February 10, 2022

2021 Activity Report Summary(October 2020 - September 2021)

1.

Management Philosophy“We help institutional investors conduct sound and appropriate stewardship activities,
especially in collective shareholder engagements in which multiple institutional investors work
together in an aim to hold constructive dialogues with listed companies in Japan.”

2.

Organization, Operation and Major Activities
The Institutional Investors Collective Engagement Forum (hereinafter referred to as “IICEF”)
promotes/organizes the Institutional Investors Collective Engagement Program (hereinafterreferred to as the “Program”). The Program aims to contribute to an increase in long-term
corporate value and sustainable growth of companies, not to pursue short-term shareholder
returns.
In this Program, IICEF serves as the coordinator/secretariat (hereinafter referred to as“Secretariat”). The participating institutional investors (hereinafter referred to as the“Participating Investors”) discuss key issues of target companies and set common engagement
agendas which are expected to be conducive to constructive dialogues. For each agenda, theSecretariat sets up collective engagement meetings with target companies and facilitates themeetings (i.e. acts as moderator and summarizes the discussions), so that the dialogue
between the companies and the Participating Investors is constructive.
The Program is based on an individual agreement between IICEF and each Participating
Investor, and Participating Investors are not in a mutual contractual relationship. Accordingly,
there is no “agreement of joint holding and the like.” In addition, a conduct guideline iscovenanted based on which no “act of making important suggestion” is allowed in collective
engagement meetings.

3.

Progress and Achievements of Our Activities(1) Incorporation and Operation of IICE
Since its establishment on October 2, 2017, based on the revision of Japan’s Stewardship
Code (Guidance 4-4) *, IICEF initiated for the first time in Japan and has held collective
engagement meetings between multiple investors and companies.
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(2) Operation of the Program(i) Participating Investors
As of September 30, 2021, the seven institutional investors are participating, namely The
Dai-ichi Life Insurance Company, Limited, Meiji Yasuda Asset Management Company Ltd.,
Mitsubishi UFJ Trust and Banking Corporation, Pension Fund Association, Resona AssetManagement Co., Ltd., Sumitomo Mitsui DS Asset Management Company, Limited andSumitomo Mitsui Trust Asset Management Co., Ltd. (in alphabetical order)(ii)Program Operation Meetings
We held 12 operation meetings in total as a place for discussion by the Participating
Investors, where we discussed methods of operating the Program, examined themes, setagendas, selected target companies and discussed how we conduct collective engagement
meetings. We also reported the status of announcement and liaison activities.
(iii)Setting Agendas and Sending Letters
We examined, from the perspective of superlong-term buy-and-hold investors, requests
which do not seek superficial improvements of companies, but do test fundamental
awareness and concerns of the management team, and which can be easily accepted bygovernment offices and market participants, among themes such as governance, ESG andcapital efficiency which are issues commonly faced by Japanese companies in general, andset them as agendas.
When examining agendas, we organized logical views based on lectures by professionals
knowledgeable about the themes or academic researchers, provided information and data,exchanged opinions, etc.
And then, we sent letters explaining the underlying views of investors and stating concrete
requests to each target company, specifying president, outside director or others asaddressee. When sending letters to president, etc., we sent an e-mail attaching the letterin the PDF format or mailed the letter to a person in charge or other contact point of IR inadvance to ensure that the information was shared within the target company.
As a result of these activities, we have made some achievements as below.

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(Figure) Overview of each agendaA) Materiality Identification and Disclosure Relating to Sustainability of Business Model⇒ Disclosure of Non-financial Information (title of the agenda was altered)PurposeTo promote awareness and enhance activities and disclosure of “ESGmateriality” expected from investors

Manager

Resona Asset Management Co., Ltd.

Discussion

Approximately 30 to 40 percent of Japanese companies identified andanddisclosed materiality. For the majority of these companies, the content ofBackgroundsuch materiality still involved social materiality but around 30 percent ofthese companies have switched to materiality from the investors’
perspective. Therefore, we may assume that this agenda has been met
with a certain level of success.
Meanwhile, corporate disclosures of non-financial information have been
gaining momentum in conjunction with the expansion of ESG investments.
Nevertheless, such disclosures are not always appropriate from Investors’
standpoint and many of the companies are confused about what theyshould disclose.
This is why IICEF has taken on the task of clarifying what kind of nonfinancial information disclosure is required and has been sorting out suchinformation and approaches in order to request companies to disclosematerial non-financial information that will impact their future finances.

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B) Disclosure by the Companies Engaged in Misconduct and Dialogue with Them
PurposeExplanation by the company about how it addressed the serious
misconduct

Letter timing November 16, 2020
Achievement The company hosted a briefing for investors (including the Participating
Investors).
PurposeThe proper understanding and an awareness of the issues surrounding theproblem of uncounted shareholder votes

TargetSumitomo Mitsui Trust Bank, Limited

company
Briefing

March 31, 2021

Achievement Seven Participating Investors and six domestic investors attended anddiscussed the proper understanding of vote-counting work and identified
the issues thereof.
C) Analysis of Reasons for/Responses to the Proposals to Which Many “Against” Votes
Were Cast at General Shareholders Meetings
PurposeTo analyze factors of company proposals electing directors for top
management to which many “against” votes were cast at general meetingsof shareholders and recognize governance issues

Manager

Mitsubishi UFJ Trust and Banking Corporation

Letter timing December 11, 2020
TargetAmong companies at which company proposals for electing top

company

management received 20% or more “against” votes at the general
meetings of shareholders in May and June, a certain number of companies
were selected according to given criteria. Five companies, excluding
companies that had already received letters by the end of last year, weretargeted.

Achievement Two companies provided analysis results and countermeasures. One
company sent a written reply. Improvement trends were seen, including
fully addressing this issue and visiting investors to provide IR/SR
explanations, among other efforts.

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D) Disclosure on Necessities of Takeover Defense Measures with Sufficient Attention Given
to Possible Negative Reputation in Capital Markets
PurposeTo recognize management issues through examination of the necessity tointroduce and/or continue takeover defense measures

Manager

Sumitomo Mitsui DS Asset Management Company, Limited

Letter timing March 30, 2021
Target13 companies with a market capitalization of ¥100 billion or above whosecompany

takeover defense measures were to expire in 2021

Achievement 4 out of 13 companies replied that they would conduct an examination. 6companies decided not to continue with their takeover defense measures.
(Among the companies that submitted proposals to continue with thetakeover defense measures, there were no companies that were able toprovide a reason satisfactory to the investors.)
E) Issues Related to Governance of Parent and Subsidiary Listed Companies
PurposeTo promote measures and designs for governance to reflect intention ofminority shareholders

Manager

Sumitomo Mitsui Trust Asset Management Co., Ltd.

Letter timing October 14, 2020
TargetParent companies and subsidiaries of typical corporate groups undercompany

parent-subsidiary listing

Achievement Collective engagement dialogues were held with both parent companies
and subsidiaries.
We were able to raise the points of concern expressed by the investors
and communicate wherein the problem lies. The meetings afforded theopportunity to deepen our understanding by hearing detailed accounts ofthe stance, background, and the actual situation of the companies, thedeliberations by the board of directors, and the initiatives which had notbeen explained previously, and to encourage companies to reconsider.

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F) Policy for Cross-Shareholding
PurposeTo reform the mindset of companies against Cross-Shareholding and theStable-Shareholder policy

ManagerPension Fund Association

Letter timing September 10, 2020 (last fiscal year)
TargetTypical companies that claim compliance with the CG Code but do notcompany

disclose a clear policy or analysis results, and continue to hold a large
volume of cross-shareholdings or cause the counterparty crossshareholdings.

Achievement We held collective engagement dialogues, received replies, and held
individual dialogues.
We communicated the issues perceived by the investors and a reduction
in cross-shareholdings and improved disclosures were seen at certaincompanies.
G) Demonstrating Governance in Post-COVID-19 Era and Measures for General
Shareholders Meetings that Put Safety FirstPurpose

To indicate methods of administrative work in response to COVID19 and proactively demonstrate governance in post-COVID Era

Letters sent

Nil(iv)Meetings and Receipt of Responses
We made coordination with IR contact points at the target companies to which we sentletters through such means as e-mail and telephone and held pre-meetings with IICEFSecretariat (IICEF Directors in charge). Then, we held meetings mainly online under thefacilitation by the Secretariat, attended by the Participating Investors to engage in direct
dialogue with directors in charge, outside directors and department heads in charge at
those companies. We provided feedbacks mutually after the meetings, which resulted in
improvements of the situations.
For some agendas where we did not ask for meetings but instead asked for responses, theSecretariat received explanations through interviews or explanatory documents through email or mail and reported and shared the responses to the Participating Investors. We sent
back investors’ feedbacks to the companies.
As a new undertaking, we requested senior management and outside directors ofcompanies that engaged in misconducts to hold briefings for investors, which was met withthe voluntary holding of company briefings for a wide range of investors. In addition to the6www.iicef.jp

Secretariat and the seven Participating Investors of IICEF, many investors participated in theonline meetings. Furthermore, IICEF supported convening the briefing for investors hosted
by Sumitomo Mitsui Trust Bank, Limited, and in addition to the seven Participating Investorsof IICEF, six domestic investors attended.
(v)Activities for Announcement, Seminars, etc.
The overview of the letters was publicly disclosed on IICEF’s website in order to broadly
disseminate the issues addressed in the agendas to Japanese companies as a whole, as
they are generally relevant to them. We also provided notices via e-mail to government
offices, market participants, related organizations, stock transfer agents, IR supporting
companies, annual report production companies, etc.
Alongside with the above, we gave lectures at various seminars and workshops to introduce
IICEF and explain the overview of the agendas.
(Figure) Status of implementation of specific activities for announcement, seminar, etc.
(v)-1 Distribution of e-mailE) Issues Related to Governance of Parent and Subsidiary Listed Companies
Website update

October 8, 2020

(Japanesesection)
E-mail notice

13 destinations

sent(v)-2 Lecture at Seminar/Workshop
Seminar/Workshop

3 times(3) Visits/Online Explanations
We visited and also gave online explanations to IR supporting companies to report on IICEF’sactivities, explain the agenda, and to exchange opinions, and requested indirect assistance,
including indirect explanations and advices on handling IR to companies.
(Figure) Status of visits/online explanations
Visits/online

7 times

explanations

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(4) Liaison/Lobbying Activities
We interviewed government offices, foreign public institutions, related organizations in andout of Japan, etc. to introduce IICEF, report our activities and exchange opinions concerning
collective engagement meetings.
We provided information to the members of the Council of Experts Concerning the Followup of Japan’s Stewardship Code and Japan’s Corporate Governance Code (FSA) andcommunicated the investors’ opinions on the revision of the Corporate Governance Code.
We also submitted a comment to the Call for Public Comments on the revision of theCorporate Governance Code.
(Figure) Status of liaison activities
Visits to7 times in total

provideexplanations
and toexchange
opinions
PublicComments submitted to the revision of the Corporate GovernancecommentCode

Interview

Nilfrom media
4.

Issues to Be Addressed
Four years have passed since our launch as Japan’s first organization to support collective
engagement meetings by institutional investors. During the period, we set up seven agendas,
sent letters to/and conducted collective engagement meetings with more than 200companies and worked on activities to broadly make announcements. We also conducted
lobbying activities to government agencies and related organizations. As an entity aiming at
an increase in long-term value of Japanese companies as a whole, not pursuing short-term
shareholder returns, we have looked for and gradually advanced methods of collectiveengagement meetings unique to Japan.
As a result, we made achievements as described in “3. Progress and Achievements of OurActivities.” We have continued to work on our agendas since our inception, and we seeachievements in some agendas. Many Japanese companies have come to understand IICEF’s
approaches as well as views and requests of the Participating Investors. We are confident that
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corporate mindset has started changing.
However, naturally there is a limit to the number of companies with which collective
engagement meetings can be held, and at the same time, management resources are limited.
Amid such circumstances, the issues lie in how we can increase the influence over Japanesecompanies as a whole. Above all, issues still remain in clarifying the advantages unique tocollective engagement meetings which cannot be offered in non-collective dialogues andestablishing methods of collective engagement meetings in line with the circumstances ofJapanese companies and the stock market.
In addressing this issue of establishing methods of collective engagement meetings, we havemainly promoted the sending of letters and holding collective engagement meetings, as wellas announcements and lecturing activities at seminars. Indeed this current method leads tocommunicating the stance of the investors to the companies and deepening theirunderstanding, and is effective to such agendas as non-financial disclosure (ESG materiality)
as those investors’ views are digestible for companies and they are informative for voluntaryreforms. However, with regard to the agenda that calls for a revision of deep-rooted practices
within the management of Japanese companies for a long time, such as parent-subsidiarylistings and cross shareholdings, many companies have yet to result in concrete reforms basedon the full understanding by senior management of the issues perceived by the investors. As
above, we realize we will need to better design our dialogues going forward.
Furthermore, this method of “collective engagement dialogues” (collective engagement),
which is commonplace in Europe and the US, has yet to be fully recognized by the Japanesecompanies, and we believe that this lack of awareness is an obstacle to the promotion ofcollective engagement dialogues. Therefore, raising social recognition of collectiveengagement dialogues is another issue that requires our continuing efforts.
In addition, the COVID-19 pandemic continues to impact our collective engagement meetings
in the current term as well as last one. The Forum continues to operate under a remote
working style, including the holding of meetings within the Forum and the collective
engagement dialogues with companies all online. Going forward we will need to devise
appropriate methods in light of the advances in information technology and the changing
responses of the companies.
Furthermore, by continuing to pursue these seven agendas and increasing the number of
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companies targeted for dialogues, the workload of the Secretariat is building up. Thus, theissue of establishing a management base capable of sustained growth as a generalincorporated association also remains.
To address these issues, from the fifth year onward, in addition to making changes to ourcollective engagement dialogue methods, we will call for participation of new investors.
Specifically, we will reinforce our capabilities to communicate our message to a greaternumber of companies by sending out letters that do not require meetings to a wider range oftarget companies and enhancing our announcements by obtaining cooperation of outsideorganizations. We will also continue to consider such efforts as holding workshops to acquire
the insight of outside experts, in order to improve our agenda and to enhance and deepen ourcommon views.
Furthermore, we will step up our lobbying activities to communicate the problems presently
surrounding the constructive dialogues with companies to the relevant authorities, even moreso than during our fourth year, and make efforts to strengthen our activities to communicate
the investors’ voices. At the same time, we will consider holding dialogues with various
stakeholders.
Through these activities, we intend to increase the number of participating investors and build
up our management resources pertaining to that, thereby enhance effectiveness of collectiveengagement, clarify the unique benefits of collective engagement meetings, while at the sametime establish a sustainable management foundation.

Contact information:
Institutional Investors Collective Engagement Forum
Directors in charge (the Secretariat): Yuki Kimura, Chairman; Naomi Yamazaki, Administration
Manager; Ryusuke Ohori, Executive Director; and Hiromitsu Kamata, Executive Director
Address: Tokyo Entre Salon, Shinmaki-chou Building Annex 1, 3-2-14, Nihonbashi, Chuo-ku, Tokyo
103-0027 JAPANE-mail: info@iicef.jp

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*In Japan’s Stewardship Code, Guidance 4-4 stipulates “Institutional investors should have a clear
policy in advance on how they design dialogue with investee companies in various possible
situations.”

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