Stewardship Principles
Established on June 1, 2017
Revised on February 6, 2020
Government Pension Investment Fund (GPIF) requires its external asset managers (“assetmanagers”) to comply with the following principles. If an asset manager decides not to comply withany of the principles due to the characteristics of the assets in which it invests and/or its investment
style, it is required to explain the rationale for its non-compliance to GPIF.
In order to fulfill its own stewardship responsibilities, GPIF continuously monitors the stewardship
activities of its asset managers, including their exercise of any voting rights, and proactively conducts
dialogue (engagement) with them.

(1) Corporate Governance Structure of Asset Managers○ Asset managers should adopt Japan’s Stewardship Code.
○ Asset managers should have a strong corporate governance structure. In particular, asset managers
should develop a supervisory system through such measures as appointing outside directors with ahigh degree of independence in order to enhance their independence and transparency.
○Asset managers should commit sufficient internal resources to fulfill their stewardship

responsibilities effectively.
○ Asset managers should explain how their remuneration and incentive systems for their executives
and employees are aligned with the interests of GPIF.

(2) Management of Conflicts of Interest by Asset Managers○ Asset managers should appropriately manage conflicts of interest (if the asset manager belongs toa corporate group, not only within asset manager but also within the group) in order to put thebeneficiaries’ interests first. Asset managers should classify types of conflicts of interest into thoserelated to financial/capital relationships and those related to business relationships. Asset managers
should also develop and publicly disclose a policy for the management of conflicts of interest.
○ Asset managers should manage conflicts of interest through measures such as establishing a thirdparty committee with a high degree of independence and disclosing information on such. Whenselecting committee members, asset managers should consider the candidates’ independence,experience and skill sets, among other factors.
○ When exercising voting rights for companies with which they have a potential conflict of interest,
such as their own company, their parent company or other group companies, asset managers should
develop and disclose a process that removes arbitrariness and is in line with best practice in corporate
governance and conflict of interest management, such as letting their third-party committee makevoting decisions or examine the validity of their own decisions, or following the recommendations ofa proxy voting advisor.

(3) Policy for Stewardship Activities, including Engagement○ Asset managers should develop and publicly disclose a stewardship policy, which should include
their approach to engagement.
○ Asset managers should ensure that their stewardship policy and activities contribute to long-termrisk-adjusted returns rather than short-term outcomes. In addition, to support more effective
stewardship activities, asset managers should consider formulating engagement objectives and plans.
○ Asset managers should integrate stewardship and investment.
○ Asset managers should proactively engage with index providers to promote the interests ofbeneficiaries. Such engagements should include participating in index providers’ consultations
regarding the constituent stocks of indices, as these have a material impact on GPIF’s investment
performance.
○ Asset managers should engage with various stakeholders including regulators, stock exchanges,
investee companies and index vendors, so as to improve the sustainability of the markets in which
they and GPIF invest.
○ Asset managers should take non-financial information into consideration when engaging withinvestee companies. Non-financial information should include (but not be limited to) the information
contained within companies’ corporate governance reports and integrated reporting.
○ If a company should decide not to comply with any of the principles established by relevant
corporate governance codes of individual countries or equivalents but to explain their reasons for noncompliance, asset managers should engage with the company to understand their thought process andaddress the quality and detail of these explanations as necessary.
○ GPIF expects asset managers of passive equity investment mandates to develop and effectively
implement a corporate engagement strategy to promote the sustainable growth of the market.
○ When using an engagement agency or third-party engagement service provider, asset managers
should conduct proper due diligence prior to their selection and undertake continuous monitoring afterselection.
(4) ESG Integration into the Investment Process○ GPIF believes that it is vital to integrate environmental, social and governance (ESG) factors into
the investment process to increase corporate value and promote the sustainable growth of investee
companies and the capital market as a whole, thereby contributing to long-term investment returns.
Asset managers should consider the materiality of ESG issues in relevant sectors and thecircumstances of individual investees and deal with those factors accordingly.
○ Asset managers should determine which ESG issues they deem to be critical, specify goals that

they would like to achieve as a long-term investor, and proactively engage with investee companies
on these issues.
○ Asset managers should become signatories of the Principles for Responsible Investment (PRI),and participate in other industry ESG initiatives.

(5) Exercise of Voting Rights○ Asset managers should exercise the voting rights relating to GPIF’s investments exclusively in thebest interests of GPIF and its beneficiaries.
○ In order to promote long-term corporate value at investee companies, asset managers should
exercise voting rights in accordance with the GPIF Proxy Voting Principles as attached.
○ When using a proxy voting advisor, asset managers should conduct proper due diligence prior totheir selection. After selection, asset managers should continuously monitor service quality and engage
with the proxy voting advisor as necessary (excluding cases where the objective is managing conflictsof interest in relation voting on their own shares (see section 2 above)).

Proxy Voting Principles
Established on June 1, 2017
Revised on February 6, 2020
○ In accordance with the GPIF’s Stewardship Principles, GPIF’s external asset managers (“assetmanagers”) should exercise any and all voting rights in a manner consistent with their ongoing
corporate engagements and other stewardship activities.
○ Asset managers should develop a proxy voting policy and guidelines that will contribute to themaximization of shareholders’ long-term interests. Asset managers should publicly disclose their
proxy voting policy and guidelines in order to make the basis for their voting decisions clear.
○ Asset managers should have sufficient communication with investee companies to inform theirvoting decisions and to ensure that all voting rights are exercised with thoughtful consideration.
○ Asset managers should give careful consideration to environmental, social and governance (ESG)
issues when exercising voting rights, with the objective of enhancing investee companies’ corporate
value over the medium- to long-term.
○ Asset managers should apply careful due diligence when exercising voting rights on proposals that
could undermine minority shareholders’ interests as well as those that could protect minority
shareholders’ interests.
○ Asset managers should generally exercise voting rights in support of the Corporate Governance
Codes established by the individual countries in which their investee companies are domiciled. When
there is no such code or equivalent, asset managers should appropriately exercise voting rights insupport of the internationally recognised standards that they require investee companies to follow.
○ If asset managers use a proxy voting advisory service to exercise voting rights, they should notmechanically follow the advisor’s recommendations (excluding cases in which the objective is to
manage their own conflicts of interest). In all cases, it will remain the sole responsibility of asset
managers to exercise voting rights in the best interests of GPIF and its beneficiaries.
○ Asset managers should publicly disclose their entire voting record on an individual company andindividual agenda item basis.
○ Asset managers should disclose the rationale for their voting decisions based on necessity and/or
importance as appropriate.
○ Asset managers should explain the rationale for their voting decision in detail to investee
companies upon request.
○ Asset managers should periodically review their voting records and conduct self-assessments.
○ Based on their self-assessments, asset managers should update their policies for the following year
as necessary.