July 30, 2020
Institutional Investors Collective Engagement Forum

Acceptance of the<<Japanese Stewardship Code>>,Principles for “Responsible Institutional Investors”

The Institutional Investors Collective Engagement Forum (hereinafter referred to as “IICEF”)
endorses the purport and expresses its acceptance of the Japanese Stewardship Code*, as a“provider of services for institutional investors” which support stewardship activities of institutionalinvestors.
IICEF leads the “Institutional Investors Collective Engagement Program (hereinafter referred to as
the “Program”)” in which multiple institutional investors as asset manager collaborate to engage inconstructive and “purposeful dialogues” with companies, contributing to appropriate stewardship
activities of institutional investors. While IICEF itself does not provide funds, conduct investment ormanagement or exercise rights as a shareholder, in line with the purport stated in No. 9. of Aims of
the Code in the Stewardship Code mentioning that “Principle 8 of the Code specifically applies toservice providers for institutional investors. The other principles of the Code, including guidance, also
apply to them as far as the principles do not conflict with Principle 8,” we are committed to complying
with the Principles as described below.
* Official translation is hereinafter shown on Appendix.
[Principle 1: Stewardship policy]
The Program is participated by institutional investors who are willing to collaborate in“purposefuldialogues”

withcompanies.

In

thisprogram,

IICEF

servesasthecoordinator/secretariat (hereinafter referred to as “Secretariat”). IICEF, together with the investors
who take part in the Program, will discuss key issues of target companies and come up with
common engagement agendas which reinforce ongoing constructive dialogues. The Secretariat ofIICEF holds collective dialogues for each agenda with multiple companies which are targets of suchdialogues, sends letters summarizing common views, and holds meetings, while at the same time
conducts activities such as publication of agenda material and provision of explanations atseminars for many companies which face similar issues as the target companies, and thereby
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promotes collective dialogues between multiple institutional investors and companies.
The institutional investors participating in the Program (hereinafter referred to as the“Participating Investors”) are investors who engage in their activities with a focus on a sustainable
increase in corporate value and strong awareness of the stewardship responsibilities. All of theParticipating Investors are investors who invest broadly in Japanese shares from a long-term
perspective such as passive investment and stable management of long-term funds. Passive
investment in particular is super-long term investment in which shares remain in their possession
in principle, although there may be some fluctuations in the number of shares held on a daily basis
due to fluctuations in the invested funds.
Collective dialogues under the Program aims to contribute to an increase in corporate value andsustainable growth, not to pursue near-term shareholder returns, so that the dialogues results inenhanced medium- and long-term investment returns for customers and beneficiaries of theParticipating Investors. In order to achieve this, when setting agendas for collective dialogues, westrongly take into account the medium- to long-term sustainability including Environmental, Socialand Governance (ESG) elements of the target companies of the relevant dialogues throughdiscussion with the Participating Investors.
In addition, we do not intend to require material changes in the business activities of the target
companies or intervene in details of management; rather, we intend to support management inaccordance with the independent management policy of companies through promotion of sharingof recognition of issues faced by the companies among the Participating Investors and companies.
[Principle 2: Management policy against conflicts of interest]
Based on the recognition that managing conflicts of interest of Directors of IICEF is indispensable
for appropriate operation of collective dialogues by the Participating Investors, IICEF has set forthand manages the “Policy Concerning Prevention of Conflict of Interest for Directors” as follows,
and discloses the policy on IICEF’s website.
The Participating Investors manage their conflicts of interest in accordance with their own
stewardship policy.
<Policy Concerning Prevention of Conflict of Interest for Directors>
IICEF has established policy as described below from the viewpoint of preventing conflict ofinterest between IICEF’s Directors and the Participating Investors.
1. If any of IICEF’s Directors (including any corporations and/or organizations with which theDirector is affiliated) is engaged in business with a company participating in collective
engagement meetings (hereinafter referred to as the “Company Participating in Collective
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Engagement Meetings”) or has any other special interest in such a company, the said Director
shall not participate in collective engagement meetings with the said Company Participatingin Collective Engagement Meetings.
2. IICEF’s Directors may not commence business with a Company Participating in Collective
Engagement Meetings or give rise to any other special interest in such a company during theperiod in which collective engagement meetings with the said Company Participating inCollective Engagement Meetings continue.
3. The provisions of the preceding two paragraphs shall not apply to an IICEF’s Director if theother Directors and the participating investors agree to do so.
[Principle 3: Accurately understanding companies’ situations]
Under the Program, the Participating Investors hold preliminary discussion prior to collectivedialogues with companies. In the preliminary discussion, multifaceted discussions are made onrecognition of issues common to Japanese companies which are voiced from a broad range ofparties including investors, companies, relevant associations and experts to the Secretariat of IICEF
and management issues of individual companies recognized by any of the Participating Investors,
among other issues, and common agendas which contribute to constructive dialogues are set.
Based on the discussions, common views of the Participating Investors for each agenda aresummarized.
In addition, depending on agendas, the Secretariat of IICEF holds meetings with companies towhich we sent letters inquiring on how to proceed with collective engagement, and/or asking
answers to the letter, to understand the situations of the companies.
Through these processes, the Secretariat of IICEF and the Participating Investors deepen theunderstanding of the relevant agenda and the situations of the target companies for it.
[Principle 4: Sharing of recognition with companies and solving problems]
After summarizing common views, the Secretariat of IICEF sends letters describing the commonviews to the target companies under the joint names of IICEF and the Participating Investors
participating in the agenda. Such letters explain investors’ common views identified in preliminary
discussion, their backgrounds and thoughts of the Participating Investors. The letters are notmeant to unilaterally impose the thoughts of the Participating Investors but to promote sharing ofissue recognition, and we respond to questions, inquiries and feedback from companies.
Depending on agendas, we may only send letters, ask for explanations and/or answers fromcompanies through the Secretariat of IICEF or hold direct dialogues attended by multiple
Participating Investors.
In meetings attended by multiple Participating Investors in particular, we provide explanations
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on the common views and investors’ thoughts and/or theories underlying such views and inquire
about the current situations, thoughts, policies, etc. of companies.
In the meantime, because naturally there is a limit to the number of letters we can send orcompanies with which we can hold meetings, we publicize agenda material on our website andprovide explanations through seminars, etc. and thereby broadly notify many Japanese companies
facing similar issues indicated in the agendas.
Through the processes described above, we discuss differences and common points in thethoughts of both companies and investors, promote sharing of recognition with companies andendeavor to remedy issues of the Japanese companies as a whole.
[Principle 5: Exercising voting rights]
IICEF does not engage in investment in and management of shares, etc. and exercise voting
rights therefor, Principle 5 does not apply.
Each Participating Investor exercises voting rights in accordance with their own policy forexercising voting rights.
[Principle 6: Reporting to customers]
Because IICEF provides institutional investors with services to support their dialogues, ourcustomers are the Participating Investors, not asset owners who contribute funds. We hold regularmeetings with the Participating Investors to not only examine agendas but also report on theprogress of agendas, the status of activities and operation of the forum.
The Participating Investors report the status of the Program, etc. to their customers, i.e., asset
owners, in accordance with their own stewardship policy.
[Principle 7: Development of skills and resources]
IICEF summarizes common agendas and common views from a long-term or super-long term
perspective based on in-depth discussion between the Participating Investors and companies andengages in collective dialogues. The perspective of sustainability is the foundation for the agendas
addressed in collective dialogues. When setting each agenda, we utilize a system which promotes
deep understanding from the both theoretical and practical standpoints by, for example, sharing
insight of each of the Participating Investors and listening to opinions of academics and experts inthe subject fields on an as-needed basis.
[Principle 8: Service providers’ stewardship responsibilities]
We recognize that the Program plays an important role in the investment chain, supporting anddeepening the engagement function of institutional investors. In operating the Program, IICEF is4

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working to enhance its collective dialogues function in line with the purport of the Stewardship
Code as seen in the above descriptions of how we comply with Principles 1 through 7.
At IICEF, four Directors who have long years of experience in investment management andresearches and exercise of voting rights on the institutional investors’ side and IR and SR activities
and practical operations concerning shares on the companies’ side, among other things. In respectof legal points of issue, IICEF also obtains advice from the legal counsel who has a high level ofexpertise in the field of stewardship responsibilities. The details of IICEF’s activities can be foundon our website (https://www.iicef.jp).
<Guidance 8-1> The system for managing conflicts of interest is as described in Principle 2.
<Guidance 8-2> Not applicable.
<Guidance 8-3> Not applicable.

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Appendix:≪Japan’s Stewardship Code≫ revised on March 24, 2020

1. Institutional investors should have a clear policy on how they fulfill their stewardship
responsibilities, and publicly disclose it.
2. Institutional investors should have a clear policy on how they manage conflicts of interest infulfilling their stewardship responsibilities and publicly disclose it.
3. Institutional investors should monitor investee companies so that they can appropriately fulfill
their stewardship responsibilities with an orientation towards the sustainable growth of thecompanies.
4. Institutional investors should seek to arrive at an understanding in common with investee
companies and work to solve problems through constructive engagement with investee companies.
5. Institutional investors should have a clear policy on voting and disclosure of voting activity. The
policy on voting should not be comprised only of a mechanical checklist; it should be designed tocontribute to the sustainable growth of investee companies.
6. Institutional investors in principle should report periodically on how they fulfill their stewardship
responsibilities, including their voting responsibilities, to their clients and beneficiaries.
7. To contribute positively to the sustainable growth of investee companies, institutional investors
should develop skills and resources needed to appropriately engage with the companies and to makeproper judgments in fulfilling their stewardship activities based on in-depth knowledge of theinvestee companies and their business environment and consideration of sustainability consistent
with their investment management strategies.
8. Service providers for institutional investors should endeavor to contribute to the enhancement of
the functions of the entire investment chain by appropriately providing services for institutional
investors to fulfill their stewardship responsibility.
(Guidance)(excerpt)
8-1. Service providers for institutional investors including proxy advisors and investment consultantsfor pensions should identify specific circumstances that may give rise to conflicts of interest, put inplace a clear policy how to manage them effectively, develop structures for conflicts of interest
management, and disclose such measures.
8-2. Proxy advisors should develop appropriate and sufficient human and operational resources,
including setting up a business establishment in Japan in order to provide asset managers with proxyrecommendations based on accurate information on specific companies. They should also disclosewith specificity the voting recommendation process, including the above measures to assuretransparency.
8-3. In providing proxy recommendations, proxy advisors should rely upon corporate disclosure, and6

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actively exchange views with companies upon necessity.
Upon the request from a company that is the subject of a proxy recommendation, it is considered tocontribute to secure accuracy of the information that is the basis for the recommendation andtransparency that the proxy advisors provide the company with an opportunity to confirm whether
such information is accurate, etc., and provide the submitted opinion of the company to their clients
together with the recommendation.

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