Report of the 9th Survey of Listed
Companies Regarding Institutional
Investors’ Stewardship Activities

May 2024

Government Pension Investment Fund

Table of Contents

Summary of Survey Results

P.2

1. Current Situation and Changes Observed regarding Institutional Investors,
including GPIF’s External Asset Managers

P.8

2. IR and ESG Activities of Companies

P.20

3. GPIF’s Initiatives (ESG Indexes)

P.35

4. GPIF’s Initiatives (Overall Stewardship Activities)

P.41

Summary of Survey Results2Outline of the Survey: Purpose and the Status of Responses
1. Purpose• To evaluate stewardship activities carried out by GPIF’s external asset managers, and toascertain the actual status of “purposeful and constructive dialogue” (engagement) andchanges observed in the past one year.
2. Subjects, etc.
• 2,154 TOPIX component companies (as of December 18, 2023)• Number of respondent companies: 717 (735 in the previous year)
Response rate: 33.3% (34.0% in the previous year)
Survey period: From January 18 through March 22, 2024
<Response coverage rate>

717
companies,
33.3%

26.8%

<Percentage of the number of respondent companies <Response rate by company size>by company size and market segment>

Large, 11.7%

Responded

Medium,
32.8%

58.9%
62.7%

MediumNo response

1,437
companies,
66.7%

84.8%
85.0%

Large

Small, 55.5%

Standard,
7.0%

Prime, 93.0%

73.2%* Inside: based on number of companies
Outside: based on market cap

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0%

20%

40%

60%

80%

100%

24.0%
24.1%

Small
0%

20%

40%

60%

80%

100%

* The upper row and lower row of figures by company size
indicate those in this survey and those in the previous
survey, respectively.

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Summary of Survey Results I: Current Situation and Changes Observed regarding Institutional
Investors, including GPIF’s External Asset Managers
 With regard to changes in the attitudes of institutional investors at IR meetings, etc. during the past one year, more than 40% of
respondents stated that they had observed desirable changes. Compared to the previous survey, the number of respondents who
answered “I feel there have been favorable changes among all or many institutional investors” has increased again (p. 9).
 Approximately 90% of companies responded that their long-term vision was on the during dialogue with institutional investors, and over
80% responded that they presented a specific long-term vision to institutional investors. Over 80% of companies responded that the
expected period for their long-term vision was five years or more, with the majority using their long-term plan and vision as criteria insetting the time frame (pp. 10 and 11).
 Regarding the use of disclosure documents by institutional investors, approximately 70% of companies responded that their integrated
reports were used, while more than 30% of companies responded that corporate governance reports were used, both of which increased
from the previous survey. Impact of the Tokyo Stock Exchange’s request to take “Action to Implement Management that is Conscious of
Cost of Capital and Stock Price” was also observed. (p. 12)
 Approximately 30% of respondent companies answered that they have received a request from institutional investors in the past one year
for conducting dialogue with outside directors and outside statutory auditors. And two thirds of them actually conducted dialogue. In thissurvey, the content of the dialogue was asked about for the first time, and we found that many companies gave it a high evaluation (pp. 13
and 14) .
 Approximately 10% of companies answered that they have received a request from institutional investors in the past one year for
conducting collaborative engagement. In addition to climate change, many companies cited “Action to Implement Management that is
Conscious of Cost of Capital and Stock Price” as a major theme for collaborative engagement (p. 15).
 With respect to questions concerning evaluation of GPIF’s asset managers entrusted with domestic equity investment, more than 60% ofcompanies cited “asset managers with which they had useful discussions or which had made contributions,” which increased from theprevious survey. The most frequently evaluated dialogue item was management strategy. The reasons for the evaluation have also been
newly disclosed (pp. 16 and 17).
 Approximately 80% of companies that issued corporate bonds have engaged in dialogue with fixed income investors. With respect to thecontent of dialogues with fixed income investors, the ratio of companies that selected “Financial conditions and financial strategy” and“Business strategy” as themes reached approximately 90%. (p. 18)
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Summary of Survey Results II: IR and ESG Activities of Companies
 Approximately 90% of the companies surveyed voluntarily disclosed non-financial information including ESG (in the integrated report,etc.). The most cited standards and guidelines referred to were the Task Force on Climate-related Financial Disclosures (TCFD)
recommendation.(p. 21)
 The number of companies that responded that they have disclosed information in line with the TCFD increased to 609. The companies
that they have conducted dialogue in connection with TCFD accounted for 56.0%. The percentage of companies that indicated they
disclosed information properly in terms of the four items ((i) Governance; (ii) Strategy; (iii) Risk management; and (iv) Indicators andgoals) rose for each item.(pp. 25 and 26)
 In this survey, we added questions concerning the Task Force on Nature-related Financial Disclosures (TNFD). Only 96 companies haveendorsed the TNFD and 35 companies responded that they have disclosed information in line with the TNFD recommendations.
Meanwhile, 376 companies responded that they plan to disclose in the future, and 160 of them intend to disclose by 2025. Among the four
items, it is observed that the disclosure of (iii) Risk and impact management has been relatively advanced. (pp. 27 and 28)
 In this survey, a new question regarding the Tokyo Stock Exchange’s request to take “Action to Implement Management that is Consciousof Cost of Capital and Stock Price” was added. 96.6% of the companies have discussed internally, and of those, approximately as manyas 80% have discussed it at their Board of Directors meetings. There was a wide range of responses regarding issues they felt in
considering how to respond to the request. These issues are: i) internal dissemination; ii) calculation of cost of capital; iii) matters to bedisclosed; iv) specific measures to be taken; and v) gap with investors. In addition, many companies expressed their expectations forinvestors. (pp. 29, 30 and 31)
 In this survey, new questions have been added concerning the status of discussion on ESG and sustainability at Board of Directors
meetings. Regarding the theme, 93.2% responded that they have discussed it at their Board of Directors meetings. The annual averagefrequency of discussion was 3.6 times per company. (p. 33)
 The main themes in ESG activities were i) climate change; ii) corporate governance; and iii) diversity. The most frequently cited theme
was climate change, the same as in the previous survey. The themes that observed a significant increase in the response rate from theprevious survey include capital efficiency (+5.9%), risk management (+5.9%) and supply chain (+4.9%), indicating that attention payed to
new themes, such as capital efficiency, rose. (p. 34)

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Summary of Survey Results III: GPIF’s Initiatives (ESG Indexes) No significant differences was observed in evaluation for any ESG index. Compared to the previous year, the percentage of “Highly
appreciate” for each index increased, driven by small- and medium-sized companies. (pp. 36, 37 and 38)
 In this survey, new questions were added concerning “Morningstar Japan ex-REIT Gender Diversity Tilt Index (GenDiJ),” which was newly
adopted in FY2022. Being a tilt-type index, GenDiJ has more constituent stocks than WIN, a best-in-class index that also has the same
theme of women’s participation. At present, while recognition is lower than for other indexes, companies tend to rate it at the same levelas others.(p. 38)
 More than 60% of companies have reviewed the methodologies disclosed by index providers, led by small- and medium-sized companies.
The percentage of small- and medium-sized companies that responded that they would like to be included in an index increased. (p. 39)
 As for opinions about index providers, some companies continued to point out improvement in disclosure and communication withcompanies, while there were also many responses demanding improvement in communication, such as further clarification of rating
criteria and schedule, quick response, support in Japanese language, and holding briefing sessions. (p. 40)

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Summary of Survey Results IV: GPIF’s Initiatives (Overall Stewardship Activities)

 As for the rating of GPIF’s overall stewardship initiatives, more than three-quarters of respondents selected “Highly appreciate” and“Appreciate.” Many companies continued to evaluate GPIF’s dialogue with asset managers from a long-term perspective, its attitude tolisten to the opinions of both asset managers and companies, and its initiatives to promote sustainable growth of the market as a wholethrough dispatch of information, such as the promotion of ESG and the “Excellent Disclosure series” (p. 42).
 Some of GPIF’s initiatives gained high recognition, including “Survey of companies,” “Investment based on ESG indexes,” “Stewardship
Principles and Proxy Voting Principles,” and “Publication of Excellent Disclosure series.” As for the evaluation of individual initiatives,
many respondents selected “Highly appreciate” or “Appreciate” in general, and especially, the evaluation of “Excellent Disclosure series”
is the highest. (p. 43)
 Among GPIF’s public relations activities, the most viewed material is GPIF’s official website, followed by GPIF’s ESG Report. (p. 44)
 With regard to what is expected from the stewardship activities of GPIF as an asset owner, most respondents cited “Promotion of
dialogues between asset managers and investee companies toward the enhancement of medium- to long-term corporate value.” (p. 45)
 A new question asked whether they would like to cooperate with GPIF in interviews, etc., not limited to this survey, to understand theactual state of dialogue conducted by GPIF’s external asset managers. Approximately 40% would be willing to cooperate. (P. 45)

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1. Current Situation and Changes Observed
regarding Institutional Investors, including
GPIF’s External Asset Managers

8<Institutional Investors Including GPIF’s External Asset Managers>
Q1: With regard to institutional investors as a whole, have you observed any changes in their attitude at
IR/SR meetings during the past one year?
100%90%(v) Observed more undesirable
changes in institutional investors(iv) Observed no significant
changes in institutional investors(iii) Observed some changes but
there are significant differencesamong institutional investors(ii) Observed desirable changes insome institutional investors(i) Observed desirable changes inall or majority of institutional
investors

80%

45.6%

44.8%

41.3%

40.9%

37.3%

42.3%

44.3%

12.7%

8.4%

70%
60%
50%

13.5%

13.8%

15.2%

11.5%

10.9%

40%
30%
20%

35.9%

37.1%

36.1%

10%
0%

4.5%

3.5%

6.7%

37.3%

9.9%

37.5%

13.6%

31.0%

12.5%

29.8%

16.8%

The number of respondents who
answered “desirable changes inall or majority of institutional
investors” has increased again.

3rd
4th
5th
6th
7th
8th
9th
survey survey survey survey survey survey survey* Changes from the 3rd Survey in which the subject companies of the survey were changed from
JPX400 component companies to those listed on the TSE First Section.

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Q2: Has your company’s long-term vision beenon the agenda or a theme for the dialogue
with institutional investors?

2-1: Is your specific long-term vision disclosed to
institutional investors?

This survey

Yes, 90.5%

No, 9.5%

This survey

Previous survey

Yes, 88.5%

No, 11.5%

Previous survey

Yes, 77.0%

No, 23.0%

Survey before lastYes, 90.1%

No, 9.9% Survey before lastYes, 78.3%

No, 21.7%

0%

20%

40%

60%

80%

Yes, 82.5%

0%

100%

20%

40%

No, 17.5%

60%

80%

100%

2-2: If it is disclosed, what is the time frame for your long-term vision?
20 years or more
0.9%
0.9%
1.7%

15 years or more

7.5%
7.6%
7.4%

10 years or more
5 years or more
15.9%
14.0%
17.6%

3 years or more
Less than 3 years

0.0%
0.4%
0.0%
0%

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10%

20%

26.9%

30%

38.2%
42.4%
46.4%
37.5%
34.7%

40%

This survey
Previous survey
Survey before last50%

* When the responses are indicated in a time range, the low end of the range is used for aggregation.
Responses stating that no specific time frame is presented have been excluded from aggregation.
Valid answers were received from 571 companies this year (542 companies in the previous year).
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102-3: Based on what criteria did you set the number of years indicated in 2-2?

2.3%
4.0%

10.0%

(i) Long-term plan/vision(ii) Medium-term management plan

3.2%

46.3%

(iii) Business span/Number of years
foreseeable(iv) SDGs/The Paris Agreement

34.2%(v) Number of years since company
establishment(vi) Other* Closed-ended questions were asked in this survey.

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Q3: Choose the option that reflects your view of the efficient use of your company’s Corporate Governance Report byinstitutional investors.
<Excerpts of comments from companies that selected (i)>■(i) They appear to use the.
■(ii) Cannot say.
■(iii) They do not appear to use the Reports effectively.
9th survey
8th survey
7th survey
6th survey
5th survey
4th survey
3rd survey

35.8%
29.3%
29.4%
25.9%
21.6%
16.8%
14.4%
0%

20%

51.5%
61.4%
66.3%
67.5%
71.8%
74.7%
76.7%
40%

60%

12.7%
9.3%
4.2%
6.7%
6.6%
8.5%
8.9%
80%

•

At meetings with investors, they mention things like, “Your Corporate Governance Reportstates that...”•This year, the Tokyo Stock Exchange published a list of companies that have disclosed
action to implement management that is conscious of cost of capital and stock price. As aresult, we felt that the frequency of reference to corporate governance reports had
increased.

•

Many investors seem to utilize it to check the disclosure status of “management that is
conscious of cost of capital and stock price.”•

At meetings with investors, a wide range of topics were discussed, including policies oncross-shareholding of listed shares and human resource promotion, and ensuring
objectivity in discussions based on the composition and skills matrix of directors andauditors.

•

At meetings with the proxy voting and ESG personnel, we were able to confirm the details
in advance and received appropriate proposals for improvement, including examples fromother companies.

100%* Changes from the 3rd Survey in which the subject companies of the survey were changed
from JPX400 component companies to those listed on the TSE First Section.

Q4: Choose the option that reflects your view of the efficient use of your company’s Integrated Report by institutional
investors. (Question applies only to those companies that publish the report.)<Excerpts of comments from companies that selected (i)>■(i) They appear to use the.
■(ii) Cannot say.
■(iii) They do not appear to use the Reports effectively.
9th survey
8th survey
7th survey
6th survey
5th survey
4th survey
3rd survey

68.5%
62.0%
63.5%
61.7%
50.0%
39.4%
17.5%
0%

27.4%
34.9%
33.7%
35.8%
46.3%
52.9%
73.9%

20%

40%

60%

80%

4.1%
3.1%
2.7%
2.5%
3.7%
7.7%
8.5%

Government Pension Investment Fund

Cases have been increased where questions are asked based on the contents of theIntegrated Report. In some redundancies or deficiencies were pointed out in comparison
with other companies (including those in different industries).

•

We were able to discuss the value creation story, management strategy, and ESG-related
matters. Most people who viewed the report for the first time have a basic understanding of
the information from the integrated report, so it is easy to have an in-depth conversation
within the limited time.

•

They utilize our Integrated Report to analyze our long-term growth potential and resilience,by understanding our business model and activities around ESG hot topics,•

During the dialogue, we received questions from persons in charge of exercising voting
rights and IR about the contents of our Integrated Report. In particular, there were manyquestions about outside directors, the ratio of female directors, and climate change issues,
such as TCFD, indicating that they had thoroughly read the report.

•

Since the release of the Integrated Report, we have held an ESG briefing for analysts andinstitutional investors. In fiscal 2023, the Integrated Report was published in October, andan ESG briefing was held in December, with the CEO and the Chairperson of the Board,
who is an outside director, taking the stage. Many market participants attended thebriefing, and we had a lot of opportunities for dialogue, including Q&A session, on topics
such as ESG and the medium- to long-term vision.

100%* Changes from the 3rd Survey in which the subject companies of the survey were changed from
JPX400 component companies to those listed on the TSE First Section.

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12Q5. In the past year, did you receive a request from institutional investors to conduct dialogue withoutside directors and outside statutory auditors?

(i) Yes,
29.8%(ii) No,70.2%

NEW
5-2: If you selected (i) or (iii) in Q5-1 above, please
describe the outline or impression of the
dialogue.

5-1: If you selected (i) in Q5, did you conduct
dialogues?

<Classification of impressions><Principal reasons for not
conducting dialogue>

Planning to conduct in the
futureDue to our schedule
Policies and responses
are under consideration.

低評価,
Low evaluation,
5.2%
5.2%

(iii) Both,
7.6%(ii) Did not conduct
dialogue., 34.3%

中立,
Neutral,

1.3%
1.3%

(i) Conducteddialogue., 58.1%

High
高評価,

evaluation,

93.5%
93.5%

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* Responses were classified by GPIF by limiting
to responses deemed to include impression.
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13

NEW

5-2 (continued):If you selected (i) or (iii) in Q5-1 above, please describe the outline or impression of
the dialogue.

[Excepts of comments]• We conducted dialogue with the Chairperson of the Board, who is an outside director, and explained the governance as well as the position of outside
directors regarding the company’s medium- to long-term management plans. We feel that the explanation given by the outside director has enhanced
the level of understanding.
• In response to requests from some investors, we conducted one-on-one interviews. Outside directors responded favorably that they would like tocontinue to hear opinions from outside. We expect that institutional investors other than those who participated in this interview will also request
meetings with outside directors or events.
• We held a dialogue on the status of the Board of Directors and future management issues. We believe this was a valuable opportunity to discuss thecurrent situation and challenges facing our company from an objective perspective of an outside director, along with institutional investors.
• Discussed variety topics. Transition and evaluation of the Board of Directors since the appointment of outside directors; The current roles of outside
directors in the Board of Directors; Evaluation of each director’s perspective; Status of communication among outside directors; How they evaluate
the content of the medium- to long-term strategies, and how they are involved in implementing them as an outside director; What kind of recognition
they share with the Board of Directors regarding stock price valuation (capital market valuation); and from what perspective they participate indiscussions.
• We conducted interviews between female outside directors and institutional investors. We received comments that cannot be obtained through IR
interviews, such as the status of business execution by executive officers and corporate characteristics from the perspective of outside directors.
Although it differs from the financial results, we provided feedback internally as important opinions from the capital market.
• Three outside directors and several institutional investors participated in small meetings on such themes as management restructuring, humanresources strategy, human resources management, and succession planning. Overall, there were many calls for strengthening monitoring of
formulated strategies and plans, including setting KPIs and reporting and managing progress. Opinions received from institutional investors will beshared with the Board of Directors and business divisions to promote improvements.
• IR Day was held in September 2023. Outside directors took the stage to explain the evolution of governance that supports the enhancement of ourcorporate value. To convey the effectiveness of the Board of Directors, we showed a video that recorded Board meetings, and conducted dialogue
with analysts and institutional investors. Going forward, we intend to continue to provide opportunities for dialogue on a regular basis.
• A small meeting was held, hosted by a securities company, with outside directors as speakers. At an ESG briefing session hosted by us, outside
directors held a discussion session. In both cases, outside directors exchanged opinions with investors about the challenges the company faces andstrategies for sustainable growth in the future. In addition to receiving high appreciation from investors, outside directors themselves seemed to havebeen inspired by various issues through communication with investors at the event and prior internal preparations. It is expected that this event willlead to revitalize the Board of Directors in the future.
• here were many perfunctory questions and the discussion was not very fruitful.
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Q6: In the past one year, did you receive a request for collaborative engagement?
(i) Yes,
10.5%(ii) No,
89.5%

6-1: If you selected (i) in Q6, did you conduct
dialogues?

6-2: If you selected (i) or (iii) in Q6-1, please select theoutline of the dialogue from below (up to three).
<Major themes on collaborative engagement>
Response to climate change (decarbonization strategy, etc.)(iii) Both,
1.4%

Toward management that is conscious of cost of capital and stock
price<Major reasons for not
conducting dialogue>

Cross-shareholding

Planning to conduct in the future
Exchanged letters without
holding a meeting
Dialogue has been held withindividual asset managers(ii) Did not conduct
dialogue., 55.7%(i) Conducteddialogue., 42.9%

Deforestation
ESG as a whole<Major initiatives for having conducted collaborative engagement>
Institutional Investors Collective Engagement Forum
Climate Action 100+
ACGA (Asian Corporate Governance Association)
AIGCC (Asia Investor Group on Climate Change)
PRI Collaboration Platform

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Q7: Among GPIF’s external asset managers entrusted with domestic equity investment, please cite “those with whichyour company had useful discussion or those which made contributions” from the viewpoint of improvement of
your company’s medium- to long-term corporate value over the past one year, and indicate the reasons for citing
such asset managers. Furthermore, please cite asset managers, if any, “with which the meeting was of little use,”and provide the reasons for citing such asset managers. (up to 3 asset managers for each question)<Percentage of respondent companies>
External asset managers whichwere beneficial<Contents of “useful/of little use discussions andcontributions”>

64.2%
53.7%

External asset managers whichwere not beneficial

4.7%
3.4%
20%

0%

40%

60%

Management strategies

21

Financial strategies

15

ESG

21

Disclosure

10

Others580%* The upper row shows the figures in this survey; and lower row indicates those in
the previous survey, respectively. The percentage indicates the ratio to total
respondents (717 companies in this survey). In this survey, 460 companies citedasset managers with which useful discussions were held, while 34 companies
cited asset managers with which discussions held were of little use.

<Number of asset managers mentioned in responses (Total
number of asset managers)>
External asset managers whichwere beneficial

835

External asset managers whichwere not beneficial

988

200

491
529
460

41
200

400

600

External asset managers which were beneficial

800
companies

External asset managers which were not beneficial* Multiple responses allowed. The denominator is the number of asset
managers cited in the responses. (Total number of asset managers)>

49
34
0

0

732

400

600

800

1,000 companies* The upper row shows the figures in this survey; and lower row
indicates those in the previous survey, respectively.
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NEW

Q7 (continued):

Reasons for citing “Institutions with which useful discussions were held and thosewhich made contributions”[Excepts of comments]• They accurately understood the business model we develop and we received accurate questions about the growth potential and anticipated risks. By
answering their questions, we were able to reaffirm the challenges in order to realize sustainable growth.
• Rather than questions for understanding our business, we often receive questions from the perspective of “What would you like your company tobecome in the future?” or “What kind of challenges does your company are you facing today?,” and they provide us with extremely valuable opinions
not only for IR but also for considering our management strategy.
• Issues that have not been sufficiently addressed tend not to be disclosed, but even if our response is insufficient, we were advised that we should
recognize them as current issues and disclose what we are going to do about it. This advice made us realize that we need to change our mindset as acompany.
• They understand our company deeply and their advice through engagement is helpful. Many investors tend to hesitate in expressing their opinions tomanagement, but asset managers give harsh opinions directly to the President and CFO. Therefore, the meeting is very beneficial in the sense thatmanagement can hear the voices of investors directly. For this reason, they have won deep trust from our CFO.
• They demonstrate the differences between us and our overseas competitors (in terms of P/L, R&D, product portfolio, etc.) in an easy-to-understandmanner from an investor’s perspective, making efforts to have dialogue that lead to future value.
• We exchange opinions on various risks related to our business from an ESG perspective. It also gave us an opportunity to review our businessenvironment, enabling us to have a valuable dialogue. In particular, they explained frankly their way of thinking behind their ESG analysis andevaluation of our company, which helped us understand the “investor perspective.”• We had a frank exchange of views on sustainability. Especially on materiality, we were able to obtain opinions on what institutional investors want.
• We continuously receive proposals that contribute to enhancing corporate value from a long-term perspective based on their detailed analyses on ourmanagement strategy and business strategy. As the dialogue is extremely beneficial, top-level meetings with the Representative Director are held on
an ongoing basis. With regard to our integrated report, we receive their support every year to improve and enhance the content of our disclosure byquantitatively analyzing, and indicating specific areas for improvement. In order to achieve 1x in PBR, we have received their support in reviewing our
proposed disclosure based on examples of other companies, and have set up a new dedicated website.
• Using PowerPoint materials, they gave a presentation on how the stock market views us, our profit levels, and their expectations for efforts to improve
PBR. It was very persuasive with numerical data.
• Guidelines for revising the proxy voting standards were clearly and effectively communicated in advance, facilitating their use as a reference forresponding to demands from the external environment into the company.
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NEW

Q8: Has your company issued
bonds (corporate bonds)?

Q8-1: Do you conduct dialogue with fixed income investors?
<Overall><Corporate bond issuers>■ (i) Conduct dialogue regularly ■ (ii) Conduct dialogue at the time of issuing bonds/refinancing ■ (iii) No

15.9%(i) Yes, 39.7%

36.7%(ii) No, 60.3%

18.4%
65.7%

8-2: If you selected (i) or (ii) in Q8-1, what are thecontents of dialogue with fixed income
investors? (Multiple responses allowed)
91.6%

Financial condition/Financial strategies

88.6%

Business strategies

64.1%

Details of bond issuance
Status and plans ofissuance of GB and SB*

4.6%
20%

40%

60%

This survey
Previous survey* GB: Green bonds; and SB: Sustainability bonds

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Government Pension Investment Fund

8-3:If you selected (i) or (ii) in Q8-1, please describe thecontents of dialogue with fixed income investors if you
found them useful. (Up to three cases)[Excepts of comments]• We were able to provide fixed income investors with more in-depth understanding ofour business and financial strategies.
• On reviewing our financial condition, we received feedback on our future strategy.

• Based on a detailed understanding of our latest initiatives, such as our approach tothe human capital portfolio, we held dialogue about the thinking behind them, as
well as information provided on topics that we had not been able to cover, such as
biodiversity.

45.1%

0%

43.5%

• We received advice from an investor’s perspective on areas for improvement infinancial and non-financial disclosure, which contributed to improvement in
disclosure content and methods.

67.9%

Initiatives for ESG

Others

19.8%

80%

100%

Survey before last

• In order to emphasize portfolio management, we were first asked to disclose
operating income by product group. Although we have not disclosed this information
yet, we have reported this matter to the Board of Directors. We understand that it
has had a positive impact on the changes in our organizational management
structure over the past few years.
Copyright © 2024 Government Pension Investment Fund All rights reserved.

18

Q9.

What do you expect from institutional investors as a whole in pursuing enhancement of yourcorporate value and sustainable growth over the medium to long term?

[Excepts of comments]• Going forward, we will continue to engage in constructive dialogue based not only on short-term quarterly financial results, but also on mediumto long-term perspectives, while receiving frank opinions to enhance our corporate value.
• Our medium- to long-term enhancement of corporate value and sustainable growth will be achieved not only through repeated discussions within
the company, but also through active discussions with outside parties, including institutional investors and Outside Directors. While we will strive
to create more opportunities for dialogue than ever before, we would like institutional investors to view our company from an outside perspective
and provide frank opinions and suggestions.
• We would like institutional investors to engage more than ever in dialogue centered on enhancing corporate value over the medium to long term.
We believe that receiving an evaluation of our company from a medium- to long-term perspective and candid feedback on issues we face isessential for our medium- to long-term growth and contributes to our management decisions. While we do not deny short-termism, we feel thatthe benefits of dialogue with institutional investors, many of whom still focus on short-term performance, are significantly less than those thattake a long-term perspective, and we have no choice but to lower the priority of dialogue when allocating limited IR resources.
• We look forward to dialogue in which that will encourage management becomes more aware of the importance of “enhancing corporate value”
and “sustainable growth.”• Meetings with management, in particular, have limited time and often consist of one-sided questions and assertions, which does not seem toresult in mutually beneficial dialogue. While there may be some improvements to be made on the company’s side, we feel that the value of
meetings would increase if investors, for example, are conscious of leaving insight for management by incorporating perspectives that are notavailable at the company(such as interviews with other companies, suggestions from comparative management analysis, and global investor
trends).
• In the dialogue, we would like to hear their frank opinions regarding their expectations and concerns for our company, as well as theirperceptions of issues and growth potential. Even when the main purpose of the dialogue is to update figures and short-term trends, we would
appreciate their comment on each occasion, for example what kind of insights they gained from that confirmation, whether they saw medium- tolong-term prospects beyond that, and what appeal they found (or did not find) as an investment target.
• Regarding non-financial information such as ESG, we would like them to continue to provide us with their focus, best practices for disclosure,and suggestions on areas for improvement. We would also like them to explain how the disclosure of non-financial information is affects
investment decisions.
• We would like them to exercise their voting rights not only based on formal criteria, such as proxy voting standards, but also based on
constructive dialogue for the improvement of corporate value and sustainable growth over the medium to long term, according to the situation ofeach investee company.

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19

2. IR and ESG Activities of Companies

20

<IR and ESG Activities of Companies>
Q1: Do you voluntarily disclose non-financial information including ESG (publication of CSR Reports,
Sustainability Reports, Integrated Reports, etc.)?
This survey

90.0%

10.0%

Previous survey

85.8%

14.2%

Survey before last

85.1%

14.9%

0%

20%

40%

60%

80%

100%

(i) Yes(ii) Do not voluntarily disclose nonfinancial information except for that
otherwise stipulated by laws andregulations

1-1: If you selected “Yes” in Q1, do you refer to any of the following standards and guidelines?
The Task Force on Climate-related Financial Disclosures (TCFD) recomendations

79.1%“Guidance for Collaborative Value Creation 2.0” published by the Ministry of Economy, Trade andIndustry

61.6%“International Integrated Reporting <IR> Framework”

59.4%“GRI Guidelines” or “GRI Standards”

58.3%“TCFD Guidance 3.0” formulated by TCFD Consortium

54.0%“Examples of Disclosure of Descriptive Information” published by the Financial Services Agency

46.4%“Guidelines for Investor and Company Engagement” published by the Financial Services Agency

43.1%“SASB Standards”

37.1%“Environmental Reporting Guidelines” published by the Ministry of the Environment

36.3%

Report by the “Working Group on Corporate Disclosure” of the Financial System Council

31.1%“ISSB Standards”

30.8%“ISO 26000” published by the International Organization for Standardization

29.7%

Recommendations published by the Task Force on Nature-related Financial Disclosures (TNFD)

19.4%

Others

7.8%

None in particular

1.1%

0%
年金積立金管理運用独立行政法人
Government Pension Investment Fund

20%

40%

60%

80%

*Multiple responses. The percentage indicates the ratio to total of 717 respondents.
Copyright © 2024 Government Pension Investment Fund All rights reserved.

21

1-2. At present, discussions on the formulation of the disclosure standards of non-financial information have been
globally advanced by International Sustainability Standards Board (ISSB), the European Corporate Sustainability
Reporting Directive (CSRD), the U.S. Securities and Exchange Commission (SEC) in addition to the Sustainability
Standards Board of Japan (SSBJ). Please describe your interest, challenges or difficulties, if any.
[Excepts of comments]• As the ISSB aims to establish global disclosure standards for non-financial information, we are very interested in whether the SSBJ in Japan and the disclosure
frameworks in Europe and the US will be linked to the ISSB (interoperability). Without interoperability, the content of disclosure will differ depending on the jurisdiction of
the country or region, increasing the burden of disclosure by companies but also making it difficult to assess the value of company. In addition to disclosure, we are alsointerested in the degree of accuracy required to ensure the contents of the disclosure. Given that some have no established methods of measuring yet, such as Scope 3
of GHG emissions, we expect that the disclosure standards will be established in accordance with the development of such methods.
• The items required by the ISSB standards, investors’ opinions, and the evaluation criteria of rating agencies differ from one another. While investors’ opinions are of theutmost importance, it is difficult for us to determine the extent to which disclosure is necessary for items with limited risks within a sector (e.g. biodiversity).
• As a Japanese company, compliance with SSBJ standards is a top priority for us. On the other hand, we are concerned, if there are differences between the SSBJ
standards and the global baselines such as CSRD and ISSB we are concerned that overseas investors will not be able to ensure comparability, and that companies
meeting the SSBJ standards will no longer be included in their portfolios.
• Consistency between various laws and regulations (for example, in Japan, the Act on Promotion of Global Warming Countermeasures, the Act on the Promotion of
Women’s Active Engagement in Professional Life, the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or
Other Family Members) and disclosure standards.
• Information on sustainability changes rapidly and needs to adapt to new technologies and environments. Therefore, disclosure standards need to be flexible enough toaccommodate these changes.
• Regarding the importance of disclosing non-financial information, we suppose that it is important to obtain understanding from our company’s management anddepartments in charge and to ask their cooperation in promoting initiatives and improving disclosure.
• As the formulation of disclosure standards is discussed, we are interested in the extent to which disclosure will be mandatory and how internal controls will be
implemented in response. We also feel that it will be necessary to acquire knowledge and establish the internal systems to deal with these challenges.
• To date, financial information has been disclosed in accordance with statutory disclosure requirements, while non-financial information has been disclosed within theframework of voluntary disclosure. Therefore, there have been few opportunities for communication between departments responsible for financial and non-financial
information. Going forward, we believe it is necessary to establish a cooperative structure between the two departments in order to ensure connectivity between
financial and non-financial information. In addition, while internal controls have permeated in the process of disclosing financial information, a disclosure governancesystems has not been established for the disclosure of non-financial information, including documentation of operations, systematization of data aggregation, andstrengthening of decision-making processes. Therefore, we are aware that the establishment of such an organizational structure is an issue for the future, with an eye
on the ISSB standards that require simultaneous disclosure of financial and non-financial reports,• In disclosing information, we make a great deal of effort and take great care to prepare it, and we expect that the content will be appropriately reflected in the evaluation,
selection, and investment activities of companies(investment preferences for high-quality companies, reduced investment in companies with little or no disclosure.
• Companies need to consider the importance of sustainability information and determine what sustainability information is useful for investment decisions. However, as
the criteria are gradually clarified, it is expected that the unified disclosure criteria will make it easier for companies to disclose information. We are also interested in
how investors evaluate the standards and how they use the disclosed information that meets the standards.
• When it comes to actual disclosure, we would like to have guidelines that include easy to understand examples for companies.
• While many positive examples of companies that have been working for a long time, if there are examples of targeting from the perspective of a company starting fromscratch (e.g. companies in their first or third year of the initiative), it would be easier for ventures to start disclosing.
年金積立金管理運用独立行政法人
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Copyright © 2024 Government Pension Investment Fund All rights reserved.

22

Q2:

When do you provide explanations on non-financial information such as ESG to institutional investors?
(Multiple responses allowed) If such explanations are provided, how do you rate the reactions ofinstitutional investors?
<Sessions where explanations
on non-financial information are provided>
71.4%(i) Financial resultspresentations

82.7%
81.6%

(iii) Information
sessions
focused on ESG
issues(iv) Explanations
are not provided
0.0%

22.9%

Government Pension Investment Fund

(ii)
(iii)

21.8%

7.9%
20.0%

This
survey 10.3%

50.4%

35.3%

Previous
survey 11.1%

52.3%

32.5%

This
survey

13.5%

69.5%

15.2%

Previous
survey

13.3%

72.4%

12.5%

This
survey

73.6%

25.2%

Previous
survey

75.5%

23.9%

0%

6.3%

40.0%

This survey

年金積立金管理運用独立行政法人

(i)

69.4%

(ii) IR meetings<Reactions of institutional investors>

60.0%

80.0%

20%

40%

60%

80%

100%

Highly interested overall

Some investors are highly interested

Not very interested

Not interested

100.0%

Previous survey

Copyright © 2024 Government Pension Investment Fund All rights reserved.

23

Q3: Do you publish Integrated Reports or equivalent reports for institutional investors?

<This survey><Previous survey>(ii) No, 27.7%(ii) No, 32.8%(i) Yes, 72.3%

3-1: If you selected (ii) in Q3, please share yourfuture plan to create such reports.
(i) Have a publishingplan, 19.7%(i) Yes, 67.2%

3-2: If you selected (i) in Q3, have you created an
English version?
(ii) No, 7.5%(iii) Have no plan to
publish, 40.5%(ii) Considering
publishing, 39.9%
年金積立金管理運用独立行政法人
Government Pension Investment Fund(i) Yes, 92.5%

Copyright © 2024 Government Pension Investment Fund All rights reserved.

24

Q4: Have you endorsed the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations?
This survey

576

Previous survey

140

521

Survey before last

204

382
0

100

325

200

300
(i) Yes

400

500

600

700

800
companies

700

800

(ii) No

4-1: Do you disclose information in line with the TCFD recommendations?
This survey

609

Previous survey

59

462

Survey before last

249
0

100

49
126

200

300

400

500

(i) Yes(ii) Have a plan to disclose

600

companies* In this survey, the companies are notlimited to those that endorsed TCFD.

4-2: Have you had any dialogue on TCFD with institutional investors?

(ii) No,44.0%

年金積立金管理運用独立行政法人
Government Pension Investment Fund(i) Yes,
56.0%

Copyright © 2024 Government Pension Investment Fund All rights reserved.

25

4-3: If you selected “(i) Yes” in 4-1, what is the disclosure status regarding the items below?

(i) Governance(ii) Strategy

This survey

74.9%

25.1%

0.0%

Previous survey

72.2%

27.8%

0.0%

This survey

61.3%

Previous survey(iii) Risk management(iv) Indicators and goals

53.3%

This survey

35.4%

0.2%
0.8%
0.2%

Previous survey

57.1%

41.6%

1.3%

This survey
Previous survey

59.2%
51.5%

40.8%
47.4%

0.0%
1.0%

80%

100%

20%
Properly disclosed

Government Pension Investment Fund

45.9%

64.4%

0%

年金積立金管理運用独立行政法人

38.5%

40%

60%

Partially disclosed

Not disclosed

Copyright © 2024 Government Pension Investment Fund All rights reserved.

26

NEW
Q5. Have you endorsed the Task Force on Nature-related Financial Disclosure (TNFD)
recommendations?
(i) Yes

96(ii) No

609

0

100

200

300

400

500

600

700

companies

NEW

NEW

5-1: Do you disclose information in line with the TNFD
recommendations?

5-2: Have you had any dialogue on TNFD withinstitutional investors ?

<Disclosure medium>
Integrated reportCompany website(i) Yes

Sustainability report

35(i) Yes,
20.8%

TNFD Report
Others* Classified based on open-ended
responses. In decreasing order.

(ii) Have a plan
to disclose

376

0

100

200

年金積立金管理運用独立行政法人
Government Pension Investment Fund

300

400
companies<Scheduled timing
for disclosure>•2024

76 companies

•

2025

84 companies

•

2026

33 companies•

2027 and thereafter
10 companies* Some companies have notspecified the time period.

(ii) No,
79.2%

Copyright © 2024 Government Pension Investment Fund All rights reserved.

27

NEW
5-3: If you selected “(i) Yes” in 5-1, what is the disclosure status regarding the items below?
(i) Governance

48.4%(ii) Strategy

30.3%(iii) Risk and impact
management

30.3%(iv) Indicatorsand goals

0%20%

Government Pension Investment Fund

19.4%

54.5%

15.2%

63.6%

30.0%

Properly disclosed

年金積立金管理運用独立行政法人

32.3%

36.7%
40%
Partially disclosed

6.1%
33.3%

60%

80%

100%

Not disclosed

Copyright © 2024 Government Pension Investment Fund All rights reserved.

28

NEW
Q6: Has there been any discussion within your company regarding the Tokyo Stock Exchange’s
request to take “Action to Implement Management that is Conscious of Cost of Capital andStock Price”?
(ii) No,
3.4%(i) Yes,
96.6%

NEW

6-1: If you selected (i) in Q6 above, in what kind of forum are the discussions taking place (including futureplans)? (Multiple responses allowed)(i) Board of Directors

80.4%(ii) Meeting bodies of internal officers(including executive officers)

71.9%(iii) Others

16.5%
0%

年金積立金管理運用独立行政法人
Government Pension Investment Fund

20%

40%

60%

80%

100%

Copyright © 2024 Government Pension Investment Fund All rights reserved.

29

NEW
6-2: Please tell us about challenges facing your company in considering how to respond to this request.
[Excepts of comments]• Since the department that leads the company and the department that discloses information it to the outside are different, it is important to convey the opinions ofinvestors, shareholders, and other stakeholders reliably and accurately. Also, the internal planning department is not the front line in dealing with external issues,
we should consider how to convey the sense of urgency: for example, what is the best method of disclosure, etc.
• We feel that the substantial challenge is to build a system (implementing the PDCA cycle) that incorporates specific measures and targets for what each needs
to do, permeates them throughout the company, and appropriately manages them.
• It is a challenge to create an environment in which directors, or at least executive officers and senior management levels of Japanese companies, including ourown, are able to seriously consider cost of capital and stock price from the same point of view as shareholders (institutional investors).
• There are various financial indicators, but at this stage we have not yet determined which one should be given the most importance. Our challenge is setting thecost of capital for each business segment. We find it difficult to build a rational and simple logic to calculate the cost of capital for individual business segment,
where objective data such as market data is difficult to use,.
• It is necessary to align our understanding with shareholders on the definitions that are the premise of discussions, such as the level of cost of capital. In principle,
investments for growth, such as M&A, will lead to improvements in ROE and ROIC, as well as corporate value, by setting a hurdle rate for the cost of capital.
However, at the initial stage after the investment, this may bring a temporary decline in ROIC, etc. If this becomes an obstacle to the transformation of thebusiness portfolio, medium- to long-term improvement in corporate value cannot be achieved. Rather than simply disclosing targets and actual results, we are
currently in the process of establishing a mechanism to enhance the effectiveness of indicators.
• It is unclear what kind of output should be disclosed within the overall business strategy. Financial and capital strategies, growth strategies, fundraising,shareholder returns, etc.,should be packaged and disclosed in relation to cash allocation, but we have not yet determined “to what extent” and “how to” disclosethem.
• Although our PBR is above 1x, it is considerably lower than that of competitors and our business sector. We recognize that there are issues with market
evaluation. We suppose that the reasons for this are: i) low resolution of the mid- to long-term growth strategy; ii) excessively large cash position relative tocapital; and iii) an insufficient equity story including i) and ii) above. We are currently considering ways to fully explain our policies and initiatives regarding theseissues.
• Although investors may be biased by factors related to the sector to which the company belongs, investors did not respond favorably to the disclosure of “efforts
to increase corporate valu.” We believe it is important to continue disclosing what has been realized on an ongoing basis in the future.
• The main factors behind the improvement of growth expectations are the slow progress of growth strategies as well as the characteristics of the industry. We areaware that the expansion of new growth areas is a challenge going forward. To improve capital profitability, it is necessary to steadily take measures such as
management that emphasizes profitability, improving the efficiency of invested capital by optimizing the business portfolio, and reducing the cost of capital by
reducing the volatility of the stock price based on performance.
• Although we are working to improve capital efficiency with ROIC as a key indicator we feel that there is a gap between ourselves and external perspective interms of the time frame for rolling out and penetrating the entire group, including overseas, and producing results. (Still we recognize that this is an area that
requires corporate effort.)

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NEW

6-3: Please tell us what you expect from institutional investors in dialogue regarding this request.
[Excepts of comments]• In addition to our qualitative growth strategy, we would like to disclose the target vision by disclosing quantitative capital allocation. Therefore, wewould appreciate their candid opinions. We believe that feedback from investors will be an opportunity for top management.
• Management is often more sensitive to “external voices” than to “internal voices,” and we believe that the role of institutional investors in
implementing these requests is extremely important. We would be grateful to receive an opportunity to be proactively provided constructive andspecific feedback.
• While we are asked “What do you think about the TSE’s request?” or “What measures are you taking to achieve 1x in PBR?,” this is not a one-sizefits-all problem. Each company must have different challenges. Therefore, we would like investors to provide their views and proposals based on
their professional corporate analysis.
• Although there is a trend to be conscious of the cost of capital, there are actually a lot of questions from short-term perspectives, such as the latest
quarterly performance. We hope that we can have a dialogue from a longer-term performance.
• We look forward to discussing not only short-term capital policies, such as share buybacks and dividend increases, but also growth strategies forthe company’s core business over the medium to long term.
• We would like to receive constructive proposals that will contribute to sustainable growth based on the characteristics and actual circumstances of
the industry, rather than stereotyped proposals.
• By receiving advice and suggestions on key points from the investor perspective as well as opinions and presentation of other companies’
examples of initiatives that have been well received by investors, this would not only help us gain new insights but also lead to improved information
disclosure, which is expected to lead to more constructive dialogue with institutional investors.
• We expect investments to be based on the calculations of corporate value that takes into account not only the performance of the current businessportfolio, but also non-financial figures such as the potential company value based on human capital and future business creativity based on pastbusiness development.
• Many institutional investors have asked us to reshuffle our business portfolio to improve capital efficiency. We would appreciate proposals uponunderstanding the synergy effects in case developing multiple businesses.
• We would like institutional investors to disclose the level of cost of capital of their investee companies. If possible, it would be helpful to provide thenumerical values of the parameters on which institutional investor base their calculation of risk premiums, etc., so that we can understand thedifference between the cost of capital which is internally calculated.
• We appreciate candid opinions on whether our disclosures meet the expectations of the capital markets for our company, and what aspect are not.

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Q7: What are the objectives of the ESG activities of your company? Please select “up to 3 items” below, andrank them 1, 2 and 3. (Duplication of rank is not allowed.)<Number of respondents>(i) Improvement of corporate value<Status of responses by company size>

506(ii) Risk reduction effect 31

7014

353

149

2nd place

3rd place

Large Medium Small

Large Medium Small

Large Medium Small(i) Improvement ofcorporate value

67

179

260

12

20

38

0

6

8

Ratio (*)

85%

84%

84%

15%

10%

13%

0%

3%

3%

3

11

17

59

137

157

16

46

106

4%

5%

6%

75%

69%

52%

22%

25%

39%

4

19

30

6

38

105

50

126

149

Ratio

5%

9%

10%

8%

19%

35%

69%

68%

55%

companies (iv) Other

5

3

2

2

3

0

6

6

6

Ratio

6%

1%

1%

3%

2%

0%

8%

3%

2%

79

212

309

79

198

300

72

184

269

168

(ii) Risk reduction effect(iii) Social contribution 53

1st place

325

Ratio

(iii) Social contribution(iv) Other0
1st place100 200 300 400 500 600 700

2nd place

3rd place

Total* Ratio of the items in the ranking (e.g. Ratio of “(i) Improvement of corporate value” in the 1st place ofthe purposes for ESG activities of large-size companies: 67 companies / 79 companies)

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NEW

Q8: Are the issues of ESG or sustainability discussed by your company’s Board of Directors? If so,please share the frequency and specific details with us to the extent acceptable.
<Frequency>(ii) No,
6.8%

companies
200

3.6 times/year on average

150
100

(i) Yes,
93.2%

50
0

Specific content of the project

1

2

3

4

5

6

7

8

9

10=< times/year* If indicated in a range, the maximum value of the range is used.

[Excepts of comments]• Progress report for the fiscal year, challenges for the next fiscal year, and future issues and directions based on the content of dialogue with institutional investors.
• In addition to regular reports made twice a year, ESG-related execution status is reported to the Board of Directors as appropriate according to the content of theagenda. The report covers a wide range of topics, including policies and strategies to goals, KPIs and progress of activities. The reflection of ESG-related KPIs in
compensation policy is deliberated by the Director and Executive Officer Compensation Committee and resolved by the Board of Directors.
• We define sustainability-related issues as materiality (important management issues that the Group should address as a priority), and report the status of these
initiatives to the Board of Directors. In addition, we have established a system to comprehensively identify and review risks every year in order to respond flexibly tochanges in the environment.
• Responding to changes in the global ESG environment and changes in disclosure requirements in each country, approving commitments, and addressing key risk
themes and sustainability strategy actions.
• Internal controls in general, sustainability activities in general, UK Modern Slavery Act statement, compliance risks, internal controls over financial reporting, internal
audit results and next fiscal year plans, and cyber security.
• We have set targets for ESG items in our medium-term management plan, and discuss progress and issues in the annual medium-term management review. In
addition, we regularly report on and discuss the progress of individual ESG themes, including sustainability management, climate change, human capital andgovernance.
• Important sustainability related themes are incorporated into management evaluation criteria as materiality issues. Topics considered particularly important throughan executive body made up of executive officers and a monitoring body, the majority of which are outside directors, are treated as items for discussion at Board of
Directors meetings. Measures against climate change are a prime example.
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33

Q9: What are the major themes of the ESG activities of your company? (Multiple
responses allowed, up to five)
Rank
Rank (previous
survey)

Theme

This
surveyPrevious
surveyChangeRank
Rank (previous
survey)

Theme

This
surveyPrevious
Changesurvey1

1

Climate Change

84.9%

82.3%

+2.6

11

14

Capital Efficiency

13.2%

7.3%

+5.9

2

2

Corporate Governance

67.6%

68.0%

-0.4

12

12

Others

9.2%

9.8%

-0.6

3

3

Diversity

60.3%

57.0%

+3.3

13

11

Environmental Opportunities

8.1%

9.9%

-1.8

4

4

Human Rights & Community

45.7%

44.6%

+1.1

14

18

Biodiversity

7.5%

5.4%

+2.1

5

5

Health & Safety

35.4%

39.7%

-4.3

15

13

Waste Management

7.1%

8.0%

-0.9

6

6

Risk Management

33.2%

27.3%

+5.9

16

14

Pollution & Resources

6.7%

7.3%

-0.6

7

8

Supply Chain

29.3%

24.4%

+4.9

17

16

Labor Standards

6.3%

6.7%

-0.4

8

9

Disclosure

21.5%

21.8%

-0.3

18

19

Water Stress & Water Security

5.4%

3.8%

+1.6

9

7

Product Liability

20.8%

26.9%

-6.1

19

17

Social Opportunities

4.3%

6.4%

-2.1

10

10

Board Structure, Self-evaluation

14.6%

11.7%

+2.9

20

20

Deforestation

1.8%

2.4%

-0.6

21

22

Minority Shareholder Rights(Cross-shareholding, etc.)

1.5%

1.1%

+0.4

21

21

Misconduct

1.5%

1.4%

+0.1

23

23

Anti-corruption

1.3%

0.8%

+0.5

24

24

Conflict Minerals (Problematic
Mineral Procurement)

1.0%

0.4%

+0.6

25

25

Tax Transparency

0.0%

0.1%

-0.1

* Companies selected up to five themes out of 25 themes listed above.
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34

3. GPIF’s Initiatives (ESG Indexes)

35

<GPIF’s Initiatives (ESG Indexes)>
Q1. Describe your rating of each of the following six ESG indexes and reasons why.

FTSE Blossom Japan Sector
Relative

FTSE Blossom Japan
100%
2.4%

7.1%

80%

60%

2.4%
44.7%

39.3%
48.8%

2.8%

2.8%

41.2%

39.0%

31.8%

40.5%
25.2%

0%

2.6%

45.1%

40%

20%

3.5%

2.1%

Medium

42.9%

48.8%

3.4%

11.3%

Small

2.9%

46.8%

17.6%

Overall

Highly appreciate

Appreciate

Do not appreciate much

Do not appreciate at all

Not sure

No response

31.8%

31.0%

23.2%

7.8%

11.3%

15.8%

19.4%

Previous This survey Previous This survey Previous This survey Previous This survey
surveysurveysurveysurveyLarge

MediumCompared to the previous survey, the percentage of companies that responded “Highly appreciate” rose overall.

•

By size, the percentage of those who “Highly appreciate” increased among medium-sized and small businesses.

Government Pension Investment Fund

39.1%

33.7%

28.9%

•

年金積立金管理運用独立行政法人

39.7%

32.0%

21.5%

3.1%

2.0%

2.0%

37.1%

Previous This survey Previous This survey Previous This survey Previous This survey
surveysurveysurveysurvey
Large

49.4%

4.0%

31.9%

31.9%
7.8%

3.1%

7.1%

Small

Overall

Copyright © 2024 Government Pension Investment Fund All rights reserved.

36

Q1 (continued): Describe your rating of each of the following six ESG indexes and reasons why.

MSCI JapanESG Select Leaders Index

S&P/JPX Carbon Efficient Index

100%

80%

9.4%

8.3%

6.4%

5.5%

14.1%

60%
45.9%

46.4%

40%

20%

0%

29.4%

5.7%
52.8%

51.5%

39.9%

30.5%
27.4%

18.4%

5.6%

8.8%

6.0%

12.9%

15.2%

Small

Overall

Highly appreciate

Appreciate

Do not appreciate much

Do not appreciate at all

Not sure

No response

年金積立金管理運用独立行政法人
Government Pension Investment Fund

45.2%

46.0%

30.2%

21.7%

Medium

6.0%

45.2%

39.1%

Previous This survey Previous This survey Previous This survey Previous This survey
surveysurveysurveysurvey
Large

9.2%
45.9%

5.0%

4.5%

10.7%

22.4%

22.6%

12.0%

14.5%

6.0%

4.7%

39.5%

38.9%

9.4%

11.3%

2.8%

2.3%
34.5%

33.4%

5.0%

7.0%

Previous This survey Previous This survey Previous This survey Previous This survey
surveysurveysurveysurveyLarge

MediumSmall

Overall

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37

Q1 (continued): Describe your rating of each of the following six ESG indexes andreasons why.
MSCI Japan Empowering Women
Index (WIN)<NEW> Morningstar Japan
Gender Diversity Tilt Index (GenDiJ)

100%

80%

100%

10.7%

9.4%

80%

5.6%

4.3%

60%
48.2%

50.0%

40%

5.3%
50.8%

50.2%

4.8%

4.3%

40.1%
20%
23.5%
0%

22.6%

18.0%

5.3%

31.8%

31.2%

4.3%

6.3%

20.9%

39.6%

Medium

40%

3.6%
3.0%
3.2%

40.5%
41.7%

11.2%

Small

3.3%
34.6%

20%

29.1%
21.4%

13.0%

Previous This survey Previous This survey Previous This survey Previous This survey
surveysurveysurveysurvey
Large

60%

0%

Large

13.6%
Medium

4.8%
Small

9.6%
Overall

Overall

Highly appreciate

Appreciate

Do not appreciate much

Do not appreciate at all

Not sure

No response<About the newly selected GenDiJ>• In this survey, “Morningstar Japan ex-REIT Gender Diversity Tilt Index (hereafter, GenDiJ),” which was adopted in FY2022, was added to thequestions. Investment weights have been determined based on an assessment of a company’s efforts toward gender equality using the Equileap
Gender Scorecard.
• Being a tilt-type index, GenDiJ has more constituent stocks than WIN, a best-in-class index that also has the same theme of women’s participation.
(WIN: 374 stocks; GenDiJ: 928 stocks, as of March 31, 2023).
• While recognition is lower than for other indexes, companies tend to rate it at the same level as other indexes.
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Q2: Have you reviewed the methodologies for the ESG
indexes selected by GPIF that index providers
have disclosed?
100%

5.9%

100%

6.0%
18.0%

0.0%

0.0%

16.6%

80%

38.9%
59.0%

34.9%

0.4%

0.0%

80%

2.8%

2.5%

76.0%

77.1%

1.6%

1.4%

84.2%

85.6%

51.8%

60%

60%
94.1%

96.5%

92.9%

40%

78.8%

82.6%

20%

39.8%

MediumYes

年金積立金管理運用独立行政法人
Government Pension Investment Fund

No

93.2%

96.2%

63.3%

45.7%

20%

This
This
PreviousThis
PreviousThis
Previous
Previous
survey survey survey survey survey survey survey survey
Large

96.4%

40%
59.3%

0%

Q3: What are your views on inclusion of yourcompany in these ESG indexes?

Small

No response

Overall0%PreviousThis
PreviousThis
PreviousThis
PreviousThis
survey survey survey survey survey survey survey survey
Large

MediumSmall

Overall

Wish to be included

Do not wish to be included

Not interested

No response

Copyright © 2024 Government Pension Investment Fund All rights reserved.

39

Q4: Did you have dialogue with MSCI, FTSE, S&P and Morningstar in the past one year withregard to the ESG indexes adopted by GPIF ? (Multiple responses allowed)(i) Had dialogue with MSCI

21.5%
21.6%

(ii) Had dialogue with FTSE

21.1%
22.3%
13.8%
10.9%

(iii) Had dialogue with S&P (Trucost).

This survey
Previous survey

6.3%(iv) Had dialogue with Morningstar (Equileap).

68.8%
69.8%

(v) Did not have dialogue with any of them.
0%

20%

40%

60%

80%

Q5: Please share your opinions concerning the ESG indexes selected by GPIF.
[Overview of opinions]•
We would like to request further clarification of the index/score evaluation criteria, evaluation process, evaluation schedule, and evaluation results(expecting information disclosure that helps companies improve our efforts).
•
Enhancement of communication between index providers and issuers (quick response, support in Japanese language, setting up opportunities for
dialogue, holding briefing sessions).
•
Enhancement of follow-up measures for companies lacking know-how and facilitation of information access.
•We expect an increase in the number of companies subject to evaluation and inclusion in the index (relaxation of market capitalization standards).
•
We expect further expansion to the indexes in addition to the currently adopted ones.
•
Efforts to reduce the burden on companies (reducing the burden on companies of responding to questionnaires and checking evaluations, andfacilitation of checking index inclusion status).

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4. GPIF’s Initiatives (Overall Stewardship Activities)

41

<GPIF’s Initiatives (Overall Stewardship Activities)>
Q1: Please give your rating of GPIF’s overall initiatives for stewardship activities and reason for your rating?
Highly appreciate

Appreciate

Do not appreciate much

Do not appreciate at all

Not sure

No response

This survey

22.0%

54.3%

Previous survey

20.5%

56.7%

Survey before last

20.6%

58.0%

0%

20%

40%

0.1%
0.4%
21.2%
0.3%
19.6%
0.7%
0.0%
1.1%
18.9%
60%

80%

2.0%
2.2%
1.4%
100%

[Excerpts of comments by assessment]• GPIF’s stewardship activities encourage engagement between companies and investors, promoting long-term thinking and sustainable growth of investee
companies and the market as a whole. (“Highly appreciate”)• GPIF clearly lays out and implements its policy for fulfilling stewardship responsibilities, and actively communicates information about its initiatives through social
media and other channels. (“Highly appreciate”)• GPIF continues to provide useful information to both investors and companies, such as ESG reports and Excellent Disclosure series. (“Highly appreciate”)• The content of dialogue with GPIF’s asset managers has consistently improved, including not only short-term performance but also medium- to long-term
corporate value and non-financial information. (“Appreciate”)• We believe that GPIF appropriately takes ESG into consideration to promote the improvement of corporate value and the sustainable growth of investee
companies and the market as a whole, from the perspective of increasing long-term investment returns on its assets under management. (“Appreciate”)• The surveys and other activities are conducted in a well-balanced manner, targeting both institutional investors and issuer companies, and we feel that mutual
understanding has advanced. (“Appreciate”)• Publishing the voting results and guidelines for judging the pros and cons of each institutional investor helps to select proposals for the general meeting ofshareholders, and to strengthen governance. (“Appreciate”)• We don’t know if it’s the influence of GPIF, but it seems that dissenting votes without engagement based on mechanical voting standards are increasing,
especially among major institutional investors. Smaller fund are more attentive to engagement. (“Do not appreciate much”)• We cannot offer a comment because we have not had any direct contact with GPIF. (“Not sure”)*

There were no comments with “Do not appreciate at all.”

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42

Q2. Are you familiar with the following recent initiatives of GPIF? (Multiple responses allowed) Choose
all the initiatives you know, and describe your rating and the reason.
<Recognition of initiatives><Rating of initiatives>(i)

Putting more weight on stewardship activities in the evaluation of
external asset managers (engagement aimed at enhancing
medium- to long-term corporate value, etc.)

74.9% ①

27.3%

62.5%

(ii)

“Stewardship Principles” and “Proxy Voting Principles”

78.7%

②

24.4%

64.3%

(iii)

Investment based on ESG indexes

79.2%

③

25.5%

57.9%

(iv) Survey of companies (this survey)

89.5% ④

21.1%

64.7%

(v)

Publication of Excellent Disclosure series (Integrated Reports,
Corporate Governance Reports and TCFD disclosures)(vi) Communication with overseas asset owners through the Global
Asset Owners’ Forum, etc.
(vii) Becoming a signatory to the United Nations-supported Principles
for Responsible Investment (PRI) and activities through PRI(viii) Joining the U.K. 30% Club, the U.S. Thirty Percent Coalition andthe 30% Club Japan (Investor Group)

77.1% ⑤31.9%

32.2% ⑥19.7%

67.4% ⑦25.5%

38.9% ⑧

22.4%

55.2%

(ix) Participation in the Climate Action 100+

49.4% ⑨

23.5%

60.0%

(x)

69.6% ⑩25.4%

Disclosure of ESG Report0%Highly appreciate

60.7%

Appreciate
Do not appreciate much

55.6%

Do not appreciate at all
Not sure

57.5%

64.0%
50%

100%

(Note) The table on the left indicates the ratio of companies that recognize each initiative. The yellow cells indicate initiatives whose recognition
exceeds 50%. The right chart indicates the results, excluding companies that did not respond.

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Q3: Have you discussed any GPIF topics during your meetings with institutional investors?

(i) Yes,
26.8%

Additional question:
What topics werediscussed?

ESG investment-related:

50.5%

Overall trend, Policies:

47.4%

AUM, Presence

44.2%

Stewardship:(ii) No,
73.2%

30.5%

Others

7.4%
0%

20%

40%

60%

* Closed-ended questions were asked in this survey.
Multiple responses allowed

Q4: Regarding GPIF’s public relations activities, have you seen the following public relations activities?
(Multiple responses allowed)
644(i) Official website
100(ii) YouTube
44(iii) X (formerly Twitter)

167(iv) Annual Report308(v) ESG Report(vi) Presentation/contribution of articles by GPIF officers/staff

98(vii) Disclosure through JPX ESG Knowledge Hub

88
55(viii) None0This survey

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Government Pension Investment Fund

100

200

300

400

500

600

700
companies

Previous survey

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44

Q5: What do you expect from GPIF’s stewardship activities as an asset owner?
(Multiple responses allowed)
Promotion of dialogues between asset managers and investee companies toward theenhancement of medium- to long-term corporate value

541
281

Leadership and dispatch of information toward the sophistication of investment chains

196

Enhancement and improvement of ESG initiatives (including ESG investment)This survey
Previous survey

176

Exchange of opinions between company and asset owner

34

Others

0

100

200

300

400

500

600

NEW

Q6: Please let us know your contact point if you would like to cooperate with GPIF in surveys, etc., not limited
to this survey, to understand the actual state of dialogue conducted by GPIF’s external asset managers.

Responded,
42.8%
No response,
57.2%

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Q7. Please share your opinions or requests, if any, concerning GPIF.
[Excepts of comments]• We hope that GPIF will continue to encourage asset managers to engage in dialogue with companies from the perspectiveof enhancing corporate value over the medium- to long-term.
• We hold regular meeting with asset managers and use their evaluations, opinions, and advice we receive as a reference
for corporate management. We hope that GPIF will continue to work closely with these institutions.
• We look forward to further strengthening of global outreach of GPIF as a world leading asset owner in order to attract evenmore overseas money.
• We hope that GPIF, as the world’s largest pension fund, will contribute to engage in constructive dialogue on ESG issues
through asset managers.
• We look forward to continued efforts to boost the entire Japanese market, including small- and medium-sized stocks.
• The feedback from these surveys and various information disclosed on GPIF’s website are extremely helpful. We would
like to ask GPIF will continue this survey and provide more comprehensive information disclosure.
• We would like to ask GPIF to urge institutional investors to disclose the results of the exercise of voting rights.
• Direct dialogue with companies on GPIF’s view as an asset owner.
• Mid- and small-cap companies, including us, have few opportunities to engage in dialogue with GPIF, so we expect suchopportunities to increase in the future.
• We would like GPIF to continue to verify the correlation between MSCI and FTSE valuations. We also expect GPIF to
examine the correlation with other rating agencies.

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46