March 10, 2023

“Critical ESG issues” listed by GPIF’s asset managers
In its Stewardship Principles, GPIF stipulates that asset managers should consider ESG factors and thatthey should proactively engage with investee companies on critical ESG issues. Accordingly, the following
issues were identified as material ESG issues among asset managers. While a variety of ESG issues wereidentified, the table below represents the issues pointed out by all asset managers, whereas the table in
the page 3 and 4 shows the issues pointed out by more than 50% of asset managers.

＜Critical ESG issues listed by all domestic equity managers＞

Y 2022

Y 2021

Passive

ActiveClimate Change, Misconduct, Disclosure,Board Structure & Self-evaluation, Minority

Supply Chain, Diversity, Corporate

Shareholder Rights, Disclosure, Capital

Governance, Human Rights & Community

Efficiency, Climate Change

Climate Change, Misconduct, Disclosure,Board Structure & Self-evaluation, Minority

Supply Chain, Diversity, Corporate

Shareholder Rights, Disclosure

GovernanceY 2020

Climate Change, Misconduct, Disclosure,Board Structure & Self-evaluation, Minority

Supply Chain, Diversity

Shareholder Rights

Y 2019Climate Change, Misconduct, Disclosure

Board Structure & Self-evaluation, Minority

Y 2018

Climate Change, Misconduct, Supply Chain

Shareholder Rights
Board Structure & Self-evaluation＜Critical ESG issues listed by all foreign equity managers＞

Y 2022

Y 2021
Y 2020
Y 2019Y 2018Passive

ActiveClimate Change, Diversity, Disclosure,
Human Rights & Community, Health &Safety, Biodiversity, Deforestation, Others(Governance)
Climate Change, Diversity, Disclosure,
Supply Chain
Climate Change, Diversity, Disclosure,
Supply Chain
Climate Change, Diversity, Others (social),Disclosure
Climate Change, Diversity, Others (social),Water Stress & Water Security

N/A

Climate Change
Climate Change
Climate Change
Climate Change

＜Critical ESG issues listed by all domestic bond managers from the viewpoint of corporate bond investors＞
Y 2022Disclosure

Y 2021

Disclosure

Y 2020Disclosure＜Critical ESG issues listed by all foreign bond managers from the viewpoint of corporate bond investors＞
Not available
The underlined items in the above are newly selected from all the managers this time compared to theprevious survey.
＜Domestic equities＞
GPIF asked external asset managers entrusted with equity investment about critical ESG issues since
2018. This is the fifth survey to equity managers.
"Human Rights & Community" was newly listed as a critical ESG issue by all passive managers thistime. The Modern Slavery Act is now in force in European countries, and EU human rights due diligenceis also required. As a result, there have been cases in which companies have been requested toconsider human rights by suppliers and customers in their supply chains. In some cases, companies arefacing an increased risk of more direct economic impact beyond reputational risk, and Human Rights isalso becoming a critical issue for Japanese companies doing business overseas. In December 2022,
The PRI launched "Advance," a new stewardship initiative where institutional investors work together totake action on human rights and social issues. Therefore, institutional investors' interests are alsoincreasing.
In addition, all active managers newly chose "Climate Change" and "Capital Efficiency" in this survey,
and all of passive and active managers consider "Climate Change" to be a common and critical issue.
Meanwhile, except for "Disclosure" and "Climate Change," passive and active managers differ in terms of
the issues they consider critical, with active managers recognizing G (governance) issues such as"Board structure & Self-evaluation," "Minority Shareholder Rights," and "Capital Efficiency" more critical
ESG issues, and passive managers recognizing a wide range of long-term issues including E(environmental) and S (social) issues such as "Diversity," "Supply Chain," and "Misconduct" as morecritical, which is the same as before.

＜Foreign equities＞
Changes since last year: all foreign equity passive managers identified "Human Rights & Community,""Health & Safety," "Biodiversity," "Deforestation," and "Others (Governance)" as critical ESG issues.
While the selection of "Human Rights & Community" is similar to that of the domestic equity passive
managers, the unique feature of the result of this year's survey is that all foreign equity passive
managers also selected "E (Environmental)" issues such as "Biodiversity" and "Deforestation," which areclosely related to climate change.

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This change may be due in part to the launch of the Taskforce on Nature-related Financial Disclosures(TNFD) in June 2021 to establish a framework for the appropriate assessment and disclosure of risks
and opportunities related to natural capital and biodiversity.

＜Domestic bonds＞
GPIF also have asked external asset managers entrusted with bond investment about critical ESG
issues considered from the perspective of corporate bond investors from Year of 2020. The survey tobond managers was third time. All domestic bond managers identified "Disclosure" as a critical issue forthe third consecutive year. As shown above, all domestic equity managers also identified "Disclosure" asa critical issue, indicating that regardless of the asset class, any managers consider it to be a criticalissue for Japanese companies.

The issues pointed out as "critical ESG issues" by more than 50% of external asset managers* of each
asset under management are listed below.

＜Passive managers of domestic equities＞＜Active managers of domestic equities＞

Climate Change

100%

Climate Change

100%

Supply Chain100%Disclosure

100%

Disclosure

100%

Minority Shareholder Rights

100%

Misconduct

100%

Board Structure, Self-evaluation

100%

Corporate Governance

100%

Capital Efficiency

100%

Human Rights & Community

100%

Misconduct

86%

Diversity

100%

Diversity

86%

Biodiversity

83%

Supply Chain

71%

Capital Efficiency

83%

Others (Governance)

71%

Board Structure, Self-evaluation

83%

Corporate Governance71%

Minority Shareholder Rights

83%

Labor Standards

71%

Environmental Opportunities

67%

Human Rights & Community

71%

Waste Management

67%

Waste Management

57%

Water Stress, Water Security

67%

Biodiversity

57%

Deforestation

67%

Environmental Opportunities

57%

Anti-Corruption

67%

Pollution & Resources

57%

Labor Standards

67%

Health & Safety

57%

Health & Safety

67%

Others (Social)

67%

Product Liability

67%
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＜Passive managers of foreign equities＞＜Active managers of foreign equities＞

Climate Change

100%

Climate Change

86%

Disclosure

100%

Disclosure

71%

Diversity

100%

Corporate Governance71%

Biodiversity

100%

Board Structure, Self-evaluation

71%

Human Rights & Community

100%

Diversity

67%

Health & Safety

100%

Biodiversity

57%

Deforestation

100%

Human Rights & Community

57%

Others (Governance)

100%

Health & Safety

57%

Corporate Governance

75%

Labor Standards

52%

Board Structure, Self-evaluation

75%

Labor Standards

75%

Capital Efficiency

75%

Water Stress, Water Security

75%

Others75%

Supply Chain

75%

Risk Management75%

Minority Shareholder Rights

75%

Environmental Opportunities

75%

Others (Environment)

75%＜Asset managers of Domestic bonds＞＜Asset managers of Foreign bonds＞

Disclosure

100%

Climate Change

88%

Climate Change

93%

Human Rights & Community

76%

Corporate Governance86%

Supply Chain71%

Supply Chain

71%

Pollution & Resources

65%

Board Structure, Self-evaluation

71%

Corporate Governance65%

Human Rights & Community

71%

Diversity

65%

Misconduct

64%

Waste Management

59%

Labor Standards

64%

Disclosure

59%

Diversity

64%

Anti-Corruption

59%

Environmental Opportunities

57%

Deforestation

53%

Water Stress, Water Security

53%

Others53%

Board Structure, Self-evaluation

53%

Health & Safety53%

Product Liability

53%

Labor Standards

53%

4

Copyright © 2023 Government Pension Investment Fund All rights reserved.

…

E（Environmental）…

S（Social）…

G（Governance）…

multiple themes of ESG

Issues pointed out by all managers are shown in red.
(*) Percentage indicates the ratio of the number of managers which selected the relevant issue to the number ofactive/passive asset managers. If an asset manager for domestic equities is entrusted to both active and passive
mandates, it is counted as the one with larger amount of mandate entrusted by GPIF.
For the foreign equities active managers, the result includes the responses from asset managers that GPIF starts toentrust FY2022.

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