but the ESG evaluation is low. Effort to improve ESG evaluation
through engagement.

ＣCan be owned (Possible to own but subject to sell (Not owned))
It is overvalued, but the ESG evaluation is high, so it can be owned.

D

Sell / Not owned

It is overvalued, the ESG evaluation is low, and the spread may widen (price decline)in the future, so it is subject to sell (Not owned).

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Recent Trends in ESG bonds

Atsushi Hamada

Hiroshi Tsubota

Head of Credit Strategy Team,

Head of Credit Research Team,

Fixed Income Investment Unit,

Research Department

Active Investment Department

Stance on social bonds

Looking back on the past year
Mr. Hamada Issuing so-called SDGs-related bonds has been

Mr. Hamada

increasing. When it comes to conventional green bonds*2 andopportunities related to bond issuance, we think it is alsosocial bonds*3, the industries of the issuers and the use of funds

their responsibility as a creditor to encourage companies toare diversifying. Although a second opinion*4 has been acquired

issue SDGs-related bonds from various angles. How about

for most SDGs-related bonds in Japan, there seems to be a lot ofsocial bonds?

variation in the degree of environmental improvement and social

Mr. Tsubota

benefits from projects that use the raised funds.

certain extent in Japan compared to emerging countries, We

Mr. Tsubota

feel it s extremely difficult to determine how much additional*1

In response to such trends, we can begin to see

Since bond investors have many corporate IR

Since social issues have been resolved to amovement by regulatory authorities. I have started to see insocial benefit is being sought.

the press that there is a trend toward concern over green

Mr. Hamada

wash . And as for green bonds, Europe established its own

lead to formulate Social Bond Guidelines, but even in thisand iscase, investors are required to properly assess the social

promoting a movement toward severely limiting the use ofeffects of a project that the funds will be used without simply

funds.

relying on external reviews. What kind of discussions do you*5classification standard called

Mr. Hamada

EU taxonomy * 6

Today, it is natural to follow the rules, but the

The Financial Services Agency is taking thehave with issuers?

goal should be to achieve high aspirations. For example, hybrid

Mr. Tsubota

cars, which are a specialty of Japan, used to be a qualified

effects with the issuer at the IR for bond investors. If we

asset, but it seems to have become more difficult recently since

don t agree with how the funds will be used, we check thethey are no longer approved in Europe.

target background and the contents of discussions with

Mr. Tsubota

external review organizations. We sometimes also give ourSince EU taxonomy is an EU regulation, it sFirst, we confirm use of proceeds and their

not believed to be a problem in Japan where they (suchopinion on the subsequent issuing contents.

bonds) are often issued based on the ICMA principle *7 .

Mr. Hamada

However, we have such global movements in mind when

The way of thinking of the company is also important.

engaging with issuers.

Mr. Tsubota

Mr. Hamada

It s not only about the formal requirements.
That is something we view as important. We

By the way, you mentioned the possibility that

also think it s important for issuers (or companies) to aim forhybrid cars would not be accepted as a use of proceeds

continuous issuance to address social issues, and not justwhen you attended an IR meeting with a car manufacturer.

temporary issuance to take advantage of a boom. So, do you

Mr. Tsubota

not invest if you do not agree with the use of funds?

The issuer also acquired a second opinion, butwhile speaking with them, I explained the possibility thatMr. Hamada

these might not be approved in the future. As a bondbond.

investor, I would like companies to have a common

Mr. Tsubota

understanding about our stance of working together to aim

so-called investment statement for investors to express

higher in the future.

their intentions.

We may invest if it is attractive as a regular
In that case, it may be better not to make a54

Purposes of Stewardship Activities

Features

Impact Investment Strategy

Overview

2020/2021 Stewardship Activity Focus Topics
Fixed Income ESG

Changes in issuance amount and number SDGs-related bonds in Japan (Public offerings)(Unit: 100 million yen)

22,50015,000

7,500

0

2016

2017

2018
Social bondGreen bond2019
Sustainability bond

2020

2021

Sustainability-linked bond

* For 2021, performance is up to June (Source : Created by SMTAM based on data from the Japan Securities Dealers Association)

Responding to diversifying SDGs-related bonds

have been more opportunities to discuss schemes with

Mr. Hamada

issuers and securities companies.

Sustainability-linked bonds*8and transition

bonds*9 have started to be issued in Japan. You often have

Mr. Tsubota

discussed the bond framework with securities firms andwhere the same amount is donated instead of coupon step-up

issuers as a bond investor.

whenever a goal is not reached.

Mr. Tsubota

Mr. Hamada

We have been trying to collect information on

There are also some sustainability-linked bonds

Coupon step-up is common in other countries,

sustainability-linked bonds for a long time since there wasand it seems that there are pros and cons to donation-type

the possibility of issuance in Japan based on trends inschemes. I view having different schemes as helping tooverseas bond markets and loan markets. When it was first

expand the sustainability-linked bond issuance market.

issued in Japan last year, some people hesitated to invest

55

because there are cases where economic return is higher if a

About the impact of investment

target is not achieved despite investing to improve theMr. Hamada

environment, and because it was difficult to calculate thepublish environmental improvement indicators based on thetheoretical value regarding coupon step-up * 1 0 when afunds such as on the status of greenhouse gas reduction.

sustainability target is not achieved.

Therefore, we believe it is easy to measure the impact of

Mr. Hamada

When issuing green bonds, that company will

We recognized coupon step-up as a general

holding green bonds. On the other hand, there are differing

global scheme, and we determined that initial coupons

opinions on measuring the impact of social bonds, whichwere at a level commensurate with creditworthinessare aimed at addressing social issues. How should we view

regardless of the conditions for when a target is not

this?

achieved. Therefore, we invested. Because of this, it was a

Mr. Tsubota

big deal since we were the only asset management

where impact is relatively easy to measure, such as thecompany that made an investment statement at the firstamount of medical care and medicines provided to poor

issuance case in Japan. So, we contributed to the increase

countries. In Japan, some social bonds are easy to measurein issuance cases thereafter. Through such initiatives, weand some are not. But, I feel that the number of people thatwant to support the activities of companies to set theircan be helped such as through equipment for disasterown sustainability goals and other efforts. Since then, there

prevention can be included as an impact.

If we look overseas, there are some cases

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Mr. Hamada I see. If you consider the number of people thatMr. Hamada

can be helped, it is possible to quantitatively show aable to visibly track growth and see changes in a company isnumerical value. Some SDGs focus on infrastructure, such as

rewarding and a social mission.

creating sustainable cities,

Mr. Tsubota

but it may be better toThat s great. Same as with green bonds, being

Don t we investors also need to change as weunderstand quantitatively through changes in traffic volume

engage with companies?

and population.

Mr. Hamada

Mr. Tsubota

we feel that disciplined investment, products, andThat s true. When it comes to social bonds,

Of course, EU SFDR also impact investors, so

there are still many unclear points as mentioned by the Financial

engagement are needed.

Services Agency, but I think the issuing market and investor base

Mr. Tsubota

can be expanded by visualizing social return. I also feel it isAsset Managers Initiative with the goal of achieving net zeronecessary to have comprehensive discussions with the issuer.

greenhouse gas emissions from our assets by 2050.

We are also participating in the Net Zero

Future activities with ESGs-related bonds
Mr. Hamada

As a company, I think you have made a varietyof efforts, but what do you feel would be the next step?
Mr. Tsubota

I think transition bonds will create more

opportunities to collaborate with equity analysts.
Mr. Hamada

What do you mean?

Mr. Tsubota

As the world moves towards carbon neutrality,

Glossary*1

A generic term for bonds that contribute to the environment and society

*2

*3

*4

Green Bond Principles

There is room for collaboration between
Regarding company transition strategies, I feel

it s possible to have better dialog with a company bycollaborating with equity analysts to discuss future growthpotential and credit analysts to discuss efficient financing

the issuance of SDGs-related bonds.
*5

Mr. Hamada*6

activity is environmentally sustainable*7

the International Capital Markets Association (ICMA) define green
bonds and social bonds, and establish four core elements which theseengagement with a real estate company.
explained that financing through subordinated loan or bondbonds should fulfill.
*8

A bond whose interest rate and other things fluctuate depending on how*9potential. The analyst went on to explain that it is a measure

A bond that, in general, is used for projects that do not meet the criteriatransition to a low-carbon economy and society, etc.

the external environment and is a way to respond to thea result, last year, the company raised funds through asubordinated loan for the first time

Transition bondfor issuing green bonds in terms of carbon emissions, etc. but that is forthat contributes to financial preparation for future changes indemand for funds for regrowth after the current pandemic. As

Sustainability-linked bondmuch the ESG goals are achievedgoes beyond appealing to existing equity investors who areinvesting in hopes of advanced business models and growth

ICMA principles

The Green Bond Principles (GBP) and Social Bond Principles (SBP) of

Speaking of collaboration with equity analysts,

Yes. Our analysts spoke with the president andEU taxonomy

Classification by the EU for clarifying whether a particular economic

I believe there was recently a positive case involving
Mr. Tsubota

Green wash

Making something appear to be environmentally friendly

methods using transition bonds. We will continue to haveclose information exchange and then respond accordingly.

by the International Capital Markets

Association (ICMA) and transparency to increase investor appeal inequity analysts and credit analysts.
Mr. Tsubota

Second opinion

External opinions and certifications ensuring the compliance with thecompanies with opportunities for future growth.
Mr. Hamada

Social bondA bond issued to finance projects that help solve social problems

money will be needed to address this. However, in addition
to being a risk, transition strategies can also present

Green bondA bond issued to finance a green projectso-called transition strategies have become a more urgent
issue for businesses. And it is said that a large amount ofSDGs-related bond*10

Coupon step-up

Something with a coupon (interest) that increases before maturity.
Here, a coupon is something that increases by a certain amount whena target is not reached.

56

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Disclosure of Climate-related Financial Information under TCFD
We believe that important issues concerning the Environment, Society, and Governance(hereinafter, ESG) will affect the long-term return of assets under management entrusted
from our customers. In particular, the effects of climate change have certainly begun tomaterialize and are beginning to have an impact on the corporate value of our investee
companies. We believe it is important to evaluate the potential profit opportunities andrisks in these investee companies. As such, we are reflecting the evaluation in
investment decision processes and leveraging it in business management.
Based on this concept, SMTAM endorsed the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) in February 2019. The following is an
explanation of the measures taken by our company as an asset manager on climatechange issues in accordance with the recommendations.
Representative Director and Chairperson/
Chairperson of the Board of Directors

David Semaya

Our Approach against Climate Change Issues
Climate change issues are a variety of phenomena caused by the progression of global warming, mainly attributable to humaneconomic activities. Changes in weather patterns due to global warming cause ecosystem changes and damage to food, water,
health, and the economy, which can adversely affect sustainable social/economic activities.
Under the Paris Agreement that came into to force in November 2016, signatory nations globally agreed to hold the increase in
the global average temperature to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit thetemperature increase to 1.5 degrees Celsius above pre-industrial levels, in order to ensure global sustainability.
In Japan, the government recently announced in October 2020 that it will reduce overall greenhouse gas emissions to zero by2050 to realize a carbon-neutral, carbon-free society by 2050. However, a forecast released by the Intergovernmental Panel on
Climate Change (IPCC) in August 2021 pointed out that the temperature will increase 1.5 degrees between 2021 and 2040, andstated, It is unequivocal that human influence has warmed the atmosphere, ocean and land.
The use of fossil fuels, which are the source of greenhouse gas, must be significantly phased out if these goals of bringing global
warming under control are to be met. Penalties such as usage constraints, carbon taxes, and carbon credits will increase costs
for companies, and companies that own fossil fuels as assets must amortize them. On the other hand, demand for products andservices that contribute to the reduction of greenhouse gas is expected to continue to increase and create new growth
opportunities.
We believe that climate change has the potential to cause the global environment to deteriorate in an irrecoverable manner inthe medium to long term, and have a significant impact on the corporate value of our investees over time. We are bolsteringvarious activities and information disclosure on climate change issues in order to solve one of the biggest challenges facing theinternational community, and to fulfill our fiduciary duty of maximizing the return on medium- to long-term investments entrusted
by our customers and to reduce downside risks.

57

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

TCFD
The recommendations announced by the TCFD call for companies and other organizations to disclose climate change-related
information in the four core areas of (1) governance, (2) strategy, (3) risk management, and (4) indicators and goals. The
following is a disclosure of measures on climate change issues to be taken by our company in accordance with therecommendations.

Information Disclosure Recommended by the Task Force*・ Role of management

・ Climate-related risks and opportunities
・ Effects of climate-related risks and opportunities
・ Potential effects of climate scenarios, including the 2°
C or less scenario

・ Process for identifying and evaluating climate-related risks
・ Process for managing climate-related risks
・ Integration of processes for identifying, evaluating, and managing climate-relatedrisks into comprehensive risks

Indicatorsand goals

Risk management

Climate change-related strategies

Climate-Related Governance・ Monitoring by the board of directors

・ Indicators for evaluating climate-related risks and opportunities
・ GHG emissions under Scope 1, 2, and 3
・ Targets used to manage climate-related risks/opportunities* The underlined items are particulary required for asset managing companies.

Climate-Related Governance
At SMTAM, the Board of Directors performs a supervisory function on
issues related to climate change as well as other important

Supervision

Board of Directors

Execution

Management meeting

management issues. Since 2020, the issues have been clarified as
matters to report to the Board of Directors in the board of directors
regulations so that more direct oversight can be carried out.
The matters to be reported to the Board of Directors consist of thecompany's strategies for climate change issues, risk management, andmonitoring of indicators and goals. These matters are discussed,
planned, and checked by the management meeting chaired by the

Stewardship Committeepresident and organized by the officers who control each businesssector. Under this structure, the stewardship meeting̶across-company organization acting as a secretariat̶promotes
administrative work on risk management and strategies related toclimate change. The supervision and execution of climate change issues

Strategy

Engagement and exercise of voting rights
Cooperation with stakeholders
Investment strategy (e.g. ESG integration)

will be primarily carried out through the strategies we describe later( Engagement and exercise of voting rights,

Cooperation withstakeholders, and Investment strategy. )58

Purposes of Stewardship Activities

Features2020/2021 Stewardship Activity Focus Topics

Climate change-related strategies(1) Common Climate Change Risks and Opportunities
Transition risk

Opportunity

Regulatory risk

Stricter environmental standards

Technological risk

Obsolescence of existing technology

Market risk

Shift of fossil fuel assets into stranded assets

Reputational risk

Risk of boycotts by consumers

Physical risk
Acute risk

Flood risk, etc.

Chronic risk

Drought risk, etc.

More efficient resources

Energy-saving technologies/products

Energy shift

Renewable energy

Products/services

Development/volume sales of EVs, etc.

Financial market

Carbon credit, etc.

Resilience

Recycled products, etc.

We have identified climate change as one of the ESG material items and are engaged with companies inside and outside Japan,
we are tackling matters by exercising voting rights and are developing and providing investment products, while integrating
various climate-related risks and opportunities. We are also contributing to the creation of a sustainable future by participating
in initiatives such as the UN Global Compact, the UN Principles for Responsible Investment (PRI), CA100+, and the Net Zero
Asset Managers Initiative.

(2) Climate Change Risks and Opportunities in the Asset Management Industry

Opportunity

Risk

Engagement andexercise of voting rights

Cooperation withstakeholders

Investment strategy

External evaluation

Remunerations

Fiduciary duty

A. Risk
Risks that the asset management industry receives from climate change include reduced management fee. As transition and physical risks become apparent,
management assets from customers are reduced, thus reducing management fee, undermining the stakes of management. In terms of fiduciary duty, the industry must
actively address climate change risks as asset managers that accept customer capital. As asset owners are increasingly focusing on climate change initiatives inselecting companies to which they entrust their assets, we believe that failure to do this will lead to a decline in competitiveness as an asset manager.

B. Opportunity
We believe that climate change is an opportunity to expand managing assets through engagement and exercise of voting rights, collaborating with stakeholders,and making investment strategies more sophisticated. Engagement with investee companies and cooperation with stakeholders are the most important activities
closely related to investment and product strategies. These activities include discussions with investee companies, direct/indirect statement of opinions, andsupport from various policy/institutional aspects. Making investment strategies more sophisticated means incorporating climate change risks into existing or new
investment (ESG integration) and to increase investment importance on securities issued by companies that take a proactive stance on climate change issues.
Through such efforts, we believe it will be possible to contribute to solving the issues related to climate change.

59

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference(3) Strategy
Strategy

Activity
examplesTargetMain initiatives
during theprevious year

Engagement and exercise of voting rights

・ Solo engagement by SMTAM with investee
companies
・ Collaborative engagement through PRI,
CA100+, etc.

Investee companies

・ Promotion of solo engagement targeting
top companies in Japan with greenhousegas emissions
・ Engagement with companies in Japan andAsia as a lead manager at CA100+

Cooperation with stakeholders

・ Engagement with government offices andindustry groups
・ Partnership with NGOs such as Ceres
・ Policy recommendation activities throughinitiatives such as the Investor Agenda

Investment strategy

・ Reflect climate change factors dependingon the individual fund style
・ Take into account climate change factors
in investment decisions on individual securities

Government offices Industry groups NGOs

Clients

・ Strengthening engagement with companies
closely connected to deforestation throughcollaboration with Ceres

・ SMT ETF Carbon Efficient Index Japan Equity
listed on the Tokyo Stock Exchange

・ Sending letters to the governments ofeach country including the Japanese
government through Investor Agenda

・ Development of Global Equity Impact
Investment Strategy

Based on our understanding of climate change risks and opportunities in the asset management industry listed in the previous
section, we have established our specific strategies.
We view engagement and exercise of voting rights as a direct opportunity to actively ask for investee companies to makemanagement decisions and build structures on the basis of climate change risks, in order to maximize asset under management
and reduce operational risk. Engagement may be conducted by SMTAM as its own activities or through initiatives *1 such as PRI
and CA100+.
In cooperation with stakeholders related to climate change, we carry out engagement with government offices and industry
groups and offer opinions on policies through such as the Investor Agenda*1.
We reduce management risks and improve returns by adopting investment strategies based on climate change issues. We
reflect climate change factors depending on the client's intentions, investment strategies, and other specific circumstances. We
increase or decrease the composition weight of individual securities in consideration of climate change under our investment
decisions. We also offer our customers investment opportunities related to climate change by providing investment products.

*1 See pages 69-70

60

Purposes of Stewardship Activities

Features2020/2021 Stewardship Activity Focus Topics

List of investment strategies that take climate change issues into consideration
Active/Passive

Passive

Passive

Asset Class

Japan Equity

Global Equity(including
Japan Equity)

Details

S&P/JPX Carbon Eﬃcient Index*2

・ S&P Dow Jones Indices, the world's largest independent index provider, builds theindex based on carbon emissions data from Trucost, a pioneer in environment
evaluation.
・ The index puts heavier investment weight on companies that have high carbon
eﬃciency (low greenhouse gas emissions/sales) and companies that disclose
information on greenhouse gas emissions in the same industry. We provide
products linked to the index.

SMT MIRAIndex Eco Index*2・ We use our knowledge of quant active management to formulate themethodology for the FactSet Global Environmental Opportunities Index, which isan environmental-related theme index, and FactSet performs calculations.
・ Investment targets are companies that obtain more than half of their sales fromenvironmental-related business, including alternative/renewable energy,
energy conservation, eﬃcient use of resources, waste disposal, and water
resource conservation, and we oﬀer products linked to the index.

Japan Equity
Global Equity

Japanese Equity Impact Investment Strategy
Global Equity Impact Investment Strategy

・ This is an absolute return-type active investment strategies which aims toachieve social returns as well as economic returns by means of concentrated
investment in companies that work on SDGs and other activities to solve social
issues.
・ The objective is to engage with companies and increase the probability ofearning social and economic returns on the basis of an impact KPIs set for eachbrand.

ActiveJapan Equity

Japan Equity Responsible
Investment Management Strategy

・ This is an active investment strategy for achieving an excess return against
TOPIX by investing in companies that have a strong commitment to ESG.
・ We select investment stocks on the basis of credit risk judgment, ESG
evaluation, and share price evaluation from SRI universe candidates selected by
the Japan Research Institute, which excels in ESG research.

ActiveJapan andGlobal Equity

Decarbonization-related
Global Equity Strategic Fund
(Asset growth type) /(Expected dividend oﬀer type)*3・ This is an active management fund where investment stocks are selected fromamong companies related to decarbonization after verifying growth potential
and degree of undervalue on stock by means of fundamental analysis.

Future Focus Corporate Bond
Investment Strategy

・ This is an active management strategy of investing in the bonds issued by companies(including issuers other than companies such as governments, government-aﬃliatedorganizations, local governments, and international organizations) that have a trackrecord of issuing bonds, etc., where use of funds is related to the resolving ofenvironmental and social issues, and bonds that incorporate resolving environmental
and social issues in the issuance conditions, etc.

ActiveActiveJapan and Global
Fixed Income*2 See page 77*3 See pages 77 and 78

61

Index/Investment strategy nameStewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Risk management
We evaluate risks for managed assets related to climate change according to the asset class, and then integrate asset classes toevaluate all held assets. Our assessment method involves using (1) fixed point analysis based on the disclosed information ofcompanies that make up our portfolio, along with their performance figures, and (2) transition pathway analysis based on futureclimate change-related scenarios. The following is a summarized disclosure of analysis results related to domestic and foreign
shares as well as domestic and foreign bonds managed by SMTAM. The analysis was carried out using the data and analysis
methods of an outside organization*4. (The base date is June 30, 2021.)(1) Fixed point analysis (Greenhouse gas emissions, etc.)
This is an attempt to ascertain the status of Greenhouse Gas Emission Exposure and other conditions at a fixed point in time, based on investee company disclosure
data and other information. Domestic shares, domestic bonds, foreign shares, and foreign bonds are the targets and the emissions of each asset are below thebenchmarks. Looking at industry-specific emissions, utilities and materials make up a large part of the total for each asset.

Greenhouse gas emissions by managed assets*5 *7 *8Industry-speciﬁc breakdown of greenhouse gas emission*6 *8（Unit: Million tCO 2 e）

Domestic
sharesDomesticbonds

ForeignsharesForeign
bonds

47.9

Portfolio

49.6

Benchmark5.0

Portfolio

Domestic
bonds

9.3

BenchmarkDomestic
shares41.4

Portfolio

Foreignshares44.3

Benchmark1.7

Portfolio

Foreignbonds

3.9

Benchmark0

Scope1+2
10

20

30

40

Scope350

0％20％
Materials

40％

60％

80％

Utilities

EnergyIndustrials

Consumer Discretionary

Weighted average carbon emissions (Emissions per unit sales)*6 *7 *8

Information technology

100％Consumer staples
Financials

Other(Unit: tCO 2 e/ $US 1 million)
Domestic
sharesDomesticbonds

ForeignsharesForeignbonds

Portfolio

89.8

Benchmark92.0

Portfolio

155.0

Benchmark402.7

Portfolio

151.4

Benchmark156.5

Portfolio

Weighted average carbon emissions (emissions per unit sales) are also
below the benchmarks for each asset. It seems that the value of domestic
bonds in our portfolios and benchmarks are high due to the large
composition ratio from the utilities sector such as electric power

71.7

Benchmarkcompanies. The value of foreign shares is also relatively high, but it isbelieved that this is due to the relatively large number of held shares

188.3

issued by companies in the utilities and materials sectors in China and
0

100

200

300

400

Asia.

62

Purposes of Stewardship Activities

Features2020/2021 Stewardship Activity Focus Topics(2) Transition Pathway Analysis

Comparison of the expected pathway for greenhouse gas emissions by all assets managed by SMTAM andemission budgets for each climate change scenario*8 *9 *10 *11
120%
100%
80%
60%
40%

Portfolio

Sustainable Development Scenario (SDS)Stated Policy Scenario (STEPS)

2050

2049

2048

2047

2046

2045

2044

2043

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

20%

Current Policy Scenario (CPS)

Transition pathway analysis assesses how the portfolio's climate change risk will change in the face of different scenarios for future climate change. The projected
greenhouse gas emissions of the portfolio are compared with the projected carbon budgets calculated according to different climate change scenarios, and thisproduces an assessment of the portfolio's resilience relative to the different scenarios over time. Specifically, evaluation will be based on the three scenarios of theInternational Energy Agency (IEA), which are the SDS: Sustainable Development Scenario,

STEPS: Stated Policy Scenario, and "CPS: Current Policy Scenario. Thisconfirms that the emissions of all assets we manage (all domestic shares, domestic bonds, foreign shares and foreign bonds) are likely to reach the SDS-allowedemissions by 2032. Based on our evaluation, this is a relatively strong tendency with foreign assets, but as stated above, with foreign assets, this is influenced by the
relatively large amount of held stocks and bonds in the utilities and materials sectors of China and Asia, which suggests that it is important to support and strengthen
initiatives to address climate change issues in these regions and sectors.

Survey on climate-related targets
Domestic assets
Foreign assets

Approved SBT

We recognize that there are many investee companies in our
portfolio of managed assets that are not aggressively addressing
climate change issues. We consider increasing the number ofinvestee companies that can set ambitious goals, commit to SBT,
and obtain certification *11 to be an important measure, and we will
actively work with investee companies.

Committed SBT

Ambitious Target

Non- Ambitious Target

No Target

0％

10％

20％

30％

40％

(Portfolio weight)

63

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Indicators and goals
After considering matters such as strategies, risk management, and issues related to access to various data mentioned above,
we perform fixed point analysis and transition pathway analysis of domestic shares, domestic bonds, foreign shares, and foreign
bonds that we manage individually and collectively. As a responsible institutional investor, in order to achieve the global
sustainability agreed upon under the Paris Agreement, we will continue to hold the increase in the global average temperature
to well below 2 degrees above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees above
pre-industrial levels, in order to ensure sustainability.

Plans for the future
Under the supervision of the Board of Directors, we will continue our efforts and disclosures on climate change issues. We
reduce greenhouse gas emissions generated by investee companies through collaboration with stakeholders such as
engagement, exercise of voting rights, and policy advocacy activities, provision of investment strategies and investment products
in relation to climate change issues, and the optimal allocation of resources with the aim of (1) maximizing customer returns on
investments and (2) contributing to climate change issues in cooperation with investee companies. We are committed tocontinuing our efforts to achieve this goal.

*4 ISS (Institutional Shareholder Services)*10 SDS (Sustainable Development Scenario): A scenario aimed at global sustainable*5 Based on Scope 1+2+3

development*6 Based on Scope 1+2

Scenario in harmony with initiatives to keep the temperature below +2 degrees*7 Benchmarks are:and +1.5 degrees as stipulated in the Paris Agreement.

Domestic shares: Tokyo Stock Price Index (TOPIX)STEPS (Stated Policy Scenario): Scenario for achieving policy statements

Domestic bonds: NOMURA-BPI Overall (Corporate bonds only),

Scenario for achieving the goals stated by governments (end of this century +2.7

Foreign shares: MSCI-ACWI (ex Japan),degrees)

Foreign bonds: Bloomberg Global Overall (excluding Japan) (Corporate bonds only)

CPS (Current Policy Scenario): Current policy-keeping scenario*8 Calculated based on the SMTAM holdings for the adjusted corporate value ofeach asset.
*9 All industries except the fossil fuel production industry: Scope 1+2, Fossil fuelproduction industry: Scope 3, Electric power: Scope 1

Scenario where the current status maintained without changing policies (end of
this century +3.2 degrees)*11 SBT (Science Based Targets): Targets for reducing greenhouse gas emissions set
by companies with a target year of 5 to 15 years in the future in harmony withthe standards stipulated in the Paris Agreement. Numerical values must bealigned with the latest indicators from meteorological science. These are
implemented as WMB (We Mean Business) initiatives, and are established andcarried out by WMB constituent organizations such as the World Resources
Institute (WRI) and CDP.
SBT certiﬁcation: Indicates that goals are certiﬁed based on the above. Even after
being certiﬁed, it is necessary to disclose emission amounts, the progress ofmeasures every year, and to regularly conﬁrm the validity of targets.
SBT commitment: Declaration that SBTs will be set within 2 years.

64

Features

Purposes of Stewardship Activities

2020/2021 Stewardship Activity Focus Topics

Corporate Profile
Balance of assets under management

As of the end of June 2021

Investment advisor business:

Approx. 69.3 trillion yen

Approx.
84.8 trillion yen Investment trust business:

Approx. 15.5 trillion yen

By asset class

By client type

Other

Domestic
shares9.3

Foreignbonds

Investment
trust

Publicpension

15.5

22.9
Other

14.9

7.6

84.8

84.8

2.4

Domestic
bonds

16.4

Government
fund

21.3
Foreignshares

44.9

69.3

14.4

Corporate
pensionInstitutional
investor

・Shares and bonds make up more than 50% and 30%, respectively,

・We are trusted with a large amount of long-term funds for savings,of the balance of assets under management, and we are actively

including pension funds and investment trusts. We believe that ESG

promoting engagement activities for our investee companies. We

investment from a long-term perspective meets the needs of manycustomers.

are also working on ESG integration for both shares and bonds.

・Most of our customers are in Japan, but foreign customers in the
Middle East and Europe have been increasing in recent years■ Communication with Customers
We actively collect feedback from customers in order to improve our stewardship activities. ESG is a major topic in the market, and customer needs areconstantly changing. Therefore, we view discussions with customers as precious opportunities to quickly conﬁrm any changes and give these priority.
In fact, when we have discussions with customers one to four times a year, we report on our policies and the contents of stewardship activities. We also
use opportunities when many of our customers are gathered to explain our initiatives.
We continuously use the feedback we receive from customers based on such direct exchanges to improve our initiatives. As a speciﬁc example, ourtop-down approach has been enhanced through feedback received from customers.

Companies exercising voting rights

As of the end of June 2021

Number of Japanese companies:

Approx. 2,600 companies

Investment balance:

Approx. 23 trillion yen

Stewardship activities [Number of meetings per year]
Number of engagement meetings:
Domestic Number of engaged companies:

Number of foreign companies:

Approx. 2,700 companies

Investment balance:

Approx. 21 trillion yen

July 2020-June 2021

Approx. 850
Approx. 430 companies

Number of contacts with companies (Overall**): Approx. 6,600
Number of engagement meetings:

Approx. 380

Number of engaged companies:

Approx. 290 companies

Overseas* Total number of contacts including general interviews, company briefing sessions,factory tours, and telephone conferences as well as engagements

65

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Responding to the Stewardship CodeAt SMTAM we are addressing the principles of the Stewardship Code via the initiatives described in the table below.
And, moving forward, we will continue to fulfill our stewardship responsibilities.

Initiative

Self-assessment

We re-endorsed the revised Principles for Responsible

・We think our response at present is appropriate, but wewill review our response from time to time when we deem
it necessary.

Principle 1

Institutional Investors <<Japan's Stewardship Code>>,

Policy formulationand disclosure

Trust Asset Management has formulated and published awhich was published on March 24, 2020. Sumitomo Mitsui
Policy for Addressing the Principles of the Japan s
Stewardship Code.

Principle 2
Conflict of interest
management

Principle 3
Accurate
understanding

Principle 4
Dialog with companies

Principle 5
Exercise of Voting Rights

・As the investment managing company of the Sumitomo
Mitsui Trust Group, we have put in place an essential
conﬂict of interest management system.
・W e h a v e d i s c l o s e d s u m m a r i e s a s n e e d e d o f t h edeliberations of the Stewardship Activities Advisory
Committee, which is an independent committee.
・We promoted top-down approach activities for selecting
companies for engagement according to each ESG12
topic based on our ESG materiality.
・We continued to focus on market cap approach activities
for selecting target companies based on the importance ofmanagement issues and market capitalization, and risk
approach activities targeting companies that we voted
against the management proposals, and companies withmisconduct.
・We promoted collective engagement activities in Japan asa member of the Institutional Investor Collective
Engagement Forum (IICEF).

Development of skills

・T h r o u g h t h e I I C E F , a s t h e l e a d m a n a g e r o f t h eparent-subsidiary listing issue agenda, we heldcollaborative talks with eight companies.

・We disclosed our reasons for voting on each of the
proposals which need explanation in light of theguidelines for exercise of voting rights. We disclosed
details on voting activity in the Stewardship Report.

・In order to increase the value of investee companies
through the sophistication of corporate governance andthe addressing of environmental and social issues, as aminimum standard, we will continue revising theguidelines for exercising voting rights in a timely andappropriate manner.

・We released our 2020/2021 Stewardship Report inNovember 2020.

・Based on revisions to the Corporate Governance Code
implemented in March 2021, we will consider revising theguidelines for exercising voting rights.
・W e t h i n k o u r r e s p o n s e a t p r e s e n t i s a p p r o p r i a t e .
considering our direct reporting to asset owners, ourhosting of seminars, the release of our Stewardship
Report, and the enhancement of information disclosed on
our website.
・Moving forward, we will endeavor to report in a timely andappropriate manner and also improve and expand thecontent of our activity reports.

・Participated in the Investor Action on AMR, TNFD, and Net
Zero Asset Managers Initiative*.

Principle 7・Since this activity started in 2014, as of June 2021, we
have engaged with companies representing 90% of thetotal market value of the ﬁrst section of the Tokyo Stock
Exchange. We have engaged with over 800 companies,and corporate actions being taken based on content fromour opinions are increasing.

・We think our response at present is appropriate, but wewill work to maintain and enhance the transparency of our
exercise of voting rights going forward.

・We are providing explanations about our stewardship
activities to asset owners periodically or non-periodically.

Reporting to clientsand beneficiaries

・Through our top-down approach, stage management is
implemented for addressing ESG issues, and it was
conﬁrmed that we are making progress compared to lastyear.

・We disclosed our voting records on all proposals for all
brands we hold (in October 2020 and January, April, andJuly 2021).

・We revised and published our Guidelines for the Exerciseof Voting Rights (in January 2021)

Principle 6

・We think our response at present is appropriate, but wewill continue to review it at correct times asenvironmental changes and other factors warrant.

・We started operation of a U.S. subsidiary (Sumitomo
Mitsui Trust Asset Management Americas, Inc) on July 1,2020 and strengthened engagement activities in theAmericas.

・While pursuing achievements through Global Initiative
activities for addressing ESG issues, we will improve ourstewardship activities by accumulating skills through these
activities.
・Our three bases in Tokyo, London, and New York, makes
comprehensive global engagement possible, and thenumber of engagements with overseas companies has
increased signiﬁcantly.
* See pages 69-70

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2020/2021 Stewardship Activity Focus Topics

Announcement of approval of the UK Stewardship CodeAs a responsible institutional investor and as a body that has signed the UN PRI, we have made it our aim to achieve sustainability
for investee companies and society as a whole by encouraging companies to resolve ESG issues through business excellence. We
take change seriously, and will identify and invest in companies that will grow at a new stage, to continuously pursue the balance
between solving social issues and gaining a return on investments.
As an institutional investor with a global business base, in addition to supporting Japan's Stewardship Code, we understand andsupport the policies of the UK Stewardship Code. The following table shows how the 12 principles of the UK Stewardship Codeapply to our activities.

Stewardship code principles

Principle1

Principle2

Purpose, strategy and culture

Governance, resources andincentives

Principle3

Conﬂicts of interest

Principle4

Promoting well-functioning markets

Applicable portion

Corresponding page

Message from the CEO

3-4,

Purpose of stewardship activities

21-26

Stewardship Promotion Framework
Conﬂict of interest management
ESG Activities and Incentives

27-28,
68

Conﬂict of interest management

28

Disclosure of climate-related ﬁnancial information under TCFD

57-64,

Collaboration with various initiatives

69-70

Striving to maximize investment returns as a responsible
institutional investor
Stewardship Promotion Framework

Principle5

Review and assurance

Conﬂict of interest management25-32,

Status of top-down engagement initiatives

33-40,Engagement which contribute to creating corporate valueof the investee companies

66-68

Responding to the Stewardship CodeAnnouncement of approval of the UK Stewardship CodePrinciple6

Client and beneﬁciary needs

Corporate Proﬁle65

SMTAM s ESG12 Topics

Principle7

Stewardship, investment and

ESG Integration

7-8,

ESG integration

Impact Investment Strategy

47-56

Fixed Income ESG

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Stewardship Activity Initiatives

ESG Integration

Stewardship code principles

Principle8

Monitoring managers andservice providers

Disclosure of Climate-related Financial Information under TCFD

Reference

Applicable portion

Corresponding page

ESG Integration

48

SMTAM s ESG12 Topics

Principle9

Engagement

Engagement which contribute to creating corporate valueof the investee companies
ESG Integration

7-8,
33-40,
47-48

Collaboration with various initiatives

69-70,

Active Involvement in the Principles for Responsible Investment (PRI)

71

Escalation

Status of top-down engagement initiatives

29-32

Exercising rights and responsibilities

Introducing criteria for exercising voting rights on important
issues that are likely to impact corporate value

43-46,

Principle10

Collaboration

Principle11

Principle12

Fixed Income ESG

53-56(Note) We are currently preparing to sign the UK Stewardship Code during 2022.

■ ESG Activities and Incentives
For investment managers including our fund managers and analysts, we have a compensation system where achievements related to ESG integration of
the investment process are reﬂected to incentives. In addition, as a responsible institutional investor, we have established a corporate philosophy andformulated an annual management plan for achieving it. As a result, our philosophy is reﬂected in the measures and achievements of each department aswell as in bonuses linked to these achievements.

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Collaboration with various initiatives (as of the end of July 2021)
As a signatory asset manager to international guidelines and principles on corporate conduct, we engage withinvestee companies while cooperating with the United Nations, NGOs, and other organizations to implement
activities in keeping with our signatory commitments.

Global initiatives
Initiatives related to the United Nations and climate change
PRI

Principles for responsible investment which requires institutional investors toincorporate ESG factors into investment decision-making processes.

Climate Action 100+Serve on the PRI Japan Network Advisory Committee.
Promote policy engagement with governments.
Participate in the collaborative task force for strengthening the disclosure of sustainability information by
the PRI and the World Business Council for Sustainable Development (WBCSD).

In addition to participating in the Global Steering Committee representing Asia, are the lead manager ofjoint engagement with Asian companies● Signed in May 2006

Joint engagement organization that requires companies with high GHG
emissions to disclose information based on TCFD

● Signed in December 2017 (Responsible for the Asia-Pacific region)

Initiatives related to speciﬁc topics
FAIRR

SPOTT

Participate in collaborative engagement on work environment issues thathave surfaced due to COVID-19. Also participated in a statement calling
for the agricultural sector to disclose data on greenhouse gas emissions

Participated in the 2020 revision of assessment questions as a memberof TAG (Technical Advisory Group) for SPOTT

An initiative established by the Zoological Society of London (ZSL) to
support sustainable commodity products

An engagement body focusing on the fishery and livestock industries● Signed in February 2020

● Signed in October 2018

30% Coalition, 30% Club

Access to Medicine

Utilizing knowledge gained from bases in Europe and the United States
related to gender diversity for engagement in Japan. Presently, discussions
are moving from gender to race in Europe and the United States.

Taking the lead in engagement activities with Japanese pharmaceuticalcompanies, and are the only Japanese institutional investor to be aninternational signatory on COVID-19 vaccines.

● Signed in April 2017

● Signed in April 2018

A collaborative body in which major asset managers and owners in the
United States and Europe seek to improve access to medicine

An investor network that promotes greater diversity on the boards of
directors at investee companies

Investor Action on AMR

TNFD

Signatory of the organization that handles collaborative engagement andrecommendations to pharmaceutical and agricultural supply chain
companies connected to the issue of resistant bacteria

A working group that handles engagement and makes recommendations
on the disclosure of natural capital information

Participated as the only Japanese institutional investor in November 2020,
and are actively promoting activities to raise awareness of the resistantbacteria issue through various meetings in Japan and overseas

Joined the informal working group before its start in June 2021 andpromoted the official launch project● Signed in September 2020

● Signed in November 2020

Domestic initiative
Related to climate change

TCFD Consortium

ESG Disclosure
Study Group

30% Club Japan
Investor Group

General incorporated association that conducts research on ESG
information disclosure in collaboration with listed companies andinvestors

An investor network that promotes greater diversity on theboards of directors at Japanese investee companies

Participate in roundtable discussions and exchanged opinionswith companies on efforts related to climate change issues

Our officers serve as directors. Listed companies, major audit
corporations, and institutional investors collaborate to promoteresearch activities on ESG information disclosure

Our President serves as the Investor Group chair Activities forraising awareness on gender diversity are promoted through thecreation of annual reports and study sessions● Signed in May 2019

● Signed in June 2020

● Signed in May 2019

Signatory organization for public/private collaborative efforts topromote climate information disclosure under the framework of
the TCFD

69

Initiatives related to speciﬁc topics

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

United Nations GC (Global Compact)

Action principles on human rights, labor, environment and anti-corruption.
Signatory companies require initiatives for implementing them
Engagement is done by including action principles on human rights, labor, theenvironment, and anti-corruption in our ESG materiality● Sumitomo Mitsui Trust Group was the first Japanese bank which signed theinitiative in July 2005

Reference

CDP

International NGO to address environmental issues such as climatechange (forerunner of the Carbon Disclosure Project)

Send letters encouraging companies to set SBTs (Science Based Targets)by participating in collaborative engagement programs● Signed in April 2014

Investor group related
Ceres

CIＩ

Joined the working group for land use and climate change in May 2021
to strengthen engagement with companies that are closely connected todeforestation

Attended the CII Spring Conference in March 2021. Collected
information on corporate governance, financial markets and regulations,accounting/auditing, and diversity● Signed in April 2017

● Signed in June 2018

NGO that promotes corporate initiatives on environmental issues such as
global warming

A non-profit organization that shares information and views on corporate
governance, shareholder rights, and so on

ICGN

AIGCC

An Asian investor association on climate change

An investor association that provides support and advice for implementing excellent corporate
governance practices

Lead manager in charge of collaborative engagement with the Asian
Utilities Engagement Program launched in March 2021

Appointed to the Board of Governors as a representative of Japan in September 2021 Strengthening
efforts related to governments, authorities, and exchange in each country to improve corporate
governance● Signed in December 2017

● Signed in September 2017

Investor Agenda

Net Zero Asset Managers Initiative

Supported the 2021 global investor statement to governments on
climate change issues

Participated in July 2021. Announced the goal of net zero greenhouse gas emissions from owned assets
by 2050● Signed in June 2019

● Signed in July 2021

An institutional investor initiative for promoting low carbon which acts on
climate change

Initiative by global asset management companies with the goal of achieving net zero greenhouse gas
emissions from managed assets by 2050

Investor group related

Japan Sustainable
Investment Forum (JSIF)

Japan Stewardship Initiative

Seven domestic institutional investors promote collaborative
engagement according to six agendas including issues related toparent-subsidiary listings

Our officers serve as directors. Contributed to the White Paper on
Sustainable Investment in Japan, and dispatched lecturers tosustainable finance courses at universities sponsored by theorganization

Contributed as a member company to the spread of smart formats,which are a common platform for reporting stewardship activities
to asset owners● Signed in October 2017

● Signed in March 2005

Institutional Investors
Collective Engagement Forum

General incorporated association whose purpose is supporting
collaborative engagement between institutional investors and companies

NPO whose goal is to promote sound development of sustainable
investment and financing in Japan

Organization that manages and revises reporting formats between
asset owners and investment institutions, while collecting andsharing information on related best practices.

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2020/2021 Stewardship Activity Focus Topics

Active Involvement in the Principles for Responsible Investment (PRI)

Established with the support of the United Nations, the Principles for Responsible

2020*

Investment (PRI) encourage institutional investors to incorporate environmental,social and governance (ESG) factors into their investment decision-making
processes. The 100 signatory institutions to the PRI at the time of its launch in
April 2006 represented total assets under management (AUM) of US$6.5 trillion,
but as of March 2021, the number of signatories had increased to 3,826,
representing total AUM of around US$121.3 trillion and a strong indication of thegrowing importance of responsible investment. Since becoming a signatory to the
PRI in May 2006, we have drafted policies in accordance with the six principles
and implemented initiatives in light of the latest developments.
The PRI evaluates each signatory with respect to their commitment to andprogress on implementing the six principles based on their reports. A score of A+
is the highest, while E is the lowest. As shown in the table to the right, we havecollected favorable scores on the whole and received a comprehensive
assessment score of A+ for the sixth year in a row up until 2020. We willcontinue with our active involvement in the PRI going forward and will makeevery effort to maintain and improve our ratings.

Strategy and governance(comprehensive assessment)

A＋Integration status of listed equity into
responsible investment

A＋

Active ownership in listed equity

A＋

Engagement

A＋

Exercise of Voting Rights

A＋

Fixed income investment(e.g., government bonds)

A＋

Fixed income investment(e.g., corporate bonds)

A＋* The evaluation for 2021 will be announced later.

We will incorporate ESG issues into investment analysis and decision-making processes.
Principle 1

We analyze and evaluate non-ﬁnancial information, such as management thoroughness, strategy execution capabilities, and capacity for reform, withthe aim of identifying improvements in or maintenance of sustainable corporate value at investee companies. Furthermore, we seek to implement
initiatives (ESG integration) that utilize the knowledge gained from our analyses and evaluations in our investment management operations.

Principle 2

We will be active owners and incorporate ESG issues into our ownership policies and practices.
We conduct engagements and exercise voting rights with ESG issues in mind; through these activities, we encourage investee companies toimplement appropriate initiatives to tackle ESG challenges.

Principle 3

Principle 4

We will seek appropriate disclosures on ESG issues by the entities in which we invest.
We seek appropriate disclosure of ESG issues from investee companies.

We will promote acceptance and implementation of the Principles within the asset management industry.
We actively promote engagement and awareness-raising activities with investee companies so these Principles gain acceptance and are
implemented in the asset management industry.

Principle 5

We will work together to enhance our eﬀectiveness in implementing the Principles.
We collaborate with investment institutions in Japan and overseas through participation in PRI-sponsored working groups and involvement insignatory bodies established with the aim of resolving ESG issues in order to improve eﬀectiveness in implementing the Principles.

Principle 6

We will report on our activities and progress towards implementing the Principles.
We implement these Principles and produce and issue reports that meet the requirements for signatories to disclose their activities andprogress towards implementing them.

71Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

Recognizing and Addressing General Market Risks and Systemic
Risks to Promote Appropriate Function of Financial Systems
As a participant in the global financial market, we also consider it is our responsibility to contribute to the upkeep ofa stable financial system. We control risks in our assets by appropriately understanding market risks, such as eachcountry's interest rates and exchange rates. In addition, we consider the climate change risk, which can affect many
economic sectors and destabilize financial systems, as important criteria for decisions on investment, and will actively
carry out initiatives for addressing it.

Managing market risks
Asset managers conduct transactions in various markets and are having an increasingly large impact on financial markets as their scale of management increases.
Therefore, appropriate risk management is necessary from the viewpoint of smooth market continuation and development.
By measuring tracking errors and durations in portfolios under our management, we understand market risks such as interest rates, exchange rates, and stock prices,and set appropriate limits and thresholds for controlling said risks. In addition, we use methods such as VaR and stress testing to understand the impact of market
fluctuations on our portfolio, and conduct capacity control, such as capping the amount of investment, in order to ensure that each portfolio is managed with anappropriate asset scale.
We secure a healthy operating status by getting an independent department outside investment departments to monitor it. The independent department also
conducts transactions and places orders in markets using the best possible method with due consideration to scale and liquidity of each market.

Addressing climate change risks
There is a growing perception that climate change will destabilize financial systems from the two aspects: physical risks, such as heat wave, drought, and flood, andtransition risks, such as decline in corporate profits and asset value in the midst of the shift to a low-carbon society.
With global ESG activities and investment decisions that take into account ESG elements, we conduct investment activities with due consideration to climate changerisks, and are actively involved in the international society's initiatives against climate change, including participation in TCFD.

Cooperation with other stakeholders
We have signed international corporate behavior policies and principles, and conduct engagement in collaboration with the United Nations and various global
initiatives. Specifically, we signed the PRI (Principles for Responsible Investment), and joined the water risk working group and palm oil working group to carry out
engagement with investee companies. For Climate Action 100+, we play an important role as the lead manager for nine companies mainly in Asia and as a memberof the Steering Committee to formulate plans for activities in Asia, organize signatory organizations, and spread information.
In addition, we were the only Japanese asset manager that joined a collaborative engagement with the Brazilian government on the destruction of the Amazon
forest through the forest conservation working groups in PRI and Ceres. We also held individual discussions with the Central Bank of Brazil and Brazilian
ambassadors in Japan.

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SMTAM's ESG Investment Policy
Basic Policy
1.

Purpose and Signiﬁcance of ESG Investment
As a signatory asset manager on the United Nations Principles for Responsible Investment, we conduct investment activities(ESG investment) focusing on the medium- to long-term environmental, social, and governance (ESG), on the basis of thevalues presented in the United Nations Global Compact and SDGs. We believe that fulﬁlling the role as an asset manager in
an investment chain through ESG investment will make contributions in promoting value improvement and sustainablegrowth of investee companies, maximizing the investment return of clients (beneﬁciaries) over a medium to long term,
reducing downside risks, and achieving a sustainable society.
The purpose of this policy is to clarify the basic policies and views when we make an ESG investment to reﬂect it ininvestment decision making.

2.

Positioning
1) ESG investment refers to activities as an institutional investor with a focus on challenges and investment opportunities
related to E (Environmental), S (Social), and G (Governance).
2) ESG investment is part of the eﬀort to fulﬁll stewardship responsibilities as a responsible institutional investor.
3) ESG investment is promoted by utilizing direct portfolio management methods such as selection of investment target
brands and weight decision, and other methods including engagement and exercise of voting rights, which are the core of
stewardship activities.

3.

Commitment
1) We take ESG investment into consideration to the maximum extent for all products under our management.
2) We make ESG investments in order to fulﬁll our responsibility (stewardship responsibility) to increase investment return toour clients (beneﬁciaries).
(1) ESG-related issues are non-ﬁnancial issues that do not appear in ﬁnancial information, and may have a signiﬁcant
impact on business opportunities, risks, and corporate value over time.
(2) Actively investing in companies that positively address ESG-related issues and seeking best practices from companies
will lead to the pursuit of a medium- to long-term upside potential.
(3) Reducing investments in companies with ESG issues and correcting ESG-related issues that could damage corporate
value will lead to a reduction of downside risks.
3) We manage portfolios for various investment strategies, and are consistent with each client's investment purposes. In
making ESG investments, we use methods that are most appropriate for investment purposes, targets, and strategies.
4) In making ESG investments, we take ESG materiality below into consideration.

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Disclosure of Climate-related Financial Information under TCFD

Reference

ESG Materiality
1.

ESG materiality
There are many tasks and topics in each perspective regarding ESG, and information providing institutions, index providers,and other entities evaluate corporate activities with diﬀerent evaluation items as their core. In order to systematize
evaluation items for an ESG investment, we arrange major topics related to ESG on the basis of the purpose of the basic
policy, and deﬁne them as "ESG materiality" as below.

2.

Environment
1) Overview
While all economic activities depend on the natural environment, the activities by humankind after the Industrial
Revolution have placed a signiﬁcant burden on the natural environment and are a challenge that threatens its sustainable
prosperity. In order to achieve a sustainable society and secure medium- to long-term investment return from client
assets, it is necessary to take into account elements of the natural environment in investment activities and to support therealization of a recycling-oriented society.
2) Climate change
Global warming, which is attributable to the accumulation of greenhouse gases such as carbon dioxide, and the resulting
extreme weather are not a threat in the future, but rather a reality that is in front of us. We consider climate change as
the most important issue aﬀecting all economic entities, and reﬂect measures for mitigating and adapting to it in ESG
investment decisions.
3) Natural capital
Improper use of natural capital, which is a major material in economic activities, makes sustainable use of resources
impossible and threatens the sustainable prosperity of society. We will reﬂect the situation regarding the sustainable useof natural capital such as water resources, mineral resources and ﬁshery resources in our ESG investment decisions.
4) Pollution & waste
If various wastes generated as byproducts of economic activity are not properly managed by companies, the naturalenvironment will be damaged and scarce resources will be consumed. We reﬂect the sustainability of material ﬂow
throughout life cycles of products in our ESG investment decisions.
5) Environment-related opportunity
The environmental issues in 2) to 4) above lead to the creation of new markets as represented by renewable energy
through policy changes at a government level and changes in consumer awareness. We view this as an investment
opportunity and reﬂect it in our ESG investment decisions in order to support the shift to a sustainable society andachieve growth of client assets.

3.

Society
1) Overview
Companies must not only comply with internationally supported laws and regulations, but also operate with consideration
to the interests of diverse stakeholders, including clients, employees, local communities, and members of worldwide supply
chains. As the population structure changes and awareness of diversity deepens, the standards required for companies are
increasing daily. In order to realize a sustainable society and ensure medium- to long-term investment return from client
assets, companies must always seek a high level of eﬀort.
2) Human rights and community
As a signatory asset manager for the United Nations Principles for Responsible Investment, we urge investees to act incompliance with international standards. For companies that have signiﬁcant problems in relation to international
standards, such as the manufacturing of cluster bombs and other inhumane weapons, we approach them through ourengagement, and consider removing them from our investment targets. We reﬂect corporate activities related to humanrights and community in our ESG investment decisions.

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2020/2021 Stewardship Activity Focus Topics

3) Human capitalAs the economy pushes a shift to service, the quality of employees and the degree of engagement with employees are
becoming more important factors that determine corporate performance.
On the other hand, at one end of expanding supply chains, there is a risk of inappropriate actions, such as neglecting
work environments and abusing the human rights of workers. We approach companies that violate laws and regulations
through our engagement and consider removing them from our investment targets. Additionally, we reﬂect the status ofinitiatives for improving performance through motivation improvement in our ESG investment decisions.
4) Security and liability
As economic activities become more complex, including globalization of supply chains and the rapid progress ofdigitization, there is growing risk of tangible and intangible damage to clients and other stakeholders through products
and services that are the output of corporate activities.
We take into account the vulnerabilities that lead to such risks and consider how we should respond to and reﬂect themin our ESG investment decisions.
5) Society-related opportunities
The social issues in 2) to 4) above lead to the creation of new markets through policy changes at a government level andchanges in consumer awareness. In addition, expanding services to communities and people where basic services
necessary for achieving SDGs, such as medical services, are lacking, will lead to create new markets. We view this as aninvestment opportunity and reﬂect it in our ESG investment decisions in order to support the shift to a sustainable society
and achieve growth of client assets.
4.

Governance1) Overview
Investment return is obtained when the interests of a target company coincide with those of stakeholders represented byinvestors, and its business goal is achieved. Corporate governance is the most basic system for this purpose, and it isnecessary to consider it as a common important matter for all investees in order to secure investment return from client
assets over a medium to long term.
2) Behavior
Whether a company conducts management with due consideration to the interests of its stakeholders is evident in its
behaviors. We take into account behaviors such as capital eﬃciency and information disclosure and reﬂect them in our
ESG investment decisions. We take particular care with regard to information disclosure in accordance with all ESG topics
because it is the starting point of relevant action.
3) Organizational design
Corporate governance should be expressed objectively in corporate organizational design, including the composition of aboard of directors. We check the appropriateness of organizational design with consideration to formal requirements
such as the composition of a board of directors and shareholders, and anti-takeover measures, as well as thecharacteristics of the industry and country/region, and reﬂect it in our ESG investment decisions.
4) Stability and fairness
During a company's economic activities, there may be events that can have negative impacts inside and outside the company,
ranging from deliberate violations of laws and regulations, to accidents. Depending on their details, they will not only go againstsocial interests, but also greatly undermine the value of the company. We take into account the code of conduct for appropriately
addressing these risks and risk management systems including their prevention, and reﬂect them in our ESG investment decisions.
5) Governance improvement
Because corporate governance is positioned as the core of corporate economic activities, it is expected that improvements incorporate governance with signiﬁcant problems will quickly see an improvement in corporate performance and investment
return. We will take into account the progress of governance improvements and reﬂect it in our ESG investment decisions inorder to improve investment return over a medium to long term with appropriate engagement.

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ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference

ESG Investment Methodology
In order to reﬂect this policy in investment decisions, we implement an appropriate combination of the following methods
depending on the characteristics of the fund, and make eﬀective ESG investments.
1.

ESG negative screening
Under certain criteria, we exclude companies from our investment universe who have signiﬁcant problems from theperspective of ESG, such as those that manufacture inhumane weapons and that conﬂict with international codes.

2.

ESG positive screening
We actively invest in companies with high ESG ratings within each sector.

3.

Integration of ESG-related information
We incorporate knowledge obtained from analyzing/evaluating non-ﬁnancial information regarding ESG and other matters
into processes regarding selecting brands of each fund and building portfolios in an explicit and systematic manner.

4.

Topic investment
We establish topics regarding ESG and organize and manage funds that mainly incorporate companies related to it.

5.

Impact investment
We form and manage funds with an explicit purpose of having a positive impact on society from the ESG perspective, as wellas producing economic investment return.

6.

Engagement
we hold constructive dialogs on ESG topics with investee companies as an opportunity to seek best practices fromcompanies and improve their value over a medium to long term.

7.

Exercise of voting rights
We call for minimum standards and value improvement in investees by reﬂecting ESG factors in voting "for" or "against" anagenda item in the exercise of voting rights of investees.

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Note on the S&P/JPX Carbon Eﬃcient Index
The index provided by S&P Dow Jones Indices LLC is a product of S&P Dow Jones Indices LLC (SPDJI), which is licensed to Sumitomo Mitsui Trust Asset Management
Co., Ltd. Standard & Poor s and S&P are registered trademarks of Standard & Poor s Financial Services LLC (S&P), and Dow Jones is a registered trademark of Dow
Jones Trademark Holdings LLC (Dow Jones). A license to use these trademarks and a sublicense to use them for speciﬁc purposes is granted to SPDJI and Sumitomo
Mitsui Trust Asset Management Co., Ltd, respectively. The ﬁnancial products in the document are not sponsored, warranted, sold, or promoted by SPDJI, Dow Jones,
S&P or its aﬃliates, and these parties do not make any representations regarding the appropriateness of investment in the products, and do not bear any liability forerrors, omissions, or suspensions in the Index.

Note on the SMT MIRAlndex Eco Index
FactSet and FactSet Global Environmental Opportunities Index are trademarks of FactSet UK Limited and its aﬃliates and are licensed to Sumitomo Mitsui Trust AssetManagement Co., Ltd. FactSet UK Limited does not support, warrant, sell, or promote this fund and does not make any representations regarding the appropriatenessof investment in this fund. FactSet UK Limited does not warrant the accuracy and/or integrity of this index or data contained therein, and bears no responsibility forany errors, omissions, or suspensions therein.

Note on the Decarbonization-related Global Equity Strategic Fund (Asset growth type)/(Expected dividend oﬀer type)■ Fund overview
Investment is made in the shares of decarbonization-related companies from around the world.
■ Fund investment risk
Because the fund invests in securities with price ﬂuctuations, the base price ﬂuctuates. Therefore, the investment principal is not guaranteed for all investors, and adrop in the net asset value could result in loss and it going below the investment principal. All proﬁt and loss incurred in the trust property belongs to investors.
Investment trusts diﬀer from bank accounts.
Stock price ﬂuctuation risk, foreign exchange ﬂuctuation risk, credit risk, theme-oriented investment risk, country risk, liquidity risk, interest volatility risk
* The above are not the only factors that can impact the net asset value.

[Other notes] ● The provisions of Article 37-6 of the Financial Instruments and Exchange Act (referred to as cooling-oﬀ) do not apply to fund transactions.

■ Fund costs▼ Costs directly borne by customers
This is calculated by multiplying the Purchase value by the Commission rate determined by the sales company.
Purchase fee

Value of assets
retained in the trust(Upper limit 3.3% (3.0% excluding tax))* It is possible to switch between funds that constitute the Decarbonization-related Global Equity Strategic Fund. However, some sales
companies do not handle switching. Contact your sales company for more details.

None.

▼ Costs indirectly borne by customers
Annual rate of up to 1.848% of the total net assets (up to 1.74% excluding tax)
Substantial operation
management costs(Trust fee)

This fund invests in other funds. Therefore, substantial operation management costs borne by the customer are calculated by adding
the operation and management costs for the investment target fund of the Fund (annual rate of up to 0.66%) to the fund operation andmanagement costs (annual rate of up to 1.276% (up to 1.16% excluding tax)). However, this value is only a guide and varies according
to the actual involvement status of the target investment fund.

Other expenses/fees

Audit costs, securities trading/holding, and various costs related to trust administration (audit costs are daily) are borne by the fund.
The rate, maximum amount, etc., cannot be indicated in advance for these costs since these vary according to the operational status.

* The total for the above fees, etc., varies according to factors such as the holding period. Therefore, the maximum amount and other items cannot be indicated in advance.

77

Stewardship Activity Initiatives

ESG Integration

Disclosure of Climate-related Financial Information under TCFD

Reference■ Note on dividends● Unlike interest on bank accounts, dividends are paid from the net assets of the investment trust.

Diagram of dividends paid by investment trusts

Therefore, when dividends are paid, the net asset value decreases by an equivalent amount.
● Dividends may be paid in excess of earnings generated during the calculation period (trading proﬁt
including dividend income and valuation proﬁt after deducting expenses). In this case, the net asset
value on the settlement date of the current ﬁscal year will be lower than on the settlement date of theprevious ﬁscal year. In addition, the dividend level does not always indicate the fund s rate of return
during the calculation period.

Investment
trust net asset

Dividends● Depending on the fund purchase value of the investor, some or all of the dividends may closely
correspond to a partial refund of the principal. This also applies when the increase in the net asset
value is below the dividend amount due to the operational status after purchasing the fund.

[Notes]● This document was created by Sumitomo Mitsui Trust Asset Management. It is not intended as a disclosure document based on the Financial Instruments
and Exchange Act.
● Be sure to conﬁrm the latest investment trust manual (prospectus for issuance) before making your own decision on applying for a purchase.
● Because investment trusts invest in securities, which have price ﬂuctuations (foreign currency-denominated assets include foreign exchange ﬂuctuation risk),
the base price also ﬂuctuates. Therefore, investment principal and yield are not guaranteed. All proﬁt and loss from fund management belong to investors.
● Unlike bank accounts and insurance contracts, investment trusts are not subject to protection by the Deposit Insurance Corporation of Japan and the
Policyholders Protection Corporation. In addition, if a purchase is made from a company that is not a securities company, it is not covered by the Investor
Protection Fund.
● This material was created using various information determined to be reliable. However, its accuracy and/or integrity cannot be guaranteed. In addition, it
may be changed at any time without prior notice.
● The charts, ﬁgures, and other data in this material were created using past data and do not indicate or guarantee future results. In addition, investment
policies may be adjusted due to future changes in the market environment.
● Intellectual property rights including copyrights and all other rights related to the indexes used in this material are the property of the developer or
publisher of each index.

■ Settings and operation

Trade name: Sumitomo Mitsui Trust Asset Management Co., Ltd.
Financial Instruments Business Operator, Director of Kanto Local Finance Bureau (Financial instruments ﬁrms) No.347
Commodity Investment Advisor, License The Minister of Economy, Trade and Industry #(1) No.25
Member: The Investment Trusts Association, JapanThe Japan Investment Advisers Association

Homepage: https://www.smtam.jp/78Inquiries:

Sumitomo Mitsui Trust Asset Management Co., Ltd.
Stewardship Development Department (ss̲oﬃce̲hp@smtam.jp)
Please send any inquiries regarding this Stewardship Report to the above email address.