Resona Asset Management

SUSTAINABILITYR EPORT
2023 / 2024

To ensure a prosperous and happy life
for future generations as well as ourcustomers as our customers all we do.

Identity of Resona Asset Management

The purpose of Resona Asset Management is“to ensure a prosperous and happy life for future generations as well as our customers.”
To realize this purpose we have explored:
Which“ values”we cherish,
What sort of“ corporate culture”we require, andWhat kind of“business model”we should operate.
We have articulated them as the“ Identity of Resona Asset Management.”

We are clearly aware that our reason for being, or“purpose,”is to ensure a prosperous
and happy life for future generations as well as our customers.

Our Purpose

We are eager to one day share in the happy stories as our smiling clients declare“I wasable to build up my assets through investment services provided by Resona AssetManagement,”“Transactions and relationship with Resona Asset Management have

“To ensure a prosperous
and happy life for future
generations as well as
our customers”

brought me an affluent and happier post-retirement life”and“Through investing in
products provided by Resona Asset Management, I was able to contribute to realizing abetter society and environment for the sake of future generations.”

Our Value
Respect open culture, long-term
perspective, and diversity

In order to make this happen and in order to“provide to ensure a prosperous and happylife for future generations as well as our customers.”at any time, we commit ourselves toacting as an asset manager focused on meeting genuine customer needs.
Furthermore, we hereby declare our intention to be“a responsible investor”and also to
be“a long-term investor,”assisting our clients in their asset formation over the long term.
And to realize these above-mentioned objectives in a sustainable manner, we hereby
make a commitment to reinforce our asset management capabilities continuously.

Corporate Culture
1. Mutual respect, 2. Pursuit of expertise,
3. Addressing real customer needs

Business Model

Trust bank model

What we seek to do to ensure a prosperous and happy life for future
generations as well as our customers.
Desirable future

Sustainability of client lifestyles

We will commit and conduct our fiduciary duties through long-termbusiness perspective and commitment.

Contents
Identity of Resona Asset Management

1

Chapter 3 Resona Asset Management’s Proxy Voting

40

Message2

Chapter 4 ESG Integration at Resona Asset Management44

─ Corporate Section ─

Sustainable
environment

Corporate
culture, purpose

We believe that society and the environment as well as the investee companies should besustainable to protect our clients’assets and to underpin the sustainability of our client lifestyles.
By achieving our concept of the desirable future to ensure a prosperous and happy life for the
future generations as well as our customers, we fulfill our fiduciary duties as a responsible investor.

46

Chapter 1 Overview of Resona Asset Management

4

ESG integration / equity / active

48

Chapter 2 Response to TCFD and TNFD recommendations

6

ESG integration / fixed income / active

50

ESG integration in equity quantitative investment52

─ Responsible Investment Section ─

Inclusive social
economyResona ESG Assessments

Chapter 1 Responsible Investment of Resona Asset Management8

ESG integration in passive investments

53

Track record of responsible investment

12

Chapter 5 Assessment on Responsible Investment Activities

54

Organization chart and work flow on responsible
investment activities

14

Chapter 2 The Engagements of Resona Asset Management

16

Materiality engagement (top-down)

18

Information disclosure engagement

22

Bottom-up equity engagement / active investment

24

Bottom-up fixed income engagement / active
investment

26

Engagement Report28

Public engagement

38

Self-assessment on responsible investment activities 54
External assessment on responsible investment activities 56

1

Message

Each of us arecontinuously
future societies.

aware of the importance ofcommitting to achieve sustainable

We would like to express our sincere gratitude for your continued support toResona Asset Management.

In this section we will report on:1) who we are;2) our efforts toward sustainability and an overview of our corporate structure; and3) the philosophy behind it for practicing responsible investment activities.

This Sustainability Report is our sixth report since the first Stewardship Reportissued in 2018.
Over the past few years, various social and economic events have occurred.
We experienced an unprecedented rate of change in lifestyle and work stylephilosophies amidst the long-lasting and significant impact of the COVID-19
pandemic on the global society and economy. Moreover, increased geopoliticalrisks such as the Russian invasion of Ukraine continue to have a major impact
globally, generating new tensions with increased division and energy and foodproblems.
Meanwhile, record-breaking heat waves were observed in various parts of theworld in the summer of 2023, with many reports of large-scale natural disasters
including wildfires and heavy rains.
These circumstances provide opportunities to think more seriously aboutsustainable societies and the environment as the foundations of our lives.
I believe that the sustainability of responsible investment activities that we havecontinued to diligently carry out becomes increasingly important precisely because
we live in a world where these unexpected events readily occur.
These recent events are good opportunities to for each of us, who are now
responsible for sustainability, to recognize the importance of continuous commitments
towards a sustainable future, and to strengthen our awareness of importance.
The purpose of Resona Asset Management is“to ensure a prosperous and happylife for future generations as well as our customers.”
I believe that an asset management business has the formidable strength tosimultaneously achieve both“prosperity”and“happiness.”
With a strong awareness of our long-term perspective, we are engaged in a varietyof activities to deliver“prosperity”and“happiness”to future generations, and toachieve stable investment outcomes and a sustainable society.
The first half of this report is the Corporate Section.

The second half of this report is the Responsible Investment Section.
Over the past year, we have established the Natural Capital Policy and the Policyon Human Rights Related to Investment Management, based on the basic policy
on responsible investing.
We recognize addressing the challenges of nature capital and biodiversity loss as
essential in our journey to fulfill our purpose, considering it one of the mostimportant issues in responsible investment activities.
In October 2023, Resona Asset Management Co., Ltd. served as a Silver Sponsor of
the 2023 PRI annual conference,“PRI in Person,”and hosted a side event on
biodiversity and natural capital. Going forward, we strive to promote natural
capital-related measures through stewardship activities involving engagementswith investees and proxy voting, and to contribute to the preservation andregeneration of natural capital throughout society based on the philosophy of auniversal owner.
We have also enhanced the content of Resona ESG Assessments, which waslaunched in January 2023.
This approach provides an understanding of ESG risks and opportunities at theinvestee companies, based on a unified standard and in a manner that transcends
the bounds of asset class, investment strategy and other such individual
considerations. We will make use of the assessments for ESG integration andhighly effective engagement with investee companies.
As a responsible asset manager, Resona Asset Management will continue toenhance the corporate value of investee companies by engaging earnestly andpracticing highly effective and responsible investment activities.
Moreover, we will continue to work tenaciously in processes to achieve sustainable
societies by collaborating with all stakeholders to resolve complex intertwinedsocial and environmental issues.

Akihiro Nishiyama

Representative Director and President
Resona Asset Management Co., Ltd.

2

3

Overview ofResona Asset Management

Resona Asset Management was established in August 2015 as the asset management companyof the Resona Group. By consolidating the trust asset management functions of Resona Bank
into Resona Asset Management in January 2020, it became one of Japan’s leading asset
managers both by asset size and asset management structure.
Resona has a 60-year track record in the asset management business. Our corporate roots arein the pension management department of a trust bank, primarily managing corporate andpublic pension fund. Through our experience in pension management, we have always
maintained a long-term investment perspective while striving to provide sustainable andstable returns to our customers.
Based on expertise we have cultivated over the course of our history, we aim to provide
products and services that are truly needed by our customers, holding on a“trust bank model,”in which“We will commit and conduct our fiduciary duties through long-term businessperspective and commitment.”

Trends in AUM

Employees and Investment professionals
129 out of a total of 194 employees, work in investment department*1.
We believe that it is important for each individual to pursue their own expertise and to maintainmutual respect in order to meet the true needs of our customers.
In order to accomplish this, we will strive to instill human resource development and assessment
systems, and corporate culture that enable each individual to demonstrate their professional
abilities to the fullest, from a long-term point of view.

Investment department *1

129(Approx. 66% of all employees)

Includes predecessors The
Daiwa Bank, Ltd., The Asahi
Trust & Banking Co., Ltd.,The Daiwa Trust & Banking
Co., Ltd., and Resona
Trust & Banking Co., Ltd.
Grew shareprimarily throughpension funds of
SMEs

1987

Approx.
1962¥

3

Establishment
trillionof Asset
Management
Business
AroundAccumulated
know-how indiversified portfoliosof global investments

2003

Approx.

10¥
trillion
Around2000

Deregulation pertaining
to pension fundasset allocations
Expansion of corporate
and scope of
pension market
portfolios

1990

2％

Other ¥1.4 trillion

3％

Corporate pension

2015
Resona AssetManagement
established2019
Approx.

18¥
trillion

2020
Approx.

21¥
trillion2020¥5.2 trillion

2023
Approx.

¥

ClientPublic pension

84％ ¥41.1 trillion

Accumulated know-how in long-term global investments
cultivated through pension fund management

Board of Directors
Internal Audit Office

Representative
Director andPresident
Responsible Investment Committee
Responsible investment
verification committee meeting
Asset Management Committee
Investment Evaluation Committee

Other ¥3.1 trillion
Global equities ex. Japan¥2.7 trillion

6％

Fund governance committee meeting6％

and the switch from saving to wealthHistory spanning
60 years

Organizational structure

Executive
Committee

trillion

Rising expectations forinvestment services such as themove towards the“100-year life,”(Approx. 34% of all employees)

Audit and Supervisory Committee

11％

48

At present

65

General Meeting of Shareholders
Retail ¥1.2 trillion

Consolidated the trust
asset management
functions of Resona
Bank into Resona AssetManagement

Client services and other departments*２*1 Investment Planning Division, Index Investment Division, Fixed Income Investment Division, Equity Investment Division,
Responsible Investment Division, and Trading Division*2 Client Services Division, Asset Management Client Services Division, Fund Administration Division, Information Technology
Planning Division, Investment Risk Administration Division, and Corporate Administration Division* As of September 30, 2023

Accumulated know-how in instrument development
and investment education for individual investors

Resona BankJapaneseﬁxed income¥8.9 trillion

Global ﬁxed
income ex.
Japan

18％ Asset type 41％ ¥20.1 trillion

Japanese equities

29％¥14.0 trillion

Compliance and Risk Management Committee

Investment Planning Division

Client Services Division

Index Investment Division

Asset Management Client Services Division

Fixed Income Investment Division

Fund Administration Division

Equity Investment Division

Information Technology Planning Division

Responsible Investment Division Investment Risk Administration Division(As of September 30, 2023)

Trading DivisionCorporate Administration Division
Compliance Office

41* For further details on human resource strategies, see page 12.

Composition of AUM

Resona AssetManagement

Ch.

Overview of Resona Asset Management

1

Chapter

Corporate Section

Corporate Section

5

Corporate Section

2. How we utilize the results of analysis to strengthen our efforts

ESG
integration

We have disclosed our efforts to manage climate/nature-related
financial risks and opportunities in accordance with the framework
based on the TCFD and TNFD recommendations, in an integrated
report“Climate/Nature-related Financial Disclosure Report 2023.”
Climate/Nature-related Financial Disclosure Report 2023 is available
on this link.
https://www.resona-am.co.jp/investors/pdf/climate-nature_report2023.pdf(in Japanese)
The summary of the report is shown below.

Engagements

Proxy voting

What we are doing now

Number of pages

How we go forward

We provide our own corporate evaluation, theResona ESG Assessments, to investees, toutilize for ESG integration. The rating items
include greenhouse gas emissions, renewableenergy utilization rate, and total water usage.

P46

We consider reflecting how measures to addresssignificant climate/nature-related risks andopportunities are being implemented to ourratings.

We conduct in-house engagements regardingtransitioning to net zero and information
disclosure in sectors with high greenhouse gas
emissions, as well as regarding procurement ofsustainable palm oil, paper, and wood.

P19

We seek to further improve the effectiveness andefficiency of engagements by focusing on sector
specific significant climate/nature-related risks
and opportunities.

We operate a Research Information Platform toshare information and engagement record withinvestees.

-

Analytical results will be added to this platform
to improve the efficiency and effectiveness ofengagements.

-

We strive to appropriately implement the
Guidelines by using the results. When revising theProxy Voting Guidelines in the future, we consider
details of the Guidelines based on the response ofinvestees to significant climate/nature-relatedrisks and opportunities identified through theanalysis.

We have introduced policies for responding toshareholder proposals and escalation policies
related to material ESG issues into our Proxy
Voting Guidelines.

Governance
We have a strong governance structure for material
ESG issues, which includes board oversight of thecompany’s activities to address the issues, the“Responsible Investment Committee”made up ofoutside experts and executive officers responsible
for related departments to discuss and monitor theactivities，and the“Responsible Investment
Verification Committee”，which consists of threeoutside experts，to verify our Proxy Voting
Guidelines and the results of proxy voting.

・Establishment of the Chief Sustainability Officer(CSuO)
・Integration of ESG criteria into the director
remuneration structure・Implementation of PDCA cycles for ESG
engagements as our enhanced response to
climate/nature-related risks and opportunities

1. Analysis of climate/nature-related risks and opportunities[Selected industrial sectors]

Chemicals, Automobiles, Foods, Real estate management anddevelopment, Electric power, Metals/Mining, and Oil/Gas/
Consumable fuels

For each industry sector, we conducted scenario analysis
to identify significant climate-related risks andopportunities, and then evaluated their time horizon,
likelihood of occurrence, and financial impact. We also
have identified countermeasures for investees to take.
[Examples of identified climate-related risks and opportunities]◦Automotive sector: Increased sales due to growing demand for EVs◦Metals/Mining sector: Increased costs associated with carbon pricing

62

Risk and impact management
In October 2023, we have decided on the“Basic Approach to Identify, Assess, and Manage
Climate/Nature-Related Risks”in order to manage risks that trust assets we manage may incur
losses due to the emergence of climate/nature-related risks (including system-level risks).
❶We identify，assess and manage climate/nature-related risks under our overall risk
management processes.
❷We operate company-wide PDCA cycles to identify, assess, and manage climate/nature-related risks.

We have identified industrial sectors which we should particularly focus on in response to
climate/nature-related risks and opportunities that may have a significant impact on theperformance of individual investees, and in response to system-level risks that may arise due tothe impacts on environmental system as a whole. Based on the results of the analysis, we areconsidering to strengthen our efforts on the identified sectors.

ClimateCh.

▪Major topics since the previous disclosure(February 2023)

Strategy

We have identified“industrial sectors to which we havecontinued significant exposure and which are generally
expected to be significantly impacted financially byclimate-related risks or opportunities”and“industrial
sectors that have grave impact on climate.”

Corporate Section

Response to TCFD and
TNFD recommendations

NatureWe have identified“industrial sectors to which we havecontinued significant exposure and which have asignificant dependency or impact on nature”and“industrial sectors that have grave impact on nature.”[Selected industrial sectors]

Foods, Chemicals, Machinery, Automobiles/Automobile parts,
Household durable goods, Independent power generators andenergy distributors, and Construction/Civil engineering

For each industrial sector, we analyzed the specific detailsof significant dependencies and impacts on nature, as wellas significant nature-related risks and opportunities, andhave identified countermeasures for investees to take.
[Examples of identified nature-related risks and opportunities]◦Foods sector: Decrease in production due to depletion ofavailable water resources, etc.
◦Construction/Civil engineering sector: Increased cost ofcompliance with regulations related to environmental impact

Metrics and targets
The following are examples of the metrics used to assess and manage climate/nature-related risks
and opportunities, and performance against them in FY 2022.
We will continue reviewing the metrics and targets so that we can assess and manage climate/nature-related risks and opportunities more effectively and efficiently.
Metrics

ClimatePerformance(1) Metrics related to conducting engagement activities by our company
Number of companies with which
we have made an engagement on
climate change

Japanese listedcompanies: 194
Global companies ex.
Japan: 37

MetricsNatureNumber of companies with which wehave made an engagement on natural
capitalPerformance
Japanese listedcompanies: 56
Global companies ex.
Japan: 8(2) Metrics related to investee behavioral change
Percentage of companies targeted
for in-house engagement that met
certain conditions regarding
sustainable palm oil procurement

Percentage of companies targeted forin-house engagement that met certain
conditions regarding sustainable paper
and wood product procurement

40.0%(Target: 100% in 2030)

9,500kt-CO2e(Target: Net Zero by 2050)(Future consideration based on the development
status of data and analysis methodologies)-

115.6t-CO2e(Target: Net Zero by FY 2030)(No metrics established as reliance or
impact on nature is deemed minimal)

-

22.7%
(Target: 100% in 2030)(3) Metrics related to the actual impact on society
Carbon footprint of our portfolio(Scope 3 category 15 GHG emissions)(4) Metrics related to direct operations
Carbon footprint of our own operations(Scope 1 and Scope 2 GHG emissions)7

Response to TCFD and TNFD recommendations

2

ChapterResponsible
Investment Section

ESG issues such as climate change have already manifested as concrete risks and opportunities.
As an asset management company, we are not only expected to be a“Future Taker”thataims to improve corporate value and expand medium- to long-term returns while considering
current and future ESG issues and adapting to them, based on the current real-world
situation. We are also required to be a“Future Maker”committed to realizing a better future
by proactively engaging the real world and creating impacts to improve the situation.

We conduct stewardship activities to improve the corporate value of the investee companies by
ESG integration, conducting engagements with the investee companies, and proxy votings.
In addition, as a long-term investor and universal owner, we are working to realize a desirable
future as a Future Maker by conducting engagements with a wide range of stakeholders and byimplementing impact investments.

Future Taker
Global issues
by external
diseconomies

Engagements
Engagements

Future Maker

Climate change
Incomeinequality

The purposeof Resona
Asset
Management

Aging populationsociety

Disclosure

Cybersecurity

ESG
integration

Basic policy on
responsible investment

1

Realizing the“desirable
future”

Pursuing
impactInclusive social
economyCreation of anew paradigm
Enhancementofcorporate
Proxy voting
value

Sustainable
environment

Anti-corruption

Universal
ownership

Loss of natural
capital・・・Corporate
culture,purposeAwareness

Future
Taker

8

Ch.

SupportProxy voting
Collaboration
with a wide
range ofstakeholders

Human rights

Responsible Investment Section

Responsible Investment ofResona Asset Management

We aim to enhance corporate value and expand mid-to-long-term returns
on our assets under management by considering and adapting to the future
ESG issues that may arise, assuming the current state of the real world.

FutureMaker

We commit to realize a better future by encouraging to
the real world and to create impacts to improve thecurrent conditions.

9

Responsible Investment of Resona Asset Management

1

ChapterResponsible
Investment
Section

Chapter1

Responsible Investment ofResona Asset Management

Responsible Investment Section

Overview of responsible investment activities
We are undertaking various activities to achieve the“Desirable future,”which is our Purpose,“To ensure a prosperous and happy life for the future generations as well as our customers.”
The purpose of Resona Asset Management“To ensure a prosperous and happy life for future
generations as well as our customers”

Ch.

Identify materiality (material issues)

Sustainable environment

Corporate culture, purpose

List and assess ESG issues“Desirable future”

Inclusive social economy

Responsible Investment of Resona Asset Management

1

Climate change

Biodiversity andforest conservation

Child labor andforced labor

Product quality andsafety, social impact
of products andservices

Diversity andinclusion

Anti-corruption

Take the following measures based onmateriality and ESG issues

ESG integration(See page 44 for details)

Engagements(See page 16 for details)

Proxy voting(See page 40 for details)＋ Intention
Impact investment**See the link below for details.
https://www.resona-am.co.jp/english/responsible-investment/impact.html

1011

Responsible
Investment
Section

Chapter1

Responsible Investment ofResona Asset Management

Silver Sponsor to 2023 PRI in Person Tokyo

Since 1962, we have mainly focused on corporate and public pension fund management.
We have built up a track record of responsible investment that includes becoming signatory
to the Principles for Responsible Investment (PRI) in 2008, prior to the establishment of PRI
Japan, and involvement in the PRI Japan network since it was first established.

History and progress of Resona
2008▪Became PRI
signatory2010▪Initial memberof PRI Japan▪Became CDP
Investor
Signatory

2012

onmentExternal envir

2018▪Establishment of PRI Japan▪ESG integration▪PRI Reporting &Assessment▪Introduction of ESG investment
criteria
Drafted manuals and held briefing
sessions (collaboration with PRI Japan)▪Introduction of the concept ofuniversal ownership▪Principles for
Financial Action for21st Century(PFA21)▪Chaired the
Corporate
2016 Appointed as
2015
2014
Chairman to theWorking
Asset Manager,
Group of PRI
Securities &
2017
Japan
Investment Banker
Network
Working Group▪Joined PRI▪Joinedcollaborative
Institutional Investors
engagement
Collective Engagement Forum
External envir
onment(IICEF)▪Adoption of the Paris▪Established
Agreement▪Steering Committee to the PFA21
Japan▪Established Japan Corporate
Stewardship▪Participate to Climate Action 100+Governance Code2019

▪As Deputy Chair of ESG Financial Strategy
Task Force, drew up“Strategy necessary
to become ESG financial
superpower”proposal

2021

2020
onmentExternal envir▪G20/Osaka Blue
Ocean Vision▪Joined ICGN,ACGA and AIGCC▪Japan to vow carbon
neutral by 2050
▪Launch of action plan on
Business and Human
Rights122013▪Adoption of the 2030
Agenda for Sustainable
Development▪Participation in
Access to Nutrition
Initiative (ATNI)▪Endorsed andsupported the
Finance for
Biodiversity Pledge▪COP26

2022

Speaking at main session
Minoru Matsubara, our Chief
Sustainability Officer (CSuO), took thestage at the Keynote Interview, together
with CalPERS and Nissan Motor
Corporation. Discussed on theengagement experience on Climate
Action 100+. Hisako Furuta, Investment
Manager spoke at the“Advance”
breakout session. This session introduced
collaborative engagement on humanrights. Resona Asset Management isserving as the lead investor in thesecollaborative engagements.

Ch.

1（PRI in Person 2023）

Hosted a Side Event on Natural Capital

Introduction of our initiatives

Co-hosted a side event with PFA21 on biodiversity andnatural capital. With more than 300 hybrid participants,
the panelists discussed on responses to the TNFD
Recommendations (v1.0), which were announced in
September 2023.

Actively introduced our stewardship activities andimpact investments to the global institutional
participants at our Sponsor Stand. Also actively
discussed on our speaking sessions and Side Events.

Received the 2022 Minister of theEnvironment Award (General Category)

Code

The Best Initiatives of the Principles for
Financial Action for the 21st Century▪Participation in PRI
collaborative
engagement initiative
for human rights,“Advance”▪Steering Committee
member of the Japan
Impact-driven
Financing Initiative▪Introduction of GX
Implementation Council

2023
onmentExternal envir▪Release of the TNFD
Recommendations (v1.0)◦Initiatives to solve
climate change issues
by the Global Impact
Investment Fund wererecognized.

Certified as an Eco-First
Company by the Ministry of
the Environment◦The first institutional
investor to becertified as an
Eco-First Company
by the Ministry of
the Environment.

13

Responsible Investment of Resona Asset Management

Track record of responsible investment

As a silver sponsor have actively contributed to this conference in recognition of the utmost
importance of addressing the various ESG issues discussed in order to achieve our purpose,
which is“to ensure a prosperous and happy life for future generations as well as our customers. ”
Below are our activities at the conference.

Responsible Investment Section（October 3 to October 5, 2023)

1

Responsible Investment ofResona Asset Management

Organization chart and work flow on responsible investment activities
The Responsible Investment Committee meeting is conducted to consolidate asset
management function’s expertise.
The objective of the Committee meeting is to fulfil our stewardship responsibilities as asset
manager to achieve a sustainable society and to support the growth of the investee companies.

Responsible investment verification committee meeting
Chairman : External expert
Content：Verification of appropriateness of stewardship activities*
External experts

Investment Risk Administration Division

Outside directors

Responsible Investment Committee

Chairman：Representative Director and President
Proposed agenda for verification : Measures taken on responsible investment activities*
Responsible
Investment Division(secretariat)

Executive officers and generalmanagers responsible forinvestment risk administrationand compliance

Executive officers and generalmanagers responsible for asset
management functions and theInvestment Planning Division

Discussions will be reflected to the proposal

Responsible investment meeting
Secretariat：Responsible Investment Division
Content : Sharing information and exchanging opinions on responsible investment activities
Responsible
Investment
Division

EquityInvestment
Division

Fixed Income
Investment
Division

Index
Investment
Division

Otherdivisions

Investees＊At Resona Asset Management, responsible investment activities are defined as:
Stewardship activities (Engagements and proxy voting), ESG integration, and impact investment related.

Responsible investment meeting
The responsible investment meeting is a place to regularly share information and discuss on- Responsible investment, news flow as it pertains to ESG issues, and- Progress made on engagements with companies.
The contents of this meeting, etc. are reflected in the Responsible Investment Committee agenda.

14

The Responsible Investment Committee meeting examines Resona’s responsible investment
activities to see whether they are conducted appropriately in accordance with Resona’s basic
policy on responsible investment. It is a control tower for continuously devising solutions andimprovements. Since May 2017, Professor Takeshi Mizuguchi, President at Takasaki City
University of Economics was welcomed onto the committee and leading authority on responsible
investment. He has been furnishing opinions and advice from an outsider’s perspective to theactivities of Resona Asset Management, based on his extensive knowledge.

Frequency of
meetings

WeeklySecretariat

Responsible Investment Division

Participants

President, key members of asset management functions (all employees are welcome to participate)Objective

Input of the latest information and knowledge related to responsible investment, exchange of opinions
and information sharing with related divisions

2023 activities(theme example)

・Discussion for PRI in Person 2023
・Cabinet decisions on GX Action Plan/GX
Promotion Act・Shared the status of collaborative engagement
activities

・Reported on progress of impact investment
and assessments
・Confirmed 2024 revision of proxy voting
guidelines for Japanese equities

Ch.

Frequency of
meetings

5 times per year (held in writing anytime needed)

Secretariat

Responsible Investment Division

Members

Chairman: President
Professor Takeshi Mizuguchi External expert (President at Takasaki City University of Economics)
Executive officers and general managers responsible for investment risk administration, compliance, asset
management functions and the Investment Planning DivisionObjective

To conduct evaluations and discussions including reports on the specific initiatives established in various
policies including the“basic policy on responsible investment,”changes to proxy voting guidelines, andthe deliberation of agenda items

Key discussion andreporting items

・Voting results for Japanese and Global equities,
discussion on updates to the proxy voting
guidelines, and discussion on voting decision tocertain AGM proposals which are not simply able
to determine

2023 results

・Discussions on 2024 proxy voting guidelines
・Report on engagement progress (July 2022 - June 2023)
・Report on collaborative engagement activities (July 2022 - June 2023)(secretariat)

Monitoring

External experts

Responsible Investment Committee

1・Report on responsible investment activities ingeneral・Engagements progress and plan changes
・Self-assessment discussions
・2023 PRI Reporting▪Cycle of activities geared to enhancing corporate value
Incorporate ESG issues into investment
process, and devise solutions andimprovements.

ESG
integration

Constructive
engagements

Actively carry out engagements inorder to enhance corporate value froma medium- to long-term perspective.

Assess the progress on activities and reporton points of improvements and issues to beaddressed for the next fiscal year.

Self-assessment
on responsible
investment activities

Proxy voting

Conduct proxy voting by considering
engagements and investment analysis.

Responsible investment verification committee meeting
The responsible investment verification committee, made up exclusively of external third parties, wasestablished in November 2017 as a meeting to verify that stewardship activities related to trust
assets are being conducted appropriately from the perspective of conflict of interest management.
Schedule

Held at least twice a year

Secretariat

Investment Risk Administration Division

Members

Chairman: Toshio Arima
External expert (Chairman of the Board, Global Compact Network Japan)
Ryo Tsuchida
Outside Director (Professor, Sophia Law School)
Shoichi Tsumuraya
External expert (Professor, Graduate School of Business Administration, Hitotsubashi University)

Objective

To strengthen governance related to conflict of interest management through external third party verification of
the appropriateness of stewardship activities, including the proxy voting

Major items
reviewed

・Appropriateness of proxy voting guidelines (Japanese equities, Japanese REITs, Global equities ex. Japan)
・Appropriateness of proxy voting execution (Japanese equities, Japanese REITs, Global equities ex. Japan)・Appropriateness of other stewardship activities (Matters deemed necessary such as review from theperspective of management on conflict of interests regarding stewardship activities)

2023 results

Responsible Investment Section

Chapter・The 12th committee meeting (held in February 2023) Revisions to proxy voting guidelines for Japanese andglobal equities
・The 13th committee meeting (held in August 2023) Proxy voting results for shareholders’meetings during
July 2022 to June 2023
* The contents of all the topics subject to review at the above meetings were confirmed to be appropriate.

15

Responsible Investment of Resona Asset Management

Responsible
Investment
SectionResponsible
Investment Section

The Engagements ofResona Asset Management

Engagement activities▪ Responsible Investment Division (Passive investment)

Three types of engagements
Engagements based on the following three types are conducted by the Responsible
Investment, Equity Investment, and Fixed Income Investment Divisions at
Resona Asset Management.

In addition to the top down materiality engagement, the Responsible Investment Division
conducts bottom-up engagement tailored to each company’s status. The Responsible
Investment Division also collaborate with the Equity Investment Division on information
disclosure engagement.
Japanese listed companies

Materiality engagement (top-down)

1

Top down engagements to the target companies based on materiality analyses and ESG issues.

Information disclosure engagement2Anti-social behavior 2%

Capital policies

Differentiated engagements themes are determined based on the status and progress of
individual company.
Type

Materiality (top down)Information disclosure

Bottom up

Rectifying the disclosure
discount

Management strategies,
capital policies, etc.

Encouraging and improving
the disclosure of nonfinancial information basedon integrated reports

Setting items based on
unique company themes

Primarily in-house
engagement

Primarily in-house
engagement

Our materiality( an d g l o b al E S G is s u e s )Focus

Climate change,
conservation of natural
capital, etc.

Main
examplesof themesMore sophisticated
TCFD disclosures
Sustainable palm oil
procurement

Approach

TargetUse of both in-house andcollaborative engagement**Such as Climate Action 100+.

16%

Management strategies

13%

74

Environmental
issues15%(373
companies)

13%

Environmental
Numberofissuescases
15%(companies)

Management
strategies

515

Social issues

12%

19%

Information disclosure

2

Corporate
governance16%

Social issues

Environmental
issues23%(65
companies)
Information disclosure

30%

15%

▪ Equity Investment Division (Active investment)

The Equity Investment Division conducts bottom-up engagement according to the company’sstatus. This is because the viewpoints of the company’s risks and opportunities differ acrosseach different investment approaches. The Equity Investment Division also collaborate with
the Responsible Investment Division on information disclosure engagements.
Engagements

1,201(with 538 companies)▪ Fixed Income Investment Division (Active investment)

The Fixed Income Investment Division actively conducts bottom-up engagements basedon each issuer’s progress status. This is because unlike the equity investments, fixedincome investors do not have voting rights, and downside risk exceeds upside potential.

Investee company

Engagements

Equity Investment Division (Active investment)
Fixed Income Investment
Division (Active investment)

In addition to the above three types, we actively conduct engagements with the index provider and theregulators (public policy engagements), by becoming a member to the policymaker discussion groups toshare our opinions as an institutional investor and to obtain understanding to the regulation status.
16

Corporate
governanceEngagements(number of companies engaged)

Responsible Investment
Division (Passive investment)
Divisionsinvolved

Ch.

Other 1%

Capital policies 2%

Number ofcases(companies)

12%＊When a company’s value is not adequately assessed due to an insufficient disclosure of non-financial information, etc.

Bottom-up engagement

Global listed companies ex. Japan

Anti-takeover measures 1%

Regarding proposals 8%

Engagement to correct the disclosure discount* resulting from insufficient information
disclosure by the investee company

3

Responsible Investment Section

During the period from July 2022 to June 2023, we have conducted the following
engagements.

Engagements(number of companies engaged)

49 (with 42 companies)

Please see page 22 for the information disclosure engagements.
Please see pages 24 and 26, for Active Equity and Fixed Income engagements.

17

The Engagements of Resona Asset Management

2

Chapter

2

The Engagements ofResona Asset Management

Materiality engagement (top down)

Materiality(ESG issues)

TopicsReduced GHG emissions

Enhancing climate-related financial disclosures
Improving governance oversight on climate change

Engagement objectives

Our approach to engagements

ClimatechangeEnhanced disclosure of GHG emissions
reduction
Enhanced disclosure of GHG emissions reduction
Improving governance oversight on
climate change

Enhance climate change-related

disclosure in accordance with TCFD
recommendations

E (Environmental)

To enhance client returns, we believe that it is necessary to improve the sustainability to theinvestee companies, as well as the social and environmental and social fronts. Our material
issues are determined along two axes:
The“Importance to long-term investment performance,”the sustainability to the investee
companies, and the“Importance to the social and environmental sustainability.”We expectthat the progress on each material issue will lead to improve the performance of our clients’assets. The objectives of the top down materiality engagements are to improve the corporate
value of the investee companies and our clients’assets over the medium to long term. The
implementation of this approach is conducted by setting material engagement issues from a
top down approach and by continuous engagements.

Reduced GHG emissions

We believe that engagement utilizing a top-down approach based on materiality is holistic,

Biodiversity

efficient, and effective. In 2023 we have established policies for various ESG issues, such as

Natural capitalconservation
including forests

the climate change policy.
We will continue to consider material and global ESG issues as well as to set engagement

Natural capital conservation
Conservation of water resources

Ceres Valuing Water Finance Initiative (collaborative engagement)
Request 72 companies with significant risks and opportunities related to water
resources to recognize and respond to such risks and opportunities.

Child laborinvestors and stakeholders. (Collaborative engagement)

Forced labor

Reducing forced labor risks

18

S (Social)management

Implementation/milestone(in-house only)

Select target companies

G (Governance)* For engagement details, please refer to the table on page 19.

collaborative engagements

Select approach: in-house or

Determination of engagement themes(and global ESG issues)

Materiality

Engagement process

In-houseengagements:
Progress sharedinternally.
Periodically
Reported at the
Responsible
Investment
Committee.

Sustainable palm oil procurement (in-house)
Encourage palm oil producers and user companies towards sustainable palm
oil procurement based on RSPO certification.
Sustainable paper and wood-products sourcing (in-house)
Support 20 pulp & paper companies towards sustainable procurement basedon FSC certification.
＊This topic also relates to S (Social).

At these engagements, various collaboration is available with our colleague institutional

Select target
companies
based on:corporate
disclosure data
(financial andnon-financial);
and analysis ofintegrated
reports.

Encourage the companies to enhance information disclosure on the risks andopportunities in line with the TCFD recommendations (in-house)
Encourage the high GHG emitters such as auto, steel, chemical, electric powercompanies to enhance disclosure in line with the TCFD recommendations, etc.

Biodiversity conservation
Zero-deforestation

CDP, in order to conduct more efficient and effective engagement on diversified ESG issues.

Decide whether
to engage
in-house orcollaboratively
based on: ourknowledge; andglobalcollaboration
platforms.

AIGCC Asian Utilities Engagement Program (collaborative engagement)
Encouraging 7 utility companies respond to climate change with greater urgency
and ambition and economies transition aligned with the Paris Agreement.

Finance for Biodiversity Foundation Engagement Working Group (collaborative engagement)
Knowledge and experience are shared during biodiversity engagements with companies
Investor Working Group on a Deforestation-free Automotive Industry(collaborative engagement)
Engagement with 5 automotive seating manufacturers and 7 auto manufacturers toaddress the deforestation risk caused by auto leather seats.

We participate to various collaborative engagement on global platforms such as the PRI and

Set engagement
topics basedon: our material
and overall
global ESG
issues;importance ofsustainability;and feasibilities.

CDP Non-Disclosure Campaign/Science-Based Targets Campaign (collaborative engagement)
CDP NDC: To build on the main request for information disclosure by selectively engaging
1,607 high-impact companies that have consistently lagged or declined to respond to CDP.
SBTi Campaign: Endorsed our support to the investor letter to 2,100+ target companies toadopt to science-based targets to align with the Paris Agreement.

Zero-deforestation

Formulating and implementing
sustainable procurement policies

engagement experience. (In-house engagement)

Climate Action 100+ (collaborative engagement)
To encourage 170 target companies to set and to better disclose their management
strategy and business reorganization to align with the Paris Agreement.

Zero deforestation engagement (collaborative engagement)
Ask companies to publicly disclose supplier lists for soft commodities, as theseproducts present high risks for deforestation. Companies linked to cases ofdeforestation are being asked to mitigate the effects of such deforestation andputting in robust processes to prevent it from happening in the future.

themes based on the above policies. We have selected engagement target companies for theengagements on sustainable palm oil procurement, where we have had advanced

Engagement themes

Product quality
and safety

Apparel & Footwear Engagement using the KnowTheChain Benchmarks(collaborative engagement)
Encourage the 37 target companies of the KnowTheChain Benchmark
assessment to prevent and mitigate reputational risk of forced labor and tocommit to responsible recruitment.
Investors Against Slavery and Trafficking APAC Collaborative Engagement(collaborative engagement)
Promote effective action among the investee companies to find, fix andprevent modern slavery, labor exploitation and human trafficking.

Controlling the negative impact of thenutritional value of food and drink onsociety and the economy

Social impacts ofthe products andservices
Formation of sustainable supply chains

Investors in Nutrition and Health (collaborative engagement)
ATNI UK Retailer Index 2022 Collaborative Investor Engagement(collaborative engagement)
Encourage 20 global food and beverage companies and 11 UK-based retailcompanies to address malnutrition, undernourishment and over nutrition.
Global Investor Engagement on Sustainable Protein Supply Chains (collaborative engagement)
Sustainable Aquaculture Engagement (collaborative engagement)
Encourage companies in the food and fisheries industry to form sustainablesupply chains for foodstuffs.

Diversity andinclusion

Mitigation of human rights risks forworkers, communities, and society

Advance: a stewardship initiative for human rights and social issues(collaborative engagement)
The following expectations are set for companies where human rights risks
and impacts are most severe:▪ Fully implement the United Nations Guiding Principles on Business and Human Rights (UNGPs).
▪ Align their political engagement with their responsibility to respect human rights.
▪ Make further progress on the most severe human rights issues in theiroperations and across their value chains.

Diversity andinclusion

Ensuring diversity in Board of Directors

30% Club Japan/UK Investor Group (collaborative engagement)
Encourage investee companies to share the importance of, and take steps to implement,＊This topic also relates to S (Social).
gender diversity on their boards of directors.

Anti-corruption

Drawing up and disclosing policies on
anti-corruption

Anti-corruption measures (collaborative engagement)
Encourage the key industries (construction, trading company, and finance) to
use the Anti-Bribery Assessment Tool made available by GCNJ, and to
disclose anti-corruption policies.

19

Responsible Investment Section

Chapter

Ch.

2

The Engagements of Resona Asset Management

Responsible
Investment
Section2

The Engagements ofResona Asset Management

Participation to collaborative engagement and working groups

AIGCC: Asia Investor Group on Climate Change

In addition to conducting collaborative engagement and working groups on the following
platforms, we also participate and endorse support to subgroups and investor statements
provided in the table.
We thoroughly consider in house whether participation in the collaborative engagement andworking groups is consistent with our materiality, and whether themes are highly urgent/necessary and have wide-reaching implications. We also actively participate in activities andstatements, etc. that we believe lead to more effective and efficient engagement.

Engagement themes

EDSG

Participated sinceNovember 2021

D

Information disclosure

Handling of misconduct

Anti-takeover measures Cross-shareholding

Proposals with strong opposition

Listed parent companies and subsidiaries

A general corporation that has three missions :to pursue an effective and efficient ESG information disclosure framework, to accumulate practicalexamples (demonstrations), and to encourage mutual understanding among stakeholders for more
amicable decision making.

Engagement themes

China Working Group, Korea Working GroupG

Participated since
March 2021

S

Engagement themes

D

Collaborative engagement and working groups which we participate
Climate Action 100+

Theme

S

D

Collaborative engagement and working groups which we participate

Theme

Participated since

Investor Collaborative Engagement Global Index 2021
ATNI UK Retailer Index 2022 Collaborative Investor Engagement

Nutrition
Nutrition

June 2021
March 2022

Climate change
Labor practices
Supply chain
Human rights
Supply chain

Established in March 2021. Signatory organization and connecting institute for partner organizations with thegoal of encouraging action and supporting cooperation among financial institutions through working groups.
Collaborative engagement and working groups which we participate
Engagement Working Group
Auto Leather Seats Engagement
Nature Action 100

May 2018
April 2019

Other

Collaborative engagement and working groups which we participate

December 2022

Satellite-based Engagements Towards No Deforestation
Investor Initiative on Hazardous Chemicals
Ceres Valuing Water Finance Initiative

Theme

Participated since

Climate change
Climate change

April 2020
September 2020

Collaborative engagement and working groups which we participate
Non-Disclosure Campaign
SBT Campaign

30% Club Japan Investor Group
30% Club UK Investor Group

Participated June/
December 2019

Theme

Participated since

Diversity in boardsof directors

April 2022

FAIRR：Farm Animal Investment Risk & ReturnParticipated since
January 2020

DFounded by investor Jeremy Collar of Collar Capital (UK) in 2015. The FAIRR Initiative(FAIRR) is a collaborative investor network that raises awareness of the environmental,social and governance (ESG) risks and opportunities in the global food sector.
The mission is to build a global network of investors who are aware of the issues linked tointensive animal production and seek to minimise the risks within the broader food system.
Collaborative engagement and working groups which we participate

Theme

Participated since

Global Investor Engagement on Sustainable Protein Supply Chains
Sustainable Aquaculture Engagement
Working Condition Engagement

Food sustainability
Food sustainability
Labor practices

January 2020
March 2021
March 2022

Participated since
January 2022
February 2022
September 2023

Theme

Participated since
February 2021
September 2022
January 2023

Theme

Endorsement Dates

Investors call for urgent action to reduce plastics from intensive users of plastic packaging Chemical substances

May 2023

Other platforms
Participated since
October 2012

Established in the UK in 2010. Working group comprising asset owners and managers who use
stewardship to encourage investee companies to have more diversity in their boards of directors inorder to maximize shareholder benefit.
Collaborative engagement and working groups which we participate

G

Theme
Biodiversity
Biodiversity
Natural capital

Destruction of forests
Chemical substances
Water resources

Investor declarations that we signed and endorsed in 2023

Japa nD

Launched in 2000 A non-profit organization (NGO) that operates a global information disclosure system
to help investors, companies, countries, regions, and cities manage their own environmental impact.

Global Engagement

20

Forced labor

Established in 2013. ATNI is a global nonprofit which drives market transformation for improved access tonutrition. It aims to see healthier and more affordable food products available for all.

Participated sinceJune 2021

E

Participated sinceInternational

Glo b al p latf o rms

Participated sinceApril 2017

SCh.

ATNI：Access to Nutrition Initiative

CDP

E

April 2022

Encourages effective action to“find, fix, and prevent”modern slavery in the APAC region.
An investor-led, multistakeholder project, which was established in 2020 to engage withcompanies in the Asia-Pacific region to promote effective action in finding, fixing and preventing
modern slavery in operations and supply chains.

Participated since
February 2022

Announced by the UN in 2005. These are investment rules signed by institutional investors, etc., to take actions
regarding the environmental, social, and governance issues of investees when making the decision to invest.

Advance: a stewardship initiative for human rights and social issues

S

Participated since

Information disclosure

Apparel & Footwear Engagement using the KnowTheChain Benchmarks

E

Theme
GovernanceFfB Foundation：Finance for Biodiversity Foundation

Participated since
March 2008

S

April 2021
October 2022

IAST APAC: Investors Against Slavery and Trafficking Asia Pacific

PRI：Principles for Responsible Investment

E

Participated since

Collaborative engagement and working groups which we participate

G

G l o b a l p l a tf o r m s

D o me s t ic p l a t f o r m s

A general corporation established with the goal of supporting healthy goal-focused dialogue(collaborative engagement) between companies and institutional investors so that theinstitutional investors can suitably perform stewardship activities.

Theme
Climate change
Climate change

Established in Hong Kong in 1999. An independent, non-profit membership organisation dedicatedto working with investors, companies and regulators in the implementation of effective corporate
governance practices throughout Asia.

Participated since
May 2020

IICEF：Institutional Investors Collective Engagement ForumD

Asian Utilities Engagement Program (AUEP)
Japan Working Group

ACGA：Asian Corporate Governance Association

The ★ indicates collaborative engagement which we lead or co-lead.

G

Collaborative engagement and working groups which we participate

E▪ Table of collaborative engagement and working groups involved

Participated since
October 2017

Established in Singapore in September 2016 as a division of the Global Investor Coalition (GIC).
It is a platform to create awareness and encourage action among Asia’s asset owners and asset
managers about the risks and opportunities associated with climate change and low-carbon investing.

Participated since
May 2020

E

S

G

Responsible Investment Section

Chapter

Principles for Financial Action for the 21st Century

Participated since
October 2021

Japan Impact-driven Financing Initiative

Participated since
September 2022

S

Engagement and Remedy Platform by the Japan Center for Engagement and Remedy on
Business and Human Rights (JaCER)

Participated since
March 2023

E

JCI: Japan Climate Initiative

Participated since
March 2023

E

FSPPP: Food Supply chain Public Private Platform

Participated sinceApril 2023

E

Eco First Promotion Council

Participated since
July 2023

S

Human Capital Management Consortium

Participatedsince April 2020

G

ICGN: International Corporate Governance Network

Participated since
December 2021

E

TNFD Forum: Taskforce on Nature-related Financial Disclosure Forum

21

2

The Engagements of Resona Asset Management

Responsible
Investment
Section2

The Engagements ofResona Asset Management

Information disclosure engagement
Objective of engagements

Use of quantitative AI-based evaluation (score)
In order to objectively quantify the value creation▪TCFD-AI Score Average value of target companies
TCFD [Total]
2021
story in the integrated reports and perform
Governance2022 Target, Reduction target
horizontal analyses across companies, we
2023
Sustainability committee
Scope 3 metrics
developed a quantitative evaluation model for
Scope
1
and
integrated reports that uses text mining technology
Directors, supervisor,
Scope 2 metrics
etc.
(AI), and it assigns a quantitative score to theintegrated reports of around 800 companies. In FYMetrics and targets
Strategy
2022, we added annual securities reports to the
Risk management
Risks and opportunities
evaluation targets and added TCFD disclosure and
CN/Transition strategies, etc.
Scenario analysis
human resource strategies to the evaluation items.
From trends in the average AI scores (TCFD/▪HR strategy-AI Score Average value of target companies
Human Resources Strategies) for annual securities
Human resource strategies
2021
Factor (10)Perspective (1) Strengthen the link between areports shown in the charts on the right, theCompliancehuman capital strategy and business strategy
2022
Factor(9)
Perspective (2) Find the gap between the current
progress in non-financial information disclosure by
2023
Labor practices
situation (“As-is”) and the goal (“To-be”)
companies targeted for engagement is evident. In
Factor (8) Safety
Perspective (3) Nurtureand well-beingtransformational corporate
addition to AI scores obtained through text mining,
cultureFactor(1) Build athe Resona Climate Change Score will also be
Factor (7) Diversity
dynamic talent portfolio
calculated based on CDP’s GHG emissions target
Factor (2) Embrace diversity andinclusion of employees’
Factor (6) Mobility
knowledge and experience
setting status and performance disclosure status,
Factor (3) Motivate employees
Factor (5) Enable employees to work anytime,
to re-skill themselves
anywhere as much as possible
and utilized for engagements centered on TCFD.
Factor (4) Enhance employees’engagement level
80
60
40

When comparing the Japanese stock market with stock markets, we are aware that the profitabilityof capital (ROE) is low and the valuation (PBR) does not increase*. We think that the disclosure
discount resulting from Japanese companies not sufficiently disclosing information is one major
factor. Our goal is to increase the value of investee companies by encouraging the disclosure of
non-financial information and making substantial improvements through information disclosure
engagement.
＊With a similar awareness of issues, in March 2023 the Tokyo Stock Exchange requested the promotion of management
conscious of capital costs and profitability of capital together with active disclosure and dialogue with investors regardingthese initiatives for all listed companies on the TSE Prime and Standard Markets.
Y-axis: PBR (magnitude)
4.0●End of March 2020
3.5
●End of March 2023
3.0
2.5
2.0
Germany (DAX)
1.5
1.0Japan (Tokyo Stock Exchange)
0.5
5.0
10.0

●T
 he figure on the left plots ROE and PBR of theUnited States, Germany, and Japan from the endof March 2020 through the end of March 2023.

United States (S&P 500)●J
 apanese companies have a low level and
15.0

20.0
X-axis: ROE (%)

low rate of improvement compared to US andGerman corporations for both ROE and PBR.

＊Created by the company based on data from Bloomberg

Eliminating the
gap in understanding
between companies
and investors

Concrete actions
by companies

Fostering trustfrom investors

Reflection in
valuation

Improvingcompany value

Creation of win-win relationship between companies and investors▪ROE, PBR, and priority engagement themes
B＊The above is an image graph.

22

Priority themes will be determined based on ROE andPBR positioning.
A Implement the value creation story

A
C

Ch.

2

B Pursue best practices
C Reconstruct the value creation story

D

D Clarify the value creation story
ROE

50
40
30

▪Quantitative score items▪Examples of quantitative score items (TCFD)

Integrated report AI-score [Total]

Accurate understanding of the upsides/opportunities and downsides/risks of business continuity for investors
Sharing the value creation story

Regression line of stocks thatcomprise the TOPIX 500

80(Integrated report AI-score)▪Path for improving company value

PBR

90

60

It is recently becoming more important to disclose and evaluate non-financial information in addition tofinancial information. As the external environment surrounding business changes significantly centeredon ESG issues, companies must clarify their strengths and meaning of existence in society before
implementing them in long-term management policies and strategies. Also, asset managementcompanies must understand this information before evaluating company values and conducting
engagements. Integrated reports provide an overall description of the company’s values, materiality,business model, and governance. They are an invaluable information disclosure tool for sharing thecompany’s value creation story with principal stakeholders. The information in the report is closely tied
to the company’s value. Accordingly, we conduct engagement by encouraging integrated reports to bedisclosed and substantially improved. At this time, we strive to increase effectiveness by selecting
appropriate themes (priority themes) according to the ROE and PBR levels of investee companies.

Encouraging integrated
reports to be disclosed
and substantially
improved

070

Our approach to engagements

Intermediate targets
and triggers

20

Responsible Investment Section

Chapter

For example, during engagement with a company thathas a relatively high PBR but a low ROE, we will focus
on theme A.

MVV and purpose

GovernancePurposeGovernance framework

VisionSkill matrix

MissionSustainability of directors

ValuesDirector compensation

Business model (strategy)

Governance

Strategy

Risk management

Metrics and targets▪Examples of quantitative score items (HR strategies)
Perspective

Diversity
Sustainability committee

Strengthen the link between a human capital strategy and business strategy

Identification of social andmanagement issues

Financial performance

Factors

Determining materiality

Non-financial KPIs and acceptability

Corporate strategy and capital allocation

Cost of capital, ROE and ROIC

Analysis of business environment
Identification and evaluation of
key risks and opportunities

KPIs

Human resource strategies (new)Build a dynamic talent portfolio

Diversity＊Scores are calculated separately for integrated reports andannual securities reports.

Building medium- and long-term plans

The status of engagements and future direction
In FY 2022 (July 2022 through June 2023), we conducted engagement 289 times with 116
companies. Both the number of companies and the number of cases increased significantly
compared to the 228 cases with 107 companies in the previous fiscal year. The number of cases inwhich we engage in dialogue at the request of an investee company is increasing. In particular, we
recognize that climate change is one of the main factors behind the valuation discount in theJapanese stock market. Resona Asset Management has identified 11 priority industries (according to
TSE 33 sector classifications) with significant greenhouse gas emissions that are also likely toreceive a high degree of attention for TCFD disclosure. Focusing on companies in these industries,
we actively discuss the enhancement of information disclosure in accordance with TCFD Guidance.

▪Examples of climate change priority industries
Oil & coal products
Wholesale trade

Iron & steel
Transportation equipment◦ Industries with high greenhouse gas emissions and highclimate change risks tend to have low valuations.

◦ Because of this, engagement with companies in these industries

is likely to improve the valuation of Japan as a whole.

23

The Engagements of Resona Asset Management

Responsible
Investment
Section2

The Engagements ofResona Asset Management

Bottom-up equity engagement / active investment
Objective of engagements
In order to ensure a prosperous and happy life for future generations as well as our customers, thenumber-one thing Resona Asset Management strives for in active stock investing is the maximizationof medium- and long-term investment performance. To this end, we consider it our responsibility as
an investment company to ensure a thorough understanding of each investee company in order tofacilitate appropriate investment activities, while also providing firm backing for investee efforts toimprove their own corporate value. With this approach as our foundation, we engage inengagements aimed at bolstering customer profits through medium- and long-term investment
performance improvements, based on a precise understanding of corporate value for each investee,
and while providing support through constructive discussions aimed at realizing corporate value
improvements for the investee. By taking a proactive approach to such corporate value improvement
measures as part of our pursuit of excellent stock investment performance, we believe that we canvitalize and strengthen the market as a whole in truly meaningful ways. Helping outstanding
companies to ambitiously pursue leading-edge measures is, after all, a best-practice approach foreffecting positive impacts on the overall market, and that’s why Resona Asset Management utilizes
engagements targeting medium- and long-term performance improvements as a means of vitalizingthat very market.

Our approach to engagements
At its core, the act of investing is funding by an investor who has shared values with and trusts in
the investee, whom they expect to create value for society through their corporate activities.
Even if there are some tensions between the two parties due to their differing stances and roles, thiskind of relationship can be formed in the most constructive and optimal manner possible if bothparties understand that they are working as a team toward the shared goal despite the mutual
differences between them. When attempting to build this type of relationship, engagements between
the investee and investor can go a long way to helping out in many ways. If any problems are facedby the investee in their pursuit of corporate value improvements, or they have not made theirpolicies and approaches entirely clear, a necessary first step is for the investor and investee to refrainfrom setting any specific targets for the time being, and instead start by identifying andunderstanding the problem areas. Conversely, if the cause or causes of a problem are clear from theoutset, it is more appropriate to set clear targets and milestones aimed at implementing corporatevalue improvement measures, and share progress levels as said measures are pursued. Resona AssetManagement takes a flexible approach to engagements while always working to ensure an accurate
grasp on current conditions at the investee company, and providing constructive ideas and opinionswith the goal of corporate value improvements. Active stock investing provides many opportunities
for such engagements with current investees as well as with investee candidates not yet included in
the portfolio. When pursuing engagements with said candidate organizations, it is important to focus
not solely on the acquisition of information; it is also
▪Engagement results
necessary to examine potential problems and issues
while thinking about what action is required to bolster
No. of engagement cases
corporate value at the company in question. Thisapproach facilitates a deeper understanding of each(with 563
FY 2021
candidate organization and enables sound investment(July
2021–June2022)
companies)
decisions, while also facilitating more effective andsmooth discussions with said company regarding(with 538
FY 2022
corporate value improvement measures should the(July 2022–June 2023)
company ultimately be selected for inclusion in thecompanies)
portfolio.

1,196
1,201

▪Important points of notice related to FY 2022 engagements
1．
Increased corporate awareness for enhancing corporate value

ROE improvement measures and capital policies were actively discussed in response to the TSE request to raise PBR

2．
Improved diversity of contact points

Added the Investor Relations Division, the Sustainability Promotion Division, outside directors and others as contact points

24

Establishment of engagement themes
In the area of active stock investing, Resona Asset Management pursues engagements based on two
main approaches: information-disclosure engagement via disclosure-discount adjustments throughpromotion of disclosure with the aim of bolstering corporate value; and bottom-up engagement
based on individual theme establishment in response to specific investment philosophies, conditionsat specific investee companies, and other such factors. In regard to bottom-up engagement
specifically, we establish themes based on individual conditions at each investee organization,
which include considerations of capitalization strategy, business portfolio optimization andadvancements in corporate governance. In addition, we take consideration of long-term corporate
strategy measures related to structural changes in business environments brought about by society’spursuit of net-zero-emission policies slated for realization by 2050, community fragmentation risk,
and other such factors. In FY 2022, we specifically intensified discussions on human resource
development and activation, and measures to improve ROE. Resona Asset Management’s activeinvestment teams carry out analyses of corporations considered for investment based on our
proprietary investment philosophy, and as a result, each team operates based on its own uniqueengagement themes. The Value-focused Team, for example, sometimes invests in companies thathave problems leading to falling stock prices, but which also exhibit high potential for solving said
problems via structural reforms and other changes and show promise in terms of future corporatevalue improvements. In such cases, engagement themes will usually focus on reforms andimprovements for unprofitable business areas, as well as business-focus shifts and the like. The
Market-focused Team that invests in a relatively wide range of companies often focuses on thetheme of addressing climate change, which is an important issue for many companies. Primarycompany-analysis focus areas, and engagement themes, for each team are as described below.
Investment team nameCompany-analysis focus areas

Engagement themes

Market-focused
Team

Sustained profit growth,
fostering of social utility

Clarification of capitalization strategy andlong-term management strategy, advancements in
information disclosure methods/approaches, etc.

Global Corporation
Team

Continual improvements incompetitive strength;
winning habits and ISDK analysis

Utilizing capitalization strategy and individual
strengths to bolster management strategy

Value-focused
Team

Practicality of structural reforms;
reasons for low stock prices andextent of reform-implementation
capabilities

Elucidation of management-related problems,
establishment and implementation of profitability
improvement measures, implementation ofcapitalization strategy improvements, etc.

Small-cap Stocks
Team

Demand arising from societal
structure changes, corporate
management personnel

Long-term strategy (investing) acceleration, IR
improvements, management philosophy
establishment, etc.

Managing engagement progress
The Value-focused Team, whose investment results directly correlate to the investee company’sstructural reform measure progress and successes (or lack thereof), establishes engagement check
items at the start of initial investments and monitors progress related to these on a monthly basis.
If monitoring reveals unfavorable results, the team identifies the reason or reasons behind the
problem, shares its findings and views with the investee company, and gives added support for
improvements moving forward at said company.

Resona ESG Assessments and engagement
In accordance with our ESG Integration Policy—which concerns environmental, social, andcorporate governance (ESG) issues—we do not, as a general rule, pursue active stock investing inany company that fails to meet standards stipulated in Resona ESG Assessments. However, somesuch investee candidates are ultimately determined to be worthy of investment because they exhibit
promise for future improvements, in which case we pursue engagements regarding relevant ESG
issues with the investee. Even if a company is rated investment grade, we seek to understand thereason for any items with low scores in the Resona ESG Assessments and encourage the company
to make improvements as necessary.
For further details on Resona ESG Assessments, see page 46.

25

Responsible Investment Section

Chapter

Ch.

2

The Engagements of Resona Asset Management

Responsible
Investment
SectionThe Engagements ofResona Asset Management

Bottom-up fixed income engagement / active investment
Purposes of engagements
We believe that the most important aspect of bond investment is to realize stable andcontinuous investment returns on the assets entrusted to us by our clients. If bonds in which weinvest default before redemption or lose investment grade due to a credit rating downgrade andforcing to be sold at a substantial loss, the portfolio may be significantly hurt in a bondinvestment with high downside risk. We regard that it is necessary to take consideration of suchrisks in advance and avoid them in order to ensure stable, continuous profits from investments.
To this end, we integrate ESG (environmental, social, and corporate governance) considerations
into our pre-investment assessments and investing processes for active bond investments, while
also pursuing continual engagements based on our Engagement Policy—with said activities
primarily targeting the bond-issuing organizations themselves. Through these actions, we strive
to mitigate or eliminate difficult-to-foresee future risk such as stranded-asset risk, reputationalrisk and other risk types so that we can maximize our customers’investment returns over the
medium and long term.

Our approach to engagements
When viewed as fund procurement through public offering, corporate bond investments bring infunds from wide-ranging investors in much the same way as stock investments do. However,stocks are a type of instrument in which investors have the ability to influence investee company
management and operations through their voting rights, whereas corporate bonds as afundraising tool do not offer those same rights to investors. In recent years, there have been an
increasing number of cases of hybrid bonds, which are corporate bonds recognized as capital for
rating purposes, but these bonds also do not have voting rights.
As things stand now, dialogue has been growing more thorough and strengthened between
companies and their equity investors thanks to corporate governance improvement measures,
but we find bond investors still have few opportunities for direct engagements with the issuing
company’s management. We recognize that bond investors have limited means of directly
approaching the issuer’s management, such as voting rights. However, given that the issuer’scash flow is the source of the bond’s principal and interest payments, and that the issuer’ssustainable growth through avoidance of future risks can be the basis of its long-term
creditworthiness, we consider that bond investors, as stakeholders, basically share the sameawareness of issues as equity investors, and that it is important for bond investors to engage indialogue with issuers regarding their future. We believe it is important for bond investors toengage in engagements with issuers regarding their future cash flows and various risks.
In many cases, bond investors have less access to issuer information than stockholders. Althoughsome issuers have begun to treat bond investors in the same way as equity investors in terms ofengagements and other opportunities, there are still only a few cases.
SDG Bonds such as green bonds, which have been on the rise in recent years, are closely related
to the sustainability strategies of the issuers, and it is welcome that more and more issuers areproviding bond investors with detailed explanations. However, unfortunately, there are still someissuers that do not enough disclose information on SDG Bonds. We believe that impartial andthoroughgoing information disclosure and engagements with the issuer’s management are
essential to facilitate avoidance of future credit risk. With the aim of bolstering effectiveness ofengagement activities, Fixed income▪Engagement results
Investment Division carries out coordinatedefforts involving Responsible Investment
No. of engagement cases
Division, Equity Investment Division andother relevant divisions while working to(with 74
FY 2021communicate investor concerns and opinions(July 2021–June 2022)
companies)
to management of the bond-issuingorganizations.
(with 42
FY 2022

89(July 2022–June 2023)

26

49

Establishment of engagement themes
In engagements related to materiality and ESG (environmental, social, and corporate
governance) considerations, Fixed Income Investment Division focuses particularly on themedium- to long-term effects on credit for two top-priority risk management themes: climatechange and lifestyle-infrastructure resilience. Several sub-themes have been established on
above themes. Considering the aforementioned circumstances as they relate to bondinvestors, we prioritize fair and sufficient information disclosure and smooth communication
with bond investors as sub-themes of particular importance. Sub-theme focuses are also
revised as necessary in order to avoid long-term risk.
The target of engagement is selected mainly from issuers of bonds with long maturities, such as
electric power companies, railroad companies, and energy-related companies, which are closely
related to the above two themes. In addition, through engagement efforts, we promote action
even at issuers who fail to meet the standards of our Resona ESG Assessments.
For example, in the case of a bond-issuing electric power company which generally issues large
amount of corporate bonds, we continually remind that company of the need to regularly
restructure and pursue greater balance in energy mixes with the goal contributing to carbon
neutrality, of the necessity of securing sufficient resources for maintaining and managing
power-distribution infrastructure as society ages and its birthrates decline, and of the need for
information disclosure and engagement with bond investors when raising funds throughcorporate bond issuance. We also request that issuers of SDG Bonds, such as green bonds,
disclose the framework and third-party certification materials in a centralized and easy-tounderstand manner on their websites.

Engagement processes, and progress management
In engagement operations, we track conditions and progress individually for each issuer.
We have established five milestones for engagements: 1) establishing opportunities for dialogue,2) setting and presenting issues, 3) sharing and discussing issues, 4) formulating andimplementing measures, and 5) resolving issues, and we manage progress for each major theme.

▪Five engagement milestones

Go back if
measures proveineffective

Establishing
opportunities for
dialogue

Resona Asset Management and the issuing organization create
opportunities for engagements

Setting andpresenting
issuesResona Asset Management specifies and shares important ESG issues with
the issuer

Sharing anddiscussing
issuesThe bond issuer shares ESG issues throughout its organization anddeliberates on them

Formulating andimplementing
measures
Resolvingissues

The issuer creates and deploys a countermeasure plan
Resona Asset Management determines that measures are practicallyeffective, and continues monitoring and confirming conditions

We believe that if issuers properly address ESG issues, etc., they will be able to avoid
unpredictable fluctuations in future cash flows and maintain sustainable growth, and will beadequately prepared for various risks, thereby avoiding the loss of corporate value. It will lead tothe expansion of customer benefits from a medium- to long-term perspective, and we believe that
this will lead to increased profits for our customers over the medium to long term. It is for thesereasons that we strive to realize more effective engagements with bond issuers.

companies)

27

Responsible Investment Section

2

Ch.

2

The Engagements of Resona Asset Management

ChapterContinual engagements until
issues are resolved

Responsible
Investment
SectionEngagement Report

Engagement Report▶ Materiality (top-down) engagement

1

Sustainable palm oil procurement

E（Environmental）

S（Social）

Since August 2017, we have conducted engagement on sustainable palm oil procurement, which relates toenvironmental and social issues. Palm oil is the most commonly used vegetable oil in the world, particularly
as a raw material in numerous food products, detergents and other household items, and cosmetics. However,palm oil underlies many problems in the major producer countries of Malaysia and Indonesia, particularly interms of deforestation accompanying development of palm plantations, child and forced labor, and conflicts
with indigenous peoples of the nations. Japan also has many companies that handle palm oil-based products
and accordingly are involved in the palm oil supply chain. Meanwhile, in comparison with companies in
Europe and the United States, we believe there is still substantial room for improvement among companies
in Japan on palm oil related issue. We support the target companies related to the palm oil supply chain tounderstand“sustainable palm oil”procurement and to formulate their procurement policies.
Use cases ofpalm oil andpalm kernel oil

Instant noodles Chocolate snacks

Margarine

Ice creams

Frozen foods

Powdered milk Detergents and cosmetics

Ensuring
traceability

We aim to encourage the target companies to achieve each of the following milestones in order to avoid environmental, labor, andhuman rights risks throughout the supply chain. We will encourage the companies to carry out Corporate Social Responsibility (CSR)
efforts to realize and develop a sustainable society.
1 Understand that palm oil procurement is connected to deforestation risks, child labor and forced labor risks [(i)].
A Confirm how much palm oil derived material is used in their products [A-(i)], and ensure traceability on supply chain [A-(ii) ,(iii), (iv)].
B Understand the RSPO-certified palm oil [B-(i)], and recommend its use [B-(ii)].
C Disclose sustainable procurement policy [C-(i)], disclose certified oil procurement targets [C-(ii)] and finally, disclose NDPE* policy targets [C-(iii)].
The following diagram shows the engagement milestones and progress of the 66 target companies.
*NDPE: No Deforestation, No Peat, No Exploitation

Step A-(i)Step A-(ii)Awareness of thecompany’s own products
containing palm oil

Determine suppliers of
raw materials related topalm oil

55/63

66/66

49/63

Step B-(i)Step B-(ii)Procurement of
RSPO-certified palm oil

65/66

Step A-(iii)

43/63

24/63

Understand the extent
to which traceabilityof palm oil has beenachieved

26/66

17/63

Step C-(ii)Step C-(iii)

Disclosure on targets
and progress on
RSPO-certified palm oil

Incorporate NDPE
policy into palm oil
procurement

36/63

30/63

11/63

33/66

15/66

Progress breakdown on palm oil by supply chain
The progress of the engagement target companies based on supply chain classification shows that average achievements tend to behigher for upstream companies. As for the edible oils refinery and chemicals, due to the increase in number of target companies, there
was a slight decrease in Step A-(ii). On the other hand, downstream companies showed progress on RSPO-certification and disclosure of
RSPO-certified oil procurement targets (red frame).

Downstream

28

Progress on each process
A-(ii) A-(iii) A-(iv) B-(i)

B-(ii)Net Zero
GHG by 2050
ambitionLong-term(2036-2050)
GHG target

Medium-term(2026-2035)
GHG target

Short-term Decarbonization(2020-2025)
strategy
GHG target

Capitalalignment(disclosure)

Climate policy
engagement

Climategovernance

Just
Transition

TCFD
disclosure

Honda MotorCo., Ltd.
Nissan MotorCo., Ltd.
Assessment classification： Yes, meets all criteria Partial, meets some criteria No, does not meet any criteria Improved benchmarks compared to October 2022 :▪Progress of two target companies as of October 31, 2023 (extract)

Honda Motor Co., Ltd.
Engagement topics and company measures

 edium-term (2026-2035) GHG target :M
In response to the setting of the long-term target, we would like to ask about the state of yourcompany’s deliberations and thoughts on setting this target.
A medium-term target was set (reduction of emissions per unit of duration of product use* in 2030).
Honda Motor
Management members will regularly monitor the progress of actions to strengthen climate
Co., Ltd.
governance and rapidly develop effective measures to achieve carbon neutrality.

Resona AssetManagement

Medium-term (2026-2035) GHG target :Bolster production of electric vehicles by FY2030
Announced to launch 27 models including 19 EVs. (formerly 23 models including 15 EVs*)
By 2026 to increase global sales ratio of EVs from 40% to over 44%.

(Note 1) This includes not only palm oil but also CSR-based procurement policies, etc.
(Note 2) S urvey by Resona Asset Management. Company status are based on the engagements, websites, integrated reports, and CSR reports, as of theengagement dates until June 2023.
indicates status as of June 30, 2022, andindicates status as of June 30, 2023.

A-(i)▪Net Zero Company Benchmark
The results announced in October 2023 (Data as of May 29, 2023)

19/66

Difficult(i)Engagements with Japanese companies/Lead Investor

Nissan Motor Co., Ltd.
Company measures

Easy

Upstream

Climate Action 100+ is a five-year investor-led global initiative to ensure theworld’
s largest corporate greenhouse gas emitters take necessary action on
climate change. The initiative is assisted by five investor networks, the PRI, Asia
Investor Group on Climate Change (AIGCC), Ceres, Investor Group on Climate
Change (IGCC), and Institutional Investor Group on Climate Change (IIGCC).
The global 170 companies were selected as engagement target companies. These
companies are mainly large cap companies and high GHG emitters.
Net Zero Company Benchmark has been disclosed since March 2021. The Benchmarks were to assess theperformance of focus companies against the initiative’s three high-level goals: emissions reduction,
governance, and disclosure. This benchmark provides comparable information on how the companies are
setting their management strategy and business reorganization to align with the Paris Agreement.
In June 2023 Climate Action 100+ has completed Phase 1, and entered into Phase 2.
In October 2023 the Net Zero Company Benchmark was updated.

Goal

Step C-(i)IndustryE（Environmental）＊：Amount of CO2 emitted per unit of distance traveled or unit of duration of use

47/66

Disclose sustainableprocurement policies
on palm oil

37/66

Step A-(iv)Encourage suppliers toensure traceability of
raw materials related topalm oil

51/66

Understand the
RSPO-certification
schemes

62/63

Disclose
procurement
policies andcommitments

63/63

Switch the use ofmaterials to RSPOcertified oil

Step (i)Awareness of risksof palm oil regarding
deforestation and humanrights issues

58/66

Climate change/Climate Action 100+

We are conducting ongoing engagements with Honda Motor Co., Ltd. and Nissan Motor Co., Ltd. as a lead investor.

Engagement milestones (10 processes)

Start

2

▶ Materiality (top-down) engagement

C-(i)Number ofcompanies

C-(ii) C-(iii) (66 companies in total)*1

Engagements with global companies as a contributing investor
We are conducting engagements with seven global companies as a contributing investor.
Below is an example of engagements with one of the companies, The Southern Company (a US holding company whichowns electric/gas utilities). (Lead Investor is Segal Marco Advisors)▪Engagement topics▪Net Zero Company Benchmark
Improvement on capital alignment
Net Zero
GHG by 2050
ambition

Number ofprocesses achieved(average) *2

Trading company

100% 100% 100%80%

80% 100% 100% 100%

80%

80%

5 (5)

9.2/10 (9.0/10)

Edible oils refinery and chemicals

100% 100%

88%

38%

38% 100% 100%

50%

38%

38%

8 (6)

6.9/10 (7.5/10)

Food manufacturers and toiletry
products manufacturers

100%

94%

88%

50%

29%

97%

85%

65%

68%

21%

34 (33)

7.0/10 (6.8/10)

Retailers, restaurants and services

100%

68%

47%

11%

11% 100%

26%

32%

16%

5%

19 (19)4.2/10 (4.1/10)█ Decrease YoY █ Increase YoY *1, *2 ( ) shows the achievement in the previous year

◦Transition planning and disclosure ：Encouraged to disclose quantitative targets.
◦Lobbying：T he investors applauded the release of the 2021 Trade
Association and Climate Engagement Report.
◦Improvement on climate disclosure ：Energy efficiency improvements and just transition

Long-term(2036-2050)
GHG target

Medium-term(2026-2035)
GHG target

Short-term Decarbonization(2020-2025)
strategy
GHG target

Capitalalignment(disclosure)

Climate policy
engagement

Climategovernance

Just
Transition

TCFD
disclosure

The
Southern
Company
Assessment classification： Yes, meets all criteria Partial, meets some criteria No, does not meet any criteria

29

Engagement Report3

Engagement Report▶ Materiality (top-down) engagement

Labor practices and human rights

S（Social）

4▶ Materiality (top-down) engagement

Board Diversity

Please refer to the website link for details.

https://www.unpri.org/investment-tools/stewardship/collaborative-stewardship-initiative-on-social-issues-and-human-rights

Gender diversity among top corporate executives▪Engagement cases: Iberdrola◦Third-party benchmarking
The company’s rating by the Business and Human Rights Civil
Society Platform (BHRC), released in 2021, ranked it #1 out of
16 companies.
◦Engagement topics
Discussions focused on human rights policies, supplierdialogue, and grievance mechanisms.
Future engagement topics are planned for health and safety
management, trade union activities, and risk mapping.

▪Other target companies with which the Company engages◦Renewable energy: The Southern Company (the UnitedStates), CLP (Hong Kong)◦Mining : Z ijin Mining (China), Grupo Mexico (Mexico), Coal
India (India), Newcrest/Newmont Mining (Australia)

Institutional
investor
community

Company scores
Iberdrola
Acciona Energy
EDPØrstedImprove engagement
capabilities for institutional
investors overall

Ratio of women in board of
directors of TOPIX100
companies:

Enel
Engie

10% by 2020,
30% by 2030

Jinko Solar
RWE

Asset managers

BlackrockAchieved

July 2020

12.9%

September
2023

2030

30%

19.6%

In pursuit of greater transparency,
the Board of Directors sharesinformation on conditions related
to gender diversity with investors at
suitable times, and also reports on
progress toward established goals.

Major activities in 2023

Brookf ield
NextEraThe Southern Company

Phase2：This collaborative engagement is a tie-up between PRI and ICCR with KnowTheChain.
This is a collaborative engagement with the apparel and footwear companies onlabor practices and human rights.
21 participant institutions
Targeting 27 apparel and footwear companies (ASICS was selected as one of
the Japanese companies)

Discussion meetings led by theBest Practices Subgroup

In order to deepen understanding of efforts toward corporate governance strengthening and improved
gender diversity, we conducted two discussion sessions with female executives affiliated with theJapanese Institute of Certified Public Accountants (JICPA). This year, we split into small groups toexchange opinions, allowing for more in-depth interactions among participants.

Best Practice Sharing

We conducted a best practice sharing session on engagement activities, corporate disclosure,and director selection processes among approximately 20 institutional investors participating in
sub-groups.

Release of a progress report

We have a progress report, which includes engagement cases and updates, featuring engagement
examples related to gender diversity in Resona Asset Management.

30% Club UK Investor Group
Initiatives

The Global Engagement WG was launched, setting up frameworks for engagement to eachregion.

Engagement progress and examples▪Engagement cases: ASICS Corporation

In order to effectively and efficiently monitor, it is preferable to compose boards of directors with sufficient diversity among theirmembers. Therefore, we put high priority on realizing such diversity in relation to gender, nationality and other factors. The
number of companies appointing female board members increased rapidly in the period 2022-2023, likely due to theintroduction of proxy voting guidelines concerning female board members by various asset management companies.

◦The company’s rating as of 2020, released in 2021, ranks in the
top 20, with four indicators improving.
◦In the 2022 Sustainability Report, the company has disclosed
responsible procurement practices and human rights policies.

30

Asset owners

Share
Investee companies
importanceof their
Board of Directors
issues andsolutions
Senior management

Goals

Power China◦“At a Glance”
99% of Tier 1 suppliers disclosed that they meet ASICS’internal
assessment criteria, through, e.g., the BetterWork Program.
◦Sustainability Framework
The structure of the sustainability framework is presented under
the pillars“People”and“Planet.”◦ Governance structure for sustainability
A Human Rights Committee has been established under the Risk
Management Committee.
◦Materiality
Human rights along supply chains has been defined as a key issue.
◦“People Framework”
References“Human rights in supply chains.”◦Gender diversity
Globally, the percentage of women in management positions is 38.3%.

Investor Group

Establish and share
best practices forpurposes ofachieving goals

EDF

China Nuclear Power
Generation Corporation▪ 2023 disclosureG（Governance）

The 30% Club is a business campaign aiming to boost the number of women inboard seats and executive leadership of companies all over the world. More than
1,000 board chairs and CEOs across more than 20 countries have already signed
up as members to deliver at least 30% female representation at both levels.
Resona Asset Management has participated in the Japan Investor Group, sinceJune 2019, and the UK Investor Group since December 2019.

Collaborative Engagement on Human Rights (established Fall 2022)
121 participant institutions (+220 endorsers); Total AUM: $30 trillion
Targeting 40 global metal mining and renewable energy companies (Nippon
Steel Corporation was selected as a Japanese target company)

Together with a Dutch asset manager as lead investors, we haveinitiated collaborative engagements with seven global asset
managers.

S（Social）▪Action by engagement-targetedcompanies

Theme

Female director increases

KnowTheChain Benchmarks
2020 Assessment results▪Example of engagement: Company A

Foreign-national director increases

ASICS

Resona AssetManagement/
Company A

We have shared a sense of need for urgent action with Company A
Resona Assetbecause the absence of female executives was a pressing issue as
1.Management- Management a global retail company with a large number of female customers.
relatedCompany There had been calls to strengthen diversity on the Board of directors, in an
problems
evaluation as to the effectiveness of the Board of directors. The company
A
looked for suitable candidates with the aim of appointing outside directors.

Industry average

2022

Resona Asset We have shared necessity of strengthening sustainability promotion
Management system, which is important for advancing promotion of diversity.
2. Promotion
SystemCompany
A

0

10

20

30

40

50

60

70

80

Engagement in promotion of gender diversity

1.Managementrelated
Company
problems
A2023
2. Promotion
System(Action)The company will establish a new ESG Promotion Committee, take into
account global standard assessments. In response to the lack of role models
for female managers, the company is working to strengthen the recruitmentof professional human resources from outside the company, change theemployee compensation system, and address working style reform.
Three female outside directors have been appointed.
(Their skills and background include extensive management experiencein digital technology and healthcare, knowledge of traditional culture
and the arts, and expertise in agribusiness and digital)
In order to achieve a multicultural society, a committee was formed topromote diversity (Chairperson: Director of the Public Relations, Investor
Relations, and executive officer of ESG Promotion departments).

31

Engagement Report5

Engagement Report▶ Information disclosure engagement

Corporate Disclosure

Engagement Example with Japanese Seafood and Fisheries Company B▪Issues detracting from company’s investor appeal◦The story of how solving social issues will lead to increased corporate value is relatively clear in the fisheries business, in which market expansion is
anticipated as a result of the need for sustainable use of marine resources; in the overseas business, where demand for marine products is increasing
due to factors such as health-consciousness, and in the fine chemicals business, centered on high-purity EPA, a raw material for pharmaceuticalproducts related to lifestyle-related diseases. Stock price valuations are low in the food industry, however, with a price-to-book ratio hovering around
1x, and it can be assumed that investors’confidence and conviction in medium- to long-term corporate value growth are relatively low.
◦Issues to be resolved in order for the company to be fully valued by the capital markets include: reviewing the business portfolio, including relatively
high volatility of performance and stock price (high cost of capital) due to the large impact of climate change and market fluctuations and the large
number of businesses in Japan and overseas with return on invested capital below the cost of capital; strengthening the formation and disclosure oflong-term vision, management strategy, integrated reports, etc. to enhance corporate value over the medium- to long-term; strengthening
environmental and social initiatives, especially those focusing on the sustainability of marine resources, and strengthening non-financial information
disclosure to enhance corporate value, which are regarded as having significant room for improvement compared to overseas (particularly
European) marine and food-related companies; as well as strengthening corporate governance to support these efforts.

▪Engagement details◦Since 2021, we have had dialogues with the company’s directors, executive officers, and members of the Corporate Planning & Investor Relations
Department about improving the effectiveness of corporate governance (e.g., stimulating discussions on medium- and long-term management strategies,
reviewing the director selection process and executive compensation system), improving capital efficiency (e.g., visualization through ROIC and CCC,
strengthening financial strategies, reducing cross-shareholding), strengthening climate change responses (e.g., TCFD disclosure with consideration for
Scope 3, biodiversity initiatives), strengthening supply chain environmental and human rights initiatives (e.g., initiatives against forced labor, child labor,
illegal fishing, use of sustainability certification systems, reducing use of antimicrobial agents), and strengthening information disclosure (e.g., publishingintegrated reports including corporate value creation stories and materiality in achieving the long-term desired state of affairs).

▪Company B responses and their effectiveness◦Published a long-term vision in April 2022, alongside TCFD disclosure in June and the company’s first integrated report in October.
Management commitment was strengthened by setting financial and non-financial target KPIs for 2030 and 2024 linked to executive compensation(variable compensation increased to 45%); information disclosure was accelerated by holding a sustainability briefing in January 2023 and an
aquaculture business briefing in July.
◦Specific goals include improving ROIC through asset-light and business portfolio optimization (divestment of listed subsidiaries and listed equity method
affiliates in 2022, monthly management of CCC, and announcement of plans to reduce cross-shareholding), the percentage of sustainable marine resource
procurement and primary supplier assessments with respect to environmental and human rights in the supply chain (participation in SeaBOS, a global
initiative that brings together seafood companies and scientists worldwide to produce more sustainable seafood and improve ocean health), reduction of
CO2 emissions and plastic use, the proportion of female executives, with efforts underway to improve corporate value over the medium- to long-term.

6▶ Bottom-up engagement

Equity investment/active

Engagement Example with Domestic Printing Company C▪Issues detracting from company’s investor appeal◦Company C, which first began as a printing business, has a more than 100 year history and has created businesses and products
needed by society in many fields in response to changing times, and is today a conglomerate operating numerous businesses. Using
foundational printing and information technologies, the company possesses a number of products that hold the world’s largest
market share in markets that are expected to grow, and its performance is expected to continue to grow in the future. Its value on
the stock market has not increased, however, with a price-to-book ratio that has remained below 1x for a very long time.

▪Engagement details◦We have been provided with many opportunities to engage with corporate management and IR departments over the past three
years. We considered not only the low stock market valuation, but also considered the reasons for the low valuation; the issues andhow to improve them, and shared these ideas with Company C and exchanged opinions.
◦Despite Company C’s strong capabilities, these were not well recognized by the capital markets for a number of reasons, including:despite high expectations and assessments of its growth products, the company’s business is diversified and difficult to understand,alongside issues with information disclosure; its business portfolio included many low-profit businesses; its balance sheet wasinefficient due to large cross-shareholdings; and although it had ROE targets, the target figures were low, making it difficult tocommunicate its intent to reform, we felt that improving and resolving these issues, little by little, would lead to an increase incorporate value.
◦We also conducted a questionnaire survey of domestic and foreign investors to find out how they viewed Company C and the issues
it faces from the perspective of the capital markets. This confirmed that many investors shared similar assessments of Company C,
and we in turn shared these details with Company C.

▪Company C responses and their effectiveness◦We believe that Company C has listened to our opinions very sincerely, and has engaged in constructive exchanges of opinion. We
also heard that there have been serious internal discussions and efforts within Company C to increase corporate value. In fact, in its
new mid-term plan announced this year, Company C announced measures including restructuring its business portfolio throughconcentrated investment in key areas and promotion of business restructuring, reduction of cross-shareholdings and large-scale
share buybacks to improve capital efficiency, together with a strong message that“we aim to promptly achieve ROE of 10% and a
price-to-book ratio above 1.0.”(Note) Excerpted from company materials*Some materials have been modified and used from Company B’s materials

32

33

Engagement Report

7

Engagement Report▶ Bottom-up engagement

Equity investment/active

Engagement Example with American Life Science Equipment Company D

8Progress▶ Bottom-up engagement

Fixed income/active
Issuer▪Issues detracting from company’s investor appeal◦Company D is headquartered in Massachusetts, a hub for biotechnology companies in the United States, that manufacturesand sells instruments for the measurement of biomarkers (proteins) based on its own innovative technology. Measurements
can be made with more than a thousand times the sensitivity of conventional methods, and it is possible to detect proteinspresent in trace amounts of blood.
◦This allows minimally invasive detection of nervous-system derived proteins, such as those in the brain, which have historically
been particularly difficult to detect, and has great potential to make a“liquid brain biopsy*”possible. Significant progress isanticipated in the development of therapeutic agents for Alzheimer’s disease in particular, and there remain significant
challenges facing technologies for its diagnosis both in terms of cost and patient burden. Company D is expected to make asignificant contribution to resolving this issue.
＊ A diagnostic method that can achieve the same level of accuracy as conventional methods by collecting a small amount of body fluid such as blood◦On the other hand, Company D has achieved rapid sales growth since going public in 2017, due in part to its use in clinical
trials for Alzheimer’s disease, but has faced challenges, including a significant decline in profit margins following revisions to
its manufacturing processes to meet unprecedented growth in demand, which led to a significant drop in Company D’sstock price.

▪Engagement details

3
Sharing anddiscussing
issues4
Formulating
andimplementing
measures3◦Through ongoing engagement with Company D’s management and head of IR from a long-term perspective, alongsides strengths in advanced protein detection technology, we have also exchanged
deepening our understanding of Company D’opinions on the social value of Company D’s technology, such as how much the overall cost of the healthcare system can be
reduced through its technology (Figure 1).

Sharing anddiscussing
issuesCompanyE(electric
power)

CompanyF(electric
power)◦Following the announcement of a profit improvement plan in response to last year’s significant decline in profit margin, we
s CEO. We felt that, given the tremendous investor focus
had the opportunity to discuss its progress directly with Company D’
on the execution of the plan, improved disclosure of its progress would help considerably in restoring market confidence andthe company’s subsequent growth.
s progress. We again◦At that meeting, it was indicated the improvement of gross profit margin was the main KPI for the plan’pressed the importance of disclosing this plan’s progress in more detail, and expressed our desire for Company D to disclose
not only changes in gross profit margin but also parallel KPIs, and to disclose specific measures introduced and their outlook
in a more easily understood manner.

▪Company D responses and their effectiveness2
Setting andpresenting
issuesCompanyG(heavyindustry)◦Company D’s stock price has subsequently risen significantly as a result of significant improvements in profitability. Investor
confidence in the progress of the plan appears to have been restored as a result of improved disclosure (Figure 2) and more
concrete explanations during individual meetings and financial results briefings. We expect Company D to steadily overcome
these challenges and make great strides toward solving social issues.

Figure 1: Estimated social outcomes of thecompany’s existing products on the market

Figure 2：Disclosure of the profit enhancement plan

Company
3
Sharing anddiscussing
issues2

Source: Excerpted by Resona Asset Management from Company D’spress release

Setting andpresenting
issuesH(information
technology)

CompanyI(insurancecompany)

Engagement details
We have pursued continual engagements on multiple occasions with
Company E regarding measures aimed at carbon neutrality, power grid
maintenance amid electricity deregulation trends, and other sustainabilityrelated issues. We requested extensive dialogue with stakeholders and theinvestment market as a whole, as well as thoroughgoing information
disclosure and other such activities.
In light of delays in restarting nuclear power plants and the management
problems of some vendors, as in the previous year, we have also pointed outthat maintaining the nuclear power value chain could be a future business risk
and encouraged issuers to consider their response policies and disclose theseas appropriate.
In regard to engagement milestones, Company E has completed“ Sharing anddiscussing issues”in relation to information disclosure and continual dialogue,
and is nearing the“Formulating and implementing measures”phase.
At Electric Power Company F, the finance department had already conductedengagements with bond investors before the issuance of label bonds, among
others; but going forward, the investor relations department wanted to pursue
engagements with both equity and bond investors. Through engagements with
the investor relations department, we deepened discussions on information
disclosure and other matters required by bond investors.
We have been lobbying for enhanced disclosure of sustainable financeinformation on Company F’s website, and following discussions with thefinance and investor relations departments, it is now possible for investors to
obtain disclosed information centrally on their investor relations webpage.
In terms of engagement milestones, Company F is at the“ Sharing anddiscussing issues”phase.
Together with our Responsible Investment Department, we had opportunities
for engagements with the CFO of Heavy Industry Company G.
As a core company in the nuclear power generation system, a carbon-neutral
power source, we requested that the company take adequate measures forhuman resource development and technology transfer.
When we pointed out that engagements, or information disclosure, with bondinvestors was inadequate compared to that with equity investors, andrequested that improvements be made going forward, we received a responsethat they too recognized that there were issues around a lack ofcommunication with bond investors and wished to consider improvements infuture.
In terms of engagement milestones, Company G is at the“Setting andpresenting issues”phase.
We had previously requested that Company H engage in continual dialogue
with bond investors, and the company has responded by creating andfinalizing a policy for carrying out such engagements on a regular basis.
We also reiterated the importance of ongoing engagements not only at thetime of bond issuance, but also after the issuance, and the issuing side sharedin our awareness of the issue.
We have also seen improvements in sustainability finance-related disclosures
on Company F’s website, something we had been requesting for some time.
In terms of engagement milestones, Company H is at the“ Sharing anddiscussing issues”phase.
Insurance Company I has stated that they aim to decarbonize their insurance
portfolio by 2050, but has not disclosed the amount of insurance allocated tofossil fuel power generation and other sources in their insurance portfolios(since they are not subject to TCFD’s Scope 3 disclosure). Disclosure wasrequested since without it, it would not be possible to monitor the progress ofdecarbonization.
As a result, the issuer shared the view that disclosures concerning theallocation of insurance to fossil fuel power generation, etc., which is a necessary
milestone for decarbonization. In addition, Company I had originally planned
to make disclosures within the Net Zero Insurance Alliance (NZIA) framework,
but this was no longer possible due to the company’s withdrawal from thealliance. They replied that they considered it necessary to set milestones both
externally and internally, and would consider disclosure of the points raised.
In terms of engagement milestones, Company I is at the“Setting andpresenting issues”phase.

Engagement themes
Theme:

Climate changeLifestyleinfrastructure
resilience
Sub-themes:
Strengthened
information disclosure
Continual dialogue
Theme:

Climate change
Sub-themes:
Strengthened
information disclosure
Continual dialogue

Theme:

Climate changeLifestyleinfrastructure
resilience
Sub-themes:
Strengthened
information disclosure
Theme:

Climate change
Sub-themes:
Strengthened
information disclosure
Continual dialogue

Theme:

Climate change
Sub-themes:
Strengthened
information disclosure(Materials from discussions with Company D)
Source: Prepared by Resona Asset Management based onmaterials provided by Company D

34

35

Engagement Report

9

Engagement Report▶ Bottom-up engagement▶ Bottom-up engagement

Passive investment (Japanese companies)

Efforts toward Japanese-company corporate governance improvements
During engagement aimed at corporate governance improvements, Resona Asset Management sets multiple
themes for each target company based on the company’s specific circumstances and conditions. One
example of past engagement activities based on said themes is described below.

▪Common corporate-governance themes utilized by Resona Asset Management

Governance◦Board of directors composition◦Board diversity◦Board of directors effectiveness evaluation◦Succession◦Reductions in cross-shareholdings◦Skill matrix◦Outside-director independence◦Parent–subsidiary pair listing issues◦Discontinuance of takeover-defense measures◦Voluntary committee establishment◦Stock compensation linked with medium- and long-term results◦Director term-of-appointment shortening

Target company action cases

Measures by engagement-targeted companies
2021/6

140
120

101

100

2022/6

122
113

108

80

71

60
40
20
0

46
22

39 37

Outside-director
Femaleincreases
director increases

13

26 23

7 6 9

Introduction of
Takeover-defense
Reduction ofequity incentives measure discontinuances cross-shareholdings

Company J is a company that operates a foodstuffs business both in Japan and overseas. We conducted engagements on
a wide range of governance issues, including the composition of the Board of Directors, cross-shareholding, and theintroduction of equity incentives.

2022-

Engagement toward governance improvements

Introduction ofequity incentives

・Discussed the introduction of equity incentives to incentivize medium- tolong-term corporate value creation

Outside-director
increases

・Discussion on increasing the number of outside directors
・Discussion on the composition of the Board of Directors to include
members with diverse backgrounds, such as women and foreign nationals
・Discussion on reducing cross-shareholding out of consideration for
capital efficiency issues, etc.

Board diversity
Reduction ofcross-shareholdings

Headquartered in Atlanta, Georgia, U.S.A., Company K is one of the world’s leading package delivery companies, and also
expanding into air freight.
It does business in North America, Europe, Asia Pacific, the Middle East and Africa, and Latin America, handling an average
daily cargo delivery volume of 24 million shipments in 2022, or 6.2 billion shipments annually.
We conduct engagements with Company K addressing four points, including business model, climate change transition
measures and goals, and the incorporation of ESG indicators into the compensation structure.

◦Intent to obtain SBTi certification: It was decided as a matter of future milestone management to follow up on the application to the
SBTi certification system and response to Sustainable Aviation Fuel (SAF).

Incorporation of ESG indicators into the compensation system◦The salary system was changed to one in which 20% of the bonus (Management Incentive Plan, MIP) is divided into 12 equal parts
and issued as monthly salary.
◦“Net Promoter Score”was introduced as a KPI. 2021: Target set at 80% (2020: 51%)

Multi-class structure▪Individual-company engagement example (Company J)

2021-▪Individual-company engagement (Company K)

Climate Change Transition Measures and Goals: ESG Progress

2023/6◦ Company measures continued for three years, and the company shows a general trend toward improvement.
◦	Measures related to outside-director increases, female director increases and reduction of cross-shareholdings havebeen particularly numerous.
◦	On the other hand, the number of discontinued takeover-defense measures is limited, but this is due to the fact that the
number of companies adopting and continuing to use takeover-defense measures is decreasing each year.

Theme(s)We conduct engagements that explore ESG issues, risks, and opportunities according to individual portfolio
companies’business models. Some engagement cases are described below.

◦Its integrated network is the key. Since the appointment of the new CEO, Company K has shifted its revenue structure from volume
to value. New business models have included forwarding and healthcare-related businesses.
◦In the healthcare field, Company K has developed refrigerated transport together with Pfizer since the developmental stages of its
Covid-19 vaccine.

▪Target company action (broad summary)

PeriodEngagement routes developed from foreign companies’business models

Business Model▪Our action related to main themes◦ Resona Asset Management shares
identified problems at the company inquestion via engagement.
◦ Following engagements, we monitor
said company’s action over the years(see graph on right).
s◦ In addition to confirming said company’action, we revise engagement themes
as necessary in response to corporate
governance code revisions and othersuch occurrences.

10 Passive investment (global companies ex. Japan)◦Management does not have control of the company by virtue of the structure for Company K; class shares are widely distributed
among employees. Back in 1907, the company was mainly operated by founder/family members. The company then started to
grant Class A shares as incentives to reward the hard working 155,000 employees.
◦However, management does not have control on the voting rights of Class A shareholders. Class A shares should be converted
to Class B shares upon the employee's retirement.

Engagement plans for 2024
◦We can consider to support director appointments, if the company could disclose the pathway of Class A shares to fall below 50%.
s unique history, we continue to engage on the equal shareholder rights.
◦While we understand Company K’▪Individual-company engagement (Biogen)
One of the world’s leading pharmaceutical and biotechnology companies.
Biogen has strengths in neurology, neuropsychiatry, specific immunity, and rare diseases.
Biogen has produced a number of groundbreaking innovations, including a treatment for multiple sclerosis, the first approved
treatment for spinal muscular atrophy (SMA), and a co-developed treatment for a characteristic pathology of Alzheimer’s disease.
Biogen was the target company to the Global Work Stream. The Global Work Stream was established in 2022 as one of theworking groups under the 30% Club UK Investor Group. Biogen was the target company to the Global Work Stream. The Global
Work Stream was established in 2022 as one of the working groups under the 30% Club UK Investor Group. We have conductedengagements on three key issues: 1) Board diversity, 2) material ESG issues, and 3) access to treatment.

Progress on Diversity◦Board gender diversity is 20%, and there remains scope for further improvement. But 47.4% plus director positions are held by
women globally, and 30.4% plus manager positions in the United States are held by ethnic or racial minorities.

No major changes in material ESG issues compared to 2022
◦B iogen has identified 1) product quality & safety, 2) R&D pipeline and innovation, and 3) access and pricing oftherapeutics from the patient’s perspective as key issues.

Access and Health Equity◦14,000 people with SMA globally being treated with SPINRAZA® (nusinersen). SPINRAZA is available in 69 countries.

Outside-director
increases

2023

Board diversity
Introduction ofequity incentives

36・Outside director headcount increased by one ; 6 out of 15 directors are
independent outside directors
・Appointment of one new foreign-national director
・Introduced a new restricted stock compensation plan

Engagement plans for 2024
◦Advancing Health Access: The company is continuously evolving its thinking and approaches to ensure broad access to its therapies.
◦On diversity, the company conducts active recruitment focusing on university laboratories. Continuously discuss about thepositive effects on management strategy from improved diversity.

37

2

T he E ngagements o f
R eso na Asset Management

Public engagement

Engagements with supranational and sovereign bond issuers

Initiatives in Japan
In addition to direct engagement with policy makers, Resona Asset Management pursues amultifaceted approach to public engagement that includes participation in working groups thatinvolve a wide range of stakeholders, such as standard-setting bodies, industry associations,
ESG assessment and data providers, credit rating agencies, NGOs and think tanks. We also
work with other institutional investors to make recommendations to policy makers.
In addition to policy makers, we aim to conduct effective engagements with this broad range ofstakeholders by building long-term relationships with them, and strive to provide effective input as
an institutional investor from the early stages of policymaking.
Our specific initiatives are as follows.

Initiatives

Sponsoring
Organizations

Sustainable Transformation Brand
Evaluation Committee

Ministry of Economy,
Trade and Industry

Promotion of activities as acommittee member

Commissioned strengthening offood bank networks
Committee for the Study of Best
Practices in Business andCorporate Information Disclosure

Ministry ofAgriculture, Forestry
and Fisheries

Promotion of activities as acommittee member

ESG Finance Award Japan
Selection Committee for theEnvironmentally Sustainable
Company category

Ministry of theEnvironment

Promotion of activities as acommittee member

Eco-First

Ministry of theEnvironment

Promotion of activities set out inthe commitment sheet

Impact IPO Working Group

GSG-NAB Japan

Promotion of activities as amemberJapan Impact-driven Financing
Initiative

Japan Impact-driven
Financing Initiative
signatoryorganizations

Promotion of activities as Vice
Chair of the Steering Committee
and Chair of the Social Indicators
Working Group

Principles for Financial Action forthe 21st Century

Principles for Financial
Action for the 21stCentury signatoryorganizations

Promotion of activities as Chairof the Management/Securities/
Investment Banking BusinessWorking GroupOur engagements with issuers of supranational bonds, such as the World Bank and theEuropean Investment Bank, focus on the content related to the use of funds for green andsocial projects. We discuss the progress and outcomes of each issuer’s efforts to addressenvironmental and social issues, based on our understanding of project progress and outcome
creation (such as environmental improvement), through exchanges of opinions with issuers
and annual reports.
Regarding overseas sovereign bonds, we are a member of the FTSE Asia Pacific Fixed
Income Advisory Committee and we engage in indirect dialogue with sovereign issuers
through the exchange of opinions with the index provider, FTSE.
Going forward, we intend to work with a wide range of stakeholders, including credit rating
agencies, NGOs, think tanks, institutional investors holding sovereign bonds, and asset
owners, in order to conduct more effective engagements.
We are also participating in the Investor Agenda together with other institutional investors,
which urged governments to accelerate the transition to a net-zero emissions economy in2021 and 2022.

Our Involvements(As of September 30, 2023)

38

39

Responsible Investment Section

Chapter

Ch.

2

The Engagements of Resona Asset Management

Responsible
Investment
SectionResponsible
Investment Section

The proxy voting process

Fundamental Concepts on Proxy Voting

1

Proxy voting operation on our equity holdings is used as a means of fulfilling ourfiduciary duties to enhance shareholder value, solely for the interest of our clients.

2

Proxy voting will not be used for supporting particular political or social
campaigns.

3

We conduct proxy voting on our holdings based on public information, i.e.,
information and research outcomes which are gathered through public information.

We strive to raise shareholder value over the long term when conducting proxy voting. We
consider the response to the social responsibility, such as the issuers’governance structure, legal
compliance, corporate ethics, societal harmony and environmental initiatives.

▪ Board responsibilities

Global Governance Principles

・The board should act in the interests of company’s shareholders by promoting sustainable growth of the company from a long-term
perspective. This involves assuming accountability to shareholders and other stakeholders, and giving consideration to a wide range ofstakeholders integrating ESG factors.
・The board should supervise management decisions by the executive managers.
・The board should be sufficiently independent from management (and significant shareholders) to ensure that it is able and motivated toeffectively supervise management’s performance for the benefit of all shareholders, including in setting and monitoring the execution of corporate
strategy, with appropriate use of shareholder capital, and in setting and monitoring executive compensation programs that support that strategy.

▪ Board composition

・The board should preferably have no less than a majority of independent non-executive directors.
・The board should preferably have a sufficiently diverse mix of directors to ensure effective supervision of business activities of management.

Monitoring:
Investment Risk
Administration
Division

Authorizer to the day
to day proxy voting:(General Manager of the
Responsible Investment Division)

❷

❶

B. ❶
A. ❶

B. ❷

* Monitor theproxy voting
process andconﬁrm theappropriatenessof proxy voting
by parent
companies, etc.

A. ❷Proxy voting deliberation:
Responsible Investment Division❸

Proxy voting
execution:
Custodians

Establishment of the Proxy Voting Guidelines❶ ‌The Responsible Investment Division drafts the Proxy Voting Guidelines. The draft Guidelines are
submitted to the Responsible Investment Committee meeting.
❷ ‌The President approves to adopt the Proxy Voting Guidelines, based on the discussion at the
Responsible Investment Committee meeting.
Deliberations on proposal
A. Proposals not submitted to the Responsible Investment Committee❶ ‌The Responsible Investment Division prepares proxy voting details materials based on the Proxy Voting Guidelines.
❷ The General Manager of the Responsible Investment Division approves the voting decisions.
B. Proposals submitted to the Responsible Investment Committee❶ Any proposal case for which proxy voting details cannot be determined simply by the Proxy Voting
Guidelines is submitted to the Responsible Investment Committee meeting.
s discussions.
❷ The President approves the voting decisions based on the Responsible Investment Committee’▪ Information disclosure (financial & non-financial), and ensuring reliability

Voting instructions❸ ‌The Responsible Investment Division sends voting instructions to the custodian banks.

▪ Shareholder rights* Management on conflict of interests
We exercise proxy voting rights related to the Resona Holdings equities based on the advice of athird-party proxy advisor (ISS), pursuant to our Proxy Voting Guidelines. The proxy voting details
related to Resona Holdings equities are verified by the Investment Risk Administration Division on
periodical basis and reported at the Responsible Investment Committee meeting. And also the
Responsible investment verification committee meeting verifies those proxy voting process from thethird party committee perspective.

・The board ensures reliability of financial and non-financial information disclosed by the company, and accordingly assumes oversight
responsibility for providing such information to the respective stakeholders.
・The board should disclose highly reliable information in a timely manner so that shareholders are able to fully exercise their voting rights upon having
sufficiently understood content of proposals, and so that shareholders are able to effectively conduct engagement on issues which may affect their interest.
・Rights of all shareholders should be equal and a shareholder’s voting rights should be directly linked to the shareholder’s economic stake.
・The board should ensure that shareholders have voting rights on key decisions and transactions of the company.

Whereas these governance principles constitute recommendations, as such companies are to
draw up voting guidelines for Japanese and global equities that are aligned with theirbusiness realities, in light of varying laws, regulations, business practices and corporate
governance codes of the respective countries.
40

Responsible Investment
Committee(secretariat: Responsible
Investment Division)

Responsible investment
veriﬁcation committee meeting

As an institutional investor, Resona Asset Management assumes key responsibility forfacilitating corporate governance improvements of its investee companies. Accordingly, thecorporate activities of our investee companies have a significant impact on the environmentand society and in turn, we recognize that those changes also affect our investment results.
Consequently, we have established several sets of guidelines based on the Articles, such as:(i) the Fundamental Concepts on Proxy Voting;(ii) the Global Governance Principles; and(iii) the Proxy Voting Guidelines.
(i) shows the basic guidelines to appropriately conduct proxy voting operations, and(ii) is the Principles stipulating Good Governance standards across listed equities.

* Veriﬁes the appropriateness of proxyvoting from a third-party perspective

Authorizer to proxy voting guidelines: President

41

Responsible Investment Section

Resona Asset Management’s
Proxy Voting

Ch.

3

Resona Asset Management’s Proxy Voting

3

ChapterResponsible
Investment
Section

Chapter

3

Resona Asset Management’s
Proxy Voting

The following data are details on Resona’s proxy voting results for Japanese and global
year comparisons. We basically decide how to vote on proposals based on details
where we weigh the pros and cons of proposals after having gained an extensive mutual

equities during the period from July 2022 to June 2023. Comments are based on year-onreleased in convocation notices and other such disclosures. However, there are also cases
understanding of the matter at hand through engagements with the respective company.

▪ Japanese equities▪ Global equities ex. Japan

Shareholder
proposals

11.2％

Support ratio

3.8％(Previous year)

Total number of proposals

Voted against(10.4%)

22,406

2,519(Previous year)

Total number of proposals

Voted for400

（2.0%）

15

The year on year number of proposals increased by 293 proposals (compared to the period July 2021 to June 2022). The
support ratio rose, due to our support on the climate proposals.

Shareholder
proposals

Opposition ratio

11.4％

Support ratio

75.6％(Previous year)

Total number of proposals（12.8％）

41,746(Previous year)

Total number of proposals

1,890（78.6%）

Voted against

4,774
Voted for

1,428

The number of proposals increased year on year (July 2021 to June 2022: 1,596 proposals). Comments are based on
year-on-year comparisons. Shareholder proposals: The support ratio decreased as corporate disclosure in the US progressed.

Corporate bodies

Opposition ratio (Previous year)

Total number of proposals

Appointment anddismissal of directors

11.5％ （11.2%）

17,315

Director appointments: We have raised our independence anddiversity criteria to a stricter level.
However, the opposition ratio remained unchanged as thecompanies attitudes progressed.

Appointment anddismissal of directors

8.1％ （9.3%）

14,536

Appointment and dismissalof corporate auditors

13.3％ （15.0%）

2,003

Corporate auditor appointment: The opposition ratio
decreased year on year, as the independent
candidates on ballots decreased.

Appointment and dismissalof corporate auditors

9.3％ （6.8%）

569

Supervisory board appointments: The opposition
ratio rose, as we were not able to support the
Chinese company proposals.

Appointment and dismissalof accounting auditors

0.0％ （0.0%）81

Accounting auditor appointment: We havesupported all of the proposals.

Appointment and dismissalof accounting auditors

0.9％ （0.7%）

2,390

Auditor ratification: The opposition ratio was at thesimilar level.

Director compensation

Opposition ratio (Previous year)

Total number of proposals

Director compensation (*1)

9.3％ （10.0%）670

Retirement bonus payments
for retiring board members

100.0％ （99.1%）

78

Capital policy

Opposition ratio (Previous year)

Other proposals related tocapital policy (*3)

2.3％ （1.9%）
0.0％ （6.5%）
98.8％（100.0%）
0.0％ （0.0%）

Articles of incorporation

Opposition ratio (Previous year)

Articles of incorporation

1.3％ （0.8%）

Appropriation of surplus
Restructuring (*2)
Introduction, renewal orabolition of anti-takeovermeasures

Other proposals

Opposition ratio (Previous year)

Other proposals

0.0％ （50.0%）

Director compensation
Director compensation (*1)

We opposed all proposals for retirement bonus
payments for retiring board members.

Retirement bonus payments
for retiring board members

Total number of proposals

1,414

Corporate bodies

Director compensation: The opposition ratio decreased
a little, as companies had established governance overcompensation.

Allocation of income and dividends: The opposition
ratio stayed at the same level year on year.

Capital policy
Appropriation of surplus

31

M&A and restructuring related: We have supported all
the proposals.

Restructuring (*2)

81

We accepted the necessity of certain anti-takeovermeasures introduced in emergencies and supported
them.

Introduction, renewal orabolition of anti-takeovermeasures61

We supported all other proposals related to capital
policy.

Other proposals related tocapital policy (*3)

Total number of proposals

Articles of incorporation

668

Articles of incorporation

Amendments to the articles of incorporation: The number of
proposals decreased drastically year on year. This was
because every company made amendments last year due tothe introduction of the electronic provision of the AGM
materials.

Total number of proposals

4―*1. Proposals on compensation policy, stock options plans, adoption and amendments to performance-linked compensation, and bonus plans.
*3. Proposals on share buybacks, reduction on statutory reserves, third-party allotment, capital reduction, reverse stock splits and issuance of classified stock.

42

Management
proposals

Other proposals
Other proposals

Ch.

3

Opposition ratio (Previous year) Total number of proposals
Director appointments: The opposition ratio decreased
year on year as there were fewer candidates withmultiple board seats.

Resona Asset Management’s Proxy Voting

Management
proposals

Opposition ratio

Responsible Investment Section

Proxy voting results (during the period from July 2022 to June 2023)

Opposition ratio (Previous year) Total number of proposals

22.2％ （23.7%）

ー

（ー）

4,959

Remuneration: The opposition ratio declined, as there
were fewer problematic compensation on the US
proposals which accounted 25% of the total
proposals.

0

Retirement bonus payments for board members: There
were no proposals at the company AGMs.

Opposition ratio (Previous year) Total number of proposals

0.5％ （0.6%）
25.0％ （29.9%）
13.4％ （13.3%）
10.8％ （11.0%）

1,645

Allocation of income and dividends: The opposition
ratio stayed at the same level year on year.

3,214

M&A and restructuring related: The opposition ratio
declined due to the problematic restructuring
剰余金の処分は、反対比率が横ばいとなりました。
proposals in China,
which accounted for the majorityof proposals.

82

Anti-takeover measures: The opposition ratio was at
the same level.

5,551

Capitalization policy: The opposition ratio was at thesame level.

Opposition ratio (Previous year) Total number of proposals

5.9％ （8.7%）

1,016

Amendments to the articles of incorporation: The
opposition ratio declined due to the decline in the
Taiwanese AGMs.

Opposition ratio (Previous year) Total number of proposals

12.0％ （14.2%）

7,784

Other proposals: The opposition ratio declined due tothe decline in China. This was because companies
started to disclose the amendment details in the
proposals.

*2. Proposals on mergers, transfer of business, equity swaps, equity transfers and company splits.

43Responsible
Investment Section

4

Chapter

ESG Integration at
Resona Asset Management(i) ESG integration on active equity investment

We will utilize“Resona ESG Assessments”into company research and portfolio construction.

Overview of our ESG Integration Policy▪ Objective
We aim to preserve benefit for our clients’assets and to expand growth of the portfolio companies on mid to longterm perspective by taking following measures. Understanding the downside risk and the upside potential on the
ESG context of the investee companies. Integrating ESG assessments into the potential investment outcome,portfolio construction, and risk management.

▪ Creation of organizational frameworks
We will establish the organizational frameworks with the appropriate skill sets of human capital and training, sothat we will be able to conduct engagements with investee companies. Also, we will establish a centralized ESG
database for ESG assessments on investee companies to effectively and efficiently conduct engagements. We will
also integrate ESG assessments and database into engagements with the investee companies.

(iii) ESG integration in formulation of long-term basic portfolio (SAA)We calculate the“Resona ESG Assessments”for each asset class that we invest in, and take theminto account through methods such as establishing certain constraints when formulating SAA.
▪ Measures toward sophistication of ESG integration
At Resona Asset Management, we will pursue further sophistication in ESG integration with a particular focus on
the following measures:

1. ESG database improvements and greater detail in systematic quantitative assessment
2. Strengthening knowledge for ESG analysts and knowledge management operations
3. Further improvements on transparency and clarity to ESG integration process
4. Establishment and strengthening of systems to monitor ESG integration

Ch.

4▪ Information disclosure on ESG integration approach
We will make thorough and clear explanations on ESG integration approach and methodology to our customers. In
addition, we will conduct suitable information disclosure through the issuance of the Resona Asset Management
Sustainability Reports.
* For more information on the ESG Integration Policy, please visit the following webpage:https://www.resona-am.co.jp/about/integration.html

Overview of our Exclusion Policy on Specific Weapons Manufacturers▪ Objective
We prohibit any investment to the company that develops, manufactures, and/or is otherwise involved in any way
with weapons of mass destruction (nuclear weapons, chemical weapons, biological weapons), antipersonnel mines,
cluster munitions, and/or any other inhumane weapons. This is because we deem it inappropriate to invest suchcompany as an institutional investor.

▪ Policy summary
As a general rule, we prohibit investment in any company that develops, manufactures, and/or is otherwise
involved in any way with weapons of mass destruction (nuclear weapons, chemical weapons, biological weapons),
antipersonnel mines, cluster munitions, and/or any other inhumane weapon type.

▪ Process▪ Exclusion list of weapons and companies(1) ESG assessments

We will utilize our proprietary“Resona ESG Assessments,”which provides both quantitative and qualitative
assessments to investable universe for listed equity and fixed income. Quantitative assessment entails identificationof ESG factors based on assessment indicators—with consideration taken for material factors and others—andassessing quantitative ESG scores based on a proprietary methodology. ESG assessments are given to each
investable company by the following process. ESG analysts to conduct qualitative analyses on top of thequantitative score by integrating the input from the company analysts.

We prohibit investment in any company that develops, manufactures, and/or is otherwise involved in any way withany of the following five weapon types: nuclear weapons, chemical weapons, biological weapons, cluster munitions
and antipersonnel mines. However, any company which operates in a signatory nation to the Treaty on the NonProliferation of Nuclear Weapons, which possesses nuclear weapons, is exempted from the exclusion policy.
Countries possessing nuclear weapons include the United States, France, the United Kingdom, China and Russia.
Note that involvement with the abovementioned weapons may include development, manufacturing, sales,
maintenance, modifications/improvements, transport, experimentation, testing, related-facility operation, andweapon-use training drills.

(2) Integration of ESG assessments into investment decisions▪ Applicable assets“Resona ESG Assessments”will be integrated into investment decisions based on the asset class and investment
strategies. For companies that fail to meet the minimum standards of“Resona ESG Assessments,”these equities are
generally uninvestable for all the active investment products. Engagements and proxy voting (voting against director
election) should be used as an escalation tactics for exceptional cases to be held in the investment portfolio.

As a general rule, these stipulations and rules apply to all invested assets. However, the exclusion policy may not
apply in the case of passive investment or investments according to the individual-customer guidelines.
*F or more information on the Investment Exclusion Policy for Specific Weapons Manufacturers, please visit the following webpage:https://www.resona-am.co.jp/about/integration.html

4445

ESG Integration at Resona Asset Management

Resona Asset Management views ESG integration as a vital element for achieving investment
performance over the medium and long term. ESG integration entails non-financial
information analyses and assessments for equity and fixed income-issuers in regard to ESG
factors as part of investment activities on all the assets, including active investments on
assets. Based on this approach, we have been a signatory to The PRI since 2008, and wecarry out ESG assessments for the abovementioned organizations by asset class, investment
strategy. These are part of continual efforts to realize ESG integration that is optimal in termsof investment performance.
In recent years, many corporations have taken a more proactive approach to information
disclosure, resulting in a much wider range of non-financial information becoming available.
As follows, much more sophisticated knowledge and skills are now required to successfully
conduct analyses and assessment on ESG information. In response to these trends, Resona
Asset Management is striving to realize even more advanced ESG integration for purposes ofbolstering investment performance. To this end, we have been revising our measures on aGroup-wide scale, and have established our ESG Integration Policy and Exclusion Policy forSpecific Weapons Manufacturers. Starting in 2023, we are pursuing new measures for ESG
integration with these policies.

ESG integration to fixed income is conducted based on“Resona ESG Assessments”from credit
analysis standpoint.“Resona ESG Assessments”is considered from the long term credit perspectiveof the issuers. This is because fixed income’s downside risk exceeds the upside potential, and thatthe investors should be aware of the credit worthiness of the issuers until its maturity.

Responsible Investment Section(ii) ESG integration on active fixed income investment

ESG Integration at
Resona Asset Management

Resona ESG Assessments
The Resona ESG Assessments are assigned to companies with the aim of providing an
understanding of their ESG-related status, such as their ESG-related risks and opportunities,
based on broad, unified guidelines and in a manner that transcends the bounds of asset
class and investment strategy.

About Resona ESG Assessments◦	The ratings are assessment metrics comprising Resona Quantitative ESG Assessments (numerical) and Resona
Quantitative ESG Assessments (A-E). The rating is expressed with a number and a letter, for example“60-C.”◦	The Resona Quantitative ESG Assessments provides a comprehensive evaluation of ESG items considered important by
Resona Asset Management based on the following three items as deviation values using a proprietary scoring model.
・Exposure to risks related to ESG recognized by the company and the status of its response
・Opportunities related to ESG recognized by the company
・Degree of enhancement of disclosure regarding ESG◦	The Resona Quantitative ESG Assessments is a comprehensive five-point evaluation of the following two items
that cannot be grasped by the Resona Quantitative ESG Assessments.
・Degree of impact on corporate value in the event that ESG risks and opportunities materialize
・Probability that ESG risks and opportunities will materialize◦	In the Resona Quantitative ESG Assessments, we strive to eliminate individualistic influences by setting
assessment indicators based on Resona Asset Management’s materiality and ESG issues, and conducting
assessment using a unified standard across the company.

▪ Resona ESG Assessments scoring process
Scoring model◦Company-disclosed data (including
statistics from outside sources), and text
data and similar

ESG quantitative evaluation
Social(S) score

Environmental (E)Example issue

Energy management

Greenhouse gas (GHG)
emission management

Example ofspecific
assessment
indicators

・GHG emissions (Scope 2)・Renewable energy usage ratio・Formulation status of renewableenergy usage targets

・GHG emissions (total volume,
Scopes 1 and 3)
・GHG emissions (by gas type)・Disclosure status of sciencebased emission reduction targets

・Total water usage
・Water recycle rate
・Formulation status of waste
water management policy

Example issue

Customers and local society

Human rights of employees
and workers

Quality management andsupply chain

Example ofspecific
assessment
indicators

・Amount of expenditure madeto local communities
・Payment of fines in relation
to bribery or corruption
・Implementation of customer
data protection

・Labor union organization rate
・Ratio of female managers
・Measures to prevent childlabor・Ratio of suppliers that havecompleted external audit
・Number of customer complaints
・S ocial risk management insupply chain

Shareholder rights

Social (S)Water resource management

Corporate governance (G)Example issue

Independence

Diversity

Example ofspecific
assessment
indicators

・Board structure・R atio of independent board
members
・Independence of chairperson
and lead directors

・Appointment of female CEO・Ratio of female directors
・Director age range

・Formulation status of antitakeover measures
・Issuance of common shareswith different voting rights
・Presence of a controllingshareholder◦Calculated based on E, S and G scores◦We also consider information not includedin the ESG database, obtained frominterviews with the company, various
reports, and examination of its website*1 Determine a score by taking a value between 0 and 1 for each ESG-related data item. Calculate a simple average of thesescores as the sub-issue score.
*2 The weighting is set separately for each issue.
*3 The weighting is determined based on the Resona ESG Industry Classifications. We identify the important ESG issues foreach industry and increase the weight of issues of high importance.
*4 The weighting is determined based on the ranking by company size (total net assets) within the companies subject toevaluation. For small sized companies, the weighting of governance (G) is increased.

ESG database
ESG-related
data
Environment-１

2.

Assessment
indicators
Environment
A-(i)Sub-issue score
Environment
A-(i)Issue score
Environment A

Assessment
indicators
Environment
A-(ii)

Sub-issue score
Environment
A-(ii)

Issue score
Environment B…

…

ESG-related
data
Environment-2

ESG-related
data
Environment-3

1.

…

Resona ESG Assessments

1. Apply the various ESG-related data from the ESG database to the specific assessment indicators of the
sub-issues specified within each issue and calculate the score for each sub-issue.*1
2. Calculate a weighted average*2 of the scores for each sub-issue in 1. to calculate a score for each issue.

…

+
Resona Qualitative ESG Assessments▪ Determination process for Resona Quantitative ESG Assessments (scoring model)

3. Calculate a weighted average*3 of the scores for each issue in 2. and make further adjustments forcompany size and industry to calculate respective ESG scores.
4. Calculate a weighted average*4 of the ESG scores in 3. to determine the Resona Quantitative ESG Assessments.

Corporate governance(G) score

Resona Quantitative ESG Assessments

46

The Resona Quantitative ESG Assessments and Resona Qualitative ESG Assessments consider assessment
indicators set for E, S and G, respectively based on Resona Asset Management’s materiality and ESG issues.

* The above details are as of September 30, 2023, and the Company plans to revise them as needed going forward.

ESG database

Environmental(E) score▪ Assessment indicators of the Resona Quantitative ESG Assessments and Resona Qualitative ESG Assessments

3.

Environmental(E) scoreSocial(S) score
Corporate
governance(G) score

4.

47

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4

Ch.

4

ESG Integration at Resona Asset Management

Chapter

Resona Quantitative
ESG Assessments

Responsible
Investment
Section4

ESG Integration at
Resona Asset Management

ESG integration / equity / active

Resona ESG Assessments measures in company analysis

Our approach to ESG integration
When carrying out long-term stock investing operations, we consider an understanding of ESG(environmental, social and corporate governance) related risks and opportunities to be a vital part ofinvestment decisions. With active investing, which seeks out high returns based on market averages, it isnecessary to fully comprehend ESG-related factors from a global perspective, evaluate the impact of thosefactors on investee companies, and incorporate this knowledge suitably when making investment decisions.
ESG-related factors are wide ranging, pertaining to climate change, biodiversity and other natural-capitalconsiderations, the human capital issues including diversity, as well as to human rights, and labor practices.
Moreover, these factors are becoming more complex and mutually influential due to the effects of politicaltrends and other matters. At Resona Asset Management, we recognize the importance of ESG integration,
which takes these factors into consideration in relation to investment decisions and investing activities, isincreasing each year. Therefore, in 2023, we established our Resona ESG Assessments method which
serves as a unified ESG evaluation approach used consistently throughout the Group to assess investee
corporations. Utilizing this evaluation approach as a basis, our investment teams compile their stock/bonduniverses, carry out company analyses, build portfolios, and pursue other such actions based on individual
team investment philosophies and strategies, all of which contribute to advancements in ESG integration.

ESG integration process

Resona ESG
Assessment

Available investment universes
Domestic stocks

Foreign stocks

Market capitalization,
creditworthiness, liquidity, etc.

Investment universes
Market-focused

Value-focused

Small-caps stock

Global corporations(1) Stock/bond issuersthat don’t pass ESG
evaluation are
eliminated(2) Stock/bond issuers
rated highly in ESG
assessment areadded as candidates

In the Company’s active equity investment, each investment strategy has its own distinctive approach tocompany analysis. Accordingly, each investment strategy has a different process for reflecting Resona
ESG Assessments in its analysis of investee candidates and investment decisions. Below, we will
introduce this process using the market-focused strategy, which is one of the Company’s main strategies.
▪ Example in market-focused strategy
・ In the market-focused strategy, an asset management professional conducts an evaluation of profit growthsustainability on stocks in the portfolio. Specifically, scores are assigned on a five-point scale, making reference
to three elements: (1) ability to create social benefits, (2) level of social need, and (3) social sacrifice and risk.
The asset management professional grasps the overall Ratings of the Resona ESG Assessments and the scoresfor each ESG theme, as well as the backgrounds for them. If necessary, the scores for (2) level of social needand (3) social sacrifice and risk will reflect the Resona ESG Assessments.
・ The evaluation of profit growth sustainability taking into account the Resona ESG Assessments is reflectedin the decision making on purchases and sales related to the portfolio and on the weighting of holdings.
Three elements of growth sustainability analysis under the market-focused strategy

Ability to grasp the needs of customers and society and realize
products and services(2) Level of social
need

Presence of social change and issues that could increase need for abusiness

Portfolio

Small-caps stock

Structuralreform
reliability
analysis

Management
reliability
analysis

Portfolio

Portfolio

ISDK
analysis

Portfolio(3) Consideration istaken of ESG
evaluation results(4) P ortfolio risk
analysis andmonitoring are
carried out→Increase in demand for environmental products and cyber-risk related products, etc.

Potential risk factors that hinder sustainable corporate activities→Negative impact of corporate activities on society, compliance and governance issues(1) Ability to create social benefits

High

Global corporations→Ability to identify social needs, realize them, respond to change, and create markets, etc.

Low(2) Level of social need

Growthsustainability
analysis

Value-focused4

Process for reflecting Resona ESG Assessments in growth sustainability analysis*

Investment-candidate groupsMarket-focusedCh.

(1) Ability to createsocial benefits(3) Social sacrifice

Low

３

High

３

４

５

５

３

３

３

４

５

２

３

３

３

４

１

２

３

３

３

１

１

２

３

３

Note: ■boxes display active stock investment strategy names

Overallevaluation
5
4
3
2
1

4

Excellent
Good
Average
Below average
Poor

Growth potential
evaluation

5(3) Social
sacrifice−1(1)Stocks/bonds that do not meet Resona ESG Assessments standards are eliminated from the investment universe.

(However, if the stock/bond issuer exhibits promise for improved ESG assessments results in the future, we may choose toinvest with engagements as a prerequisite.)(2) Stocks/bonds that are highly rated in ESG assessment are added to the investment-candidate group.
(3) Deliberations are made based on Resona ESG Assessments results and other ESG-related factors.
(4) ESG-related portfolio risk is analyzed and monitored.
Note: Of these four items, numbers 1 and 4 are implemented as a part of all investment strategies, whereas numbers 2 and 3
are used only in certain investment strategies.

48

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Chapter

ESG Integration at Resona Asset Management

Responsible
Investment
SectionOpportunity evaluation
Additional points for high evaluation

ResonaESG
Assessments

Greater decrease in points
when risk is higher* A case where (1) ability to create social benefits and (2) level of social need received the highest ranking of 5, while anegative point of minus one was received for (3) social sacrifice.

49

4

ESG Integration at
Resona Asset Management

ESG integration / fixed income / active
Our approach to ESG integration
In bond investments, the portfolio can be severely damaged if the invested bonds default before
redemption or lose investment grade due to downgrades resulting from deteriorating credit
quality, forcing bond to be sold at a substantial loss. Therefore, in bond investments where
downside risk is high, we need to avoid such risks in advance in order to realize stable andcontinuous investment returns on the assets entrusted by our customers.
In general, credit ratings used commonly as indicators for creditworthiness in bond investing aredetermined primarily based on predictions of earnings and other financial performance factors
over the next one-to-two years. However in bond investment, generally, the maturity period of thebonds invested in often exceeds this, and the medium- to long-term earnings, financial and otherprospects are not necessarily reflected in the credit rating. Moreover, in regard to non-financial
information disclosure, various experimentations and attempts have been carried out in recent
years, but non-financial information has yet to be explicitly reflected on credit ratings. In order toavoid risk until redemption, it is necessary to carry out assessments of non-financial information
not adequately expressed by credit ratings and pursue precise medium- and long-term forecastsof financial performance and profitability. None of these are easy, but we believe it is importantto properly incorporate them into investment decisions, as they could lead to various risks if leftunchecked, and could lead to the abandonment of creditworthiness in the medium to long term.
▪ESG-related issues andpotential risk areas

Environmental

Financial issues
Corporate
strategy

ClimatechangeCompany
performance

Corruption
and disposal
issuesDeforestation

Diversity

HumanrightsLabor
standards
Product
liability

Local
society

Corporate
governance
Board ofdirectors

Transparency
and information
disclosure

Relationshipwithstockholders

Directorcompensation

Failure to monitor and address these risks can lead to various problems

E◦Stranded asset risk

◦Reputational risk

May bring about major declines inbusiness value and have adverse
effects on future cash flows for thecompany

May result in loss of public trust andhinder future business continuity

S◦Supply chain risk
May result in loss of supply networks
and hinder future business continuity

50

1) W
 hile referring to Resona ESG Assessments results, we identify common ESG-related factors in the bond issuer’sindustry that may affect creditworthiness. For example, we consider decarbonization is one such factor in the electric
power industry, and countermeasures to declining birthrates and aging populations is a factor in the railway industry.
２) After examining Resona ESG Assessments results, common ESG-related factors in the issuer’s industry, and
ESG-related factors unique to the issuer, we complete a medium-to-long-term credit evaluation. ESG factors that
may influence future creditworthiness come in many forms, including establishment of new industry regulations,
government policy changes, demographic changes, resource depletion risk, and others. Then, by qualitatively
analyzing the paths through which these ESG factors affect credit quality, future credit risk in bond issuers can beassumed and reflected in investment decisions.
３) Based on assessment from steps 1) and 2), our credit analysts and fund managers meet and hold discussions,then use the results of said discussions to determine investment periods, investment weighting of each bond andother such details of investment activities. For example, if certain industry regulations are slated for strengthening
in ten years’time, and we can predict with a high probability that those changes will have impacts on current
industry business models, we will choose to invest for no more than ten years in related bonds. In this way, wetake consideration of not only current credit ratings, but of future credit risk as well.

In principle, we will not invest in bonds of issuers that do not meet the minimum evaluation in the“Resona ESG Assessments.”However, if we do invest in such bonds as a result of our comprehensive
evaluation, we will encourage issuer to take action for improvement through engagement.

Individual investee selection

Resourcesand energy

SocialIn order to reflect such difficult-to-predict future forecasts and non-financial information in ourcreditworthiness assessment and investment decisions, we conduct ESG integration in our bondactive management based on our“Resona ESG Assessments”from the perspective of assessing thecreditworthiness of the bonds we invest in. Considering the characteristics of bond investments,
where upside is limited while downside risk is high, we consider“Resona ESG Assessments”mainly
in evaluating the long-term creditworthiness of issuers in order to prepare for risks that may affectthe creditworthiness of issuers until redemption. The ESG integration process proceeds as follows:▪ ESG integration process (corporate bond investment)

Water
resources

Capitalstructure

ESG integration process◦Business continuity risk

May reduce functionality of the corporate governancesystem and hinder management continuity

G ◦Information-quality deterioration risk
between parties with shared interests

May prevent equitable and timely
provision of information to stakeholders

Identification of ESG factors that have major
impacts on bond investments

Creation of investment
candidates list

Offers to brokerage firms (bond names,
spread, amount, etc.), collection of newly
released information, and organization ofsaid information as data

Selection of investablebonds

Select corporate bonds with attractive
spreads relative to their ratings within theirrespective industries, and checks using
quantitative models that assess bankruptcy
probability, predicted credit ratings and so forth

Qualitativeevaluation
Creation ofbuy/sellcandidates
list

Creditworthiness evaluation with reference to
Resona ESG Assessments results

In pursuit of relatively promising
investments, we determine suitable
investment candidates and build ourportfolios while taking full considerationof Resona ESG Assessments results

Climate change: environment-related factors,
decarbonization
Lifestyle-infrastructure resilience: declining
birthrates and aging of society, infrastructure
maintenance and management, etc.

Medium- and long-term creditworthiness evaluations① Introduction of new regulations② Changes to important government policies③ Demographic changes④ Resource depletion risk
⑤Increased scale of natural disasters and infrastructure aging⑥ Technological advancements and obsolescence⑦Maintenance of adequate governance functions ...and others

Reflection in investment activities
Determination of eligibility for investment,
consideration of investment periods andinvestment weights

During ESG assessment, we take full consideration of issues identified by credit analysts as well as
Resona ESG Assessments results while also pursuing engagement with bond issuers in order tomake comprehensive assessments on which to base our decisions. Furthermore, we coordinate
these efforts with the Responsible Investment Division, Equity Investment Division and otherrelevant divisions in order to realize a multi-tiered approach.
For SDG Bonds such as Green Bonds and Social Bonds, we also appreciate that the bond issue
itself is a strong engagement with society, as evidenced by the specific use of funds and theestablishment of key performance indicators (KPIs) in Sustainability Linked Bonds. When investingin these SDG Bonds, in addition to the usual credit quality analysis, we evaluate and monitor theinvestment in cooperation with the Responsible Investment Department regarding conformity withguidelines and principles of ICMA, the Ministry of the Environment, and the Financial Services
Agency, as well as the existence of third-party certification and information disclosure.
51

Responsible Investment Section

ChapterCh.

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ESG Integration at Resona Asset Management

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Investment
Section4

ESG Integration at
Resona Asset Management

ESG integration in equity quantitative investment

ESG integration in passive investments

Approach to ESG integration

Resona Asset Management incorporates ESG (Environmental, Social, and Corporate
Governance) integration into passive investing through the following strategies:

Here we introduce our approach to ESG integration in quants value strategy.
Because sustainability (ESG) means the sustainability of future corporate profits, it is importantto take ESG into account when thinking about investment philosophy. Price-earnings ratio(PER) is an example of an indicator of undervalued stocks that expresses the attractiveness ofthe stock. Two different stocks for which the most recent corporate profits are the same, andthat have the same market capitalization, will have the same PER. However, if theirsustainability is different, the downside risk to future profits will also be different. For thatreason, the stock with the higher level of sustainability is the more attractive. Accordingly, it isimportant that ESG is taken into account when calculating the attractiveness of a stock.
Meanwhile, in order to practice ESG effectively, it is important that it is incorporated into thecompany’s value creation story by including ESG in the business strategy formulation process.
Therefore, we consider it important to analyze the degree of ESG incorporation in the value
creation process when building a portfolio.

The process of ESG integration in quants value strategy is shown in the diagram below.
To analyze the degree of ESG incorporation into the value creation process, we conduct text
mining of integrated reports and calculate a sustainability factor. In these calculations, we
utilize concepts such as the SDGs and ESG issues based on Resona’s Materiality Matrices.
Furthermore, in selecting the investment universe, according to the“ESG Integration Policy”
and the“Policy on excluding specific weapons manufacturers,”we have excluded ESG
non-compliant stocks (Resona ESG Assessments) and specific weapons manufacturers fromthe investment universe.
Calculating attractivenessof stock (alpha)2

Resona Alpha Model (Value)
Attractiveness of value stocks

3

Portfolio
weights
calculation

4

Trade
execution

Price-to-book ratio

Profit-based indicators of value stocks
Price-to-earnings ratio
Price-to-sales ratio
Price-to-cash-flow ratio
EBITDA/EV ratio…
Supplementary factors
Financial soundness

Composite alphaDividend yield

Integrated
Integrated
reportreportCompany
CompanyabIntegrated
reportCompanyc

Investment focus on SDG Bonds
We are managing funds primarily focused on SDG Bonds, which promote investment in green
and social projects, contributing to the realization of a sustainable society. We carefully selectSDG Bonds based on their financial efficiency as well.
Additionally, we conduct outcome assessment for some of the SDG Bonds in which we invest.

Identify bonds issued in accordance with the Green Bond Principles, Social Bond
Principles, and Sustainability Bond Guidelines, as well as other principles andguidelines established by the International Capital Market Association (ICMA).

Considerationof investment
attractivenessNarrow down the selection of bonds for investment based on factors such as
duration, credit rating, yield, and other relevant considerations.

Confirmationof concept
conformity

Engage in discussions with the Responsible Investment Division, which focuses onenvironmental, social, and governance (ESG) factors, to confirm whether the activitiesof the bond issuer align with Resona Asset Management’s values and material factors.

InvestOptimalportfolio

Rebalancing
plan

To enhance the credibility and wider dissemination of SDG Bonds, ICMA, along with relevantJapanese government bodies such as the Ministry of the Environment and the Financial Services
Agency, has established guidelines. SDG Bond issuers are required to clearly state information on the
Use of Proceeds, the Process for Project Evaluation and Selection, and the Management of Proceeds.
Additionally, they must disclose up-to-date information on the use of proceeds (Reporting), impacts,
and other relevant details. These measures ensure bond eligibility and enable investors to makeinformed decisions based on the information provided by the issuer.
Types of SDG Bonds

Trade execution

Green Bonds

Social Bonds

Green Bonds are any type of bond instrument where theproceeds will be applied to finance Green Projects related torenewable energy, energy conservation, biodiversity
preservation, etc.

Social Bonds are any type of bond instrument where theproceeds will be applied to finance Social Projects related toeducation, promotion of greater diversity, etc.

Sustainability Bonds

Sustainability-linked Bonds

Sustainability Bonds are any type of bond instrument where
the proceeds will be applied to finance a combination ofboth Green and Social Projects.

Bonds whose interest rates and/or other financial
characteristics are variable in response to progress madetoward sustainability-related goals and targets declared by
the issuer.

Corporate size
Momentum

ESG analysis(text mining)52

Sustainability factor (ESG)
…

Ch.

4

Bond selection

ResonaRebalancing Model

Asset-based indicators of value stocks

Investment universe

We manage index funds that are benchmarked against ESG indices. When selecting ESG
indices, we conduct a comprehensive evaluation, considering factors such as the index’s pastperformance, the methodology used to integrate ESG factors, and the services provided by
the index providers.

▪ SDG Bond selection process

ESG integration process

Selection of
1 investment
universe

Management adopting ESG indices as benchmarks

Responsible Investment Section

Chapter

53

ESG Integration at Resona Asset Management

Responsible
Investment
SectionResponsible
Investment Section

Self-assessment on responsible investment activities
As an institutional investor serving as an asset manager, Resona Asset Management hasestablished its Basic Policy on Responsible Investment with the aim of explicitly stating its
approach to helping enhance investment return of its clients from a medium- to long-term
perspective. Accordingly, we carry out three specific measures (i.e., ESG incorporation,
constructive engagements, proxy voting). We also conduct self-assessments on a regularbasis to further heighten the level of such measures. These self-assessments correspond to
the assessments described in Guidance item 7-4 of Japan’s Stewardship Code.​

Self-assessment process
Resona Asset Management’s Policies on Japan’s Stewardship Code stipulates that,“Resona AssetManagement believes that appropriately performing self-assessment with respect to its policies andmeasures pertaining to its responsible investment is important. Under that premise, we will develop
an effective assessment framework that involves taking on tasks such as precisely determining issues
in conjunction with external assessment, while operating on the basis of self-assessment performedby members of the Responsible Investment Committee.”Our Responsible Investment Committee
plays an important role in fulfilling Resona Asset Management’s responsible investment andstewardship responsibilities.
We have conducted a tiered survey (including free text comments) of the Responsible Investment
Committee members. The survey consists of checkpoint questions asking whether or nots・sufficient measures are being taken for the required principles and guidelines of the Japan’
Stewardship Code;・there is an adequate organizational structure to conduct stewardship activities;
・a PDCA cycle is being implemented; and・the Responsible Investment Committee meeting is being adequately operated.
The 2022/2023 self-assessment period covers from July 2022 to June 2023.
At the September 2023 Responsible Investment Committee meeting, following items were reported
and raised to discussion.
・Countermeasures to the 2021/2022 assessment.
・2022/2023 assessment results.
・Countermeasures to the 2022/2023 results.

Self-assessment and measures▪ Measures taken to address issues in 2021/2022

From the 2021/2022 assessment, we recognized the following issues:❶ conducting a unified company-wide ESG assessment and enhancing ESG integration and❷ establishing a clear engagement process and defining engagement progress and outcomes.
We took the following countermeasures:❶ Established the ESG Integration Policy to clarify and integrate the ESG assessments into
investment decisions. We have established the Resona ESG Assessments and started integratingthem into our process, and we have set December 2022 as the base date. The Resona ESG
Assessments enables us to assess the ESG risks & opportunities of the listed equities and fixedincome by a unified standard.
❷ Established the Engagement Policy, and formulated Engagement Plans based on 3 major
policies, which are Climate Change Policy, Natural Capital Policy, and Policy on Human Rights
Related to Investment Management. Moreover, we have recognized a continuous necessity to
conduct deeper discussion to measure the engagement outcomes and contribution.

54▪ 2022/2023 activities and self-assessment (during the period from July 2022 to June 2023)

The activities and self-assessment results based on Japan’s Stewardship Code are shown below. Eachmeasure against principles enabled us to enhance and improve our stewardship activities. The operationof the Responsible Investment Committee meeting was deemed to be“generally appropriate.”
Principle

Measures and self-assessment
Measurestaken

Principle 1
Formulation of policies
and public disclosure

We have established various policies on responsible investments in order to enhance the relevant processes.
In January 2023, we have established and publicly disclosed our specific operation policies: the ESG
Integration Policy and the Engagement Policy. In tandem with this, we have also established and publicly
disclosed the Exclusion Policy for Specific Weapons Manufacturers. As climate change, human rights, andnatural capital are material engagement issues, we have established and publicly disclosed the related
policies as follows:
January 2023: Climate Change Policy,
August 2023: Natural Capital Policy and Policy on Human Rights Related to Investment Management.
The establishment of various policies and formulation have contributed to clarifying and enhancing theSelfstewardship activity process. In line with these policies, we recognize the necessity to enhance theassessment effectiveness of our stewardship activities and the monitoring process of these activities.

Principle 2
Disclosure on
managing conflict ofinterests

Principle 3
Monitor investee
companies

Principle 4
Engagement(Constructive“Engagements”with
investee companies)

Principle 5
Proxy voting

Principle 6
Reporting periodicallyto clients andbeneficiaries
Principle 7

Competence in stewardship
activities in depth knowledge of theinvestee companies and theirbusiness environment and skills andresources needed to appropriately
engage with the companies andmake proper judgments in fulfilling
their stewardship activities

Measurestaken

We have established the Conflicts of Interest Management Guidelines as part of internal guidelines. Based on
this policy, we identify and classify transactions that could involve conflicts of interests related to stewardship
activities, and manage them appropriately. At the August 2023 Responsible Investment Verification
Committee meeting, the appropriateness of the conduct was verified.

No measures were deemed as inappropriate, and we plan to continue managing and verifying appropriately.
Selfassessment

Measurestaken

During the reporting period, we created the Resona ESG Assessments, a proprietary ESG assessment indicator,
for ascertaining the ESG risks and opportunities of listed equities and fixed income by a unified standard. We
have also introduced a company-wide research information platform. The platform enables us to centralize
and share the engagement themes and details, voting results, Resona ESG Assessments, by each division.

The establishment and introduction of the Resona ESG Assessments and the information platform haveSelfsignificantly increased the transparency and clarity of our integration process. However, there is room forassessment improvement in the assessment logic of the Resona ESG Assessments and the integration process.

Measurestaken

Based on the Engagement Policy and the Climate Change Policy, we have formulated Engagement Plans andimplemented them. We have conducted engagement for each classification and department in charge on
issues for investee companies, either in-house or through collaboration. We continued to participate actively
in collaborative engagement, and in FY 2022, we participated in additional collaborations including theAdvance initiative on human rights led by PRI.

We consider that we have succeeded in conducting effective engagement. To increase
Selfobjectivity, however, we need to have a deeper discussion about measuring the effect.
assessment
Measurestaken

As usual, we have revised our proxy voting guidelines. The main revisions were director appointment criteria
on gender diversity and cross-shareholdings. For proxy voting execution, we determined our voting based on
the status and the outcome of the engagements. The proxy voting proposals that were unable to clearly
determine were raised to the Responsible Investment Committee meeting.

We recognize that we were able to vote systematically based on the engagement outcomes and not by
Selfmaking simple mechanical judgements.
assessment

Measurestaken

We have issued Stewardship Report since 2018. We have renamed the 2023/2024 report to“Sustainability
Report.”The Sustainability Report provides greater clarity and detail on our measures and activities driven by
our purpose.

Our disclosure has improved markedly by the establishment of the Responsible Investment Policy and publication
Selfof the Sustainability Report. We plan to clarify that these measures contribute to our clients’interests.
assessment

Measurestaken

In FY 2022, we established a new Planning Promotion Group within the Responsible Investment Division and increased
the team, aiming to promote and accelerate companywide responsible investment activities. The Responsible
Investment Committee conducts ongoing discussions to innovate and improve responsible investment activities.

The level of knowledge and experience required for responsible investment activities generally is becoming
Selfhigher. We need to enhance human capital management towards highly professional ESG staff.
assessment▪ Awareness of issues and future measures

We have recognized the following issues through the self-assessment process.
・Enhance the effectiveness of measures and progress monitoring following the establishment ofvarious policies.
・Deepen discussion on engagement contribution measurement.
・Establish an organizational structure for human resource development and enhancement in the
responsible investment area.
We plan to implement specific action plans to resolve these issues. The oversight scheme isestablished at the Responsible Investment Committee meeting to monitor the progress andoutcome of the action plans.

55

Responsible Investment Section

Assessment on Responsible
Investment Activities

Ch.

5

Assessment on Responsible Investment Activities

5

Chapter5

Assessment on Responsible
Investment Activities

External assessment on responsible investment activities
Resona Asset Management works to improve and enhance our responsible investment
activities by conducting regular self-internal (see pages 54-55) and external assessments.
With regard to external assessments, we place particular importance on the annual
assessment by the PRI, and are working to maintain and improve these assessment ratings.
In the PRI Reporting & Assessment, asset managers answer questions about the status of
their activities and achievements regarding mainly principles 1, 2, and 6 of the PRI’s six
principles, as well as their response to climate change. Based on the responses, the PRI
assesses the activities based on a numeric score and a star rating (on a scale of one to fivestars) for each assessment item as shown in the table below. In the 2023 PRI Reporting &Assessment, we received the highest rating of five stars in five of the seven assessment
items.
In addition, the numeric scores for these five items were well above median.
On the other hand, the assessment score on“Confidence building measures”was lower
than the median.

▪2023 PRI Reporting & Assessment
Assessment indicators

RatingScore

Medianscore

Policy/Governance/strategy

★★★★★

92

60

Passive

★★★★★

91

42

Quants

★★★★★

92

65

Fundamental

★★★★★

92

71

SSA (Government bonds, Supranationalbonds, Government agency bonds)

★★★★☆

82

59

Corporate bonds

★★★★★

92

68

★★★☆☆

59

80

Listedequities

ActiveDirectinvestment

Fixed
incomeConfidence building measures

Initiatives to maintain and improve external assessment ratings
We implemented the following initiatives to improve our scores in the annual PRI
assessment. Going forward, we will continue to implement initiatives to maintain andimprove our ratings. In particular, for the indicator“Confidence building measures,”we havealready identified the problems and are proactively addressing them.
Principles

Principle 1
Should have a clear
policy on how they fulfill
their stewardship
responsibilities, andpublicly disclose it. We
will incorporate ESG
issues into investment
analysis and investment
processes.

Principle 2
Should have a clear
policy on how they
manage conflicts ofinterest in fulfilling theirstewardship
responsibilities andpublicly disclose it. We
will be active owners
and incorporate ESG
issues into ourownership policies andpractices.

Main initiatives◦InJanuary2023,wehaveestablishedtheESGIntegrationPolicy.
◦Regardingclimatechange,humanrights,andnaturecapital,whicharetheenvironmentalandsocialissuesthatweconsidermost
important,wehaveoutlinedourbasicphilosophyandapproachto
theseissuesbyformulatingandpubliclydisclosingour“climatechangepolicy,”(January2023),“Humanrightspolicyonassetmanagementoperation”(August2023),and“naturecapitalpolicy”
(August2023).
◦WedevelopedResonaESGRatingforascertainingtheESGrisksandopportunitiesofcompaniesandbondissuersusingaunified
standard.

Ch.

5◦InJanuary2023,weestablishedandpublicizedtheEngagement
Policy.Thispolicyclearlystatesthatwewillconductengagements
afterdeepeningourunderstandingoftheESGrisksand
opportunitiesofinvesteecompanies.
◦Wehaveidentifiedthethreetypesofengagements:materiality(top-down),informationdisclosure,andbottom-up.
◦WeactivelypursuedcollaborativeengagementsuchastheInstitutionalInvestorsCollectiveEngagementForum(IICEF),and
CA100+.
◦Inourproxyvotingguidelines,wehaveintroducedescalationand
policiesrespondingtoshareholderproposalssuchasclimatetransition.
◦Since2023wearedisclosingourproxyvotingresultsonglobal
equities.

Principle 6▪Reference
SUMMARY SCORECARD

https://www.resona-am.co.jp/oshirase/2023/pdf/231222_o1.pdf
PUBLIC TRANSPARENCY REPORT 2023

https://www.resona-am.co.jp/oshirase/2023/pdf/231222_o2.pdf

56

Report periodically on
how they fulfill theirstewardship
responsibilities including
their voting
responsibilities, to theirclients and beneficiaries.
We will each report on
our activities andprogress towards
implementing thePrinciples.

Responsible Investment Section

Chapter◦Wehavedisclosedourvariouspoliciesonresponsibleinvestments.
◦Weregularlydiscloseresponsibleinvestmentactivitiestoour
customersandbeneficiariesthroughthisSustainabilityReportand
ourwebsite.

57

Assessment on Responsible Investment Activities

Responsible
Investment
Section