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Sumitomo Mitsui: The power of trust is a curious thing
Unraveling Japanesecompanies
HIROKO NAKATACONTRIBUTING WRITER

The Japanese financial industry got caught
off guard a few years ago when Sumitomo
Mitsui Trust Holdings Inc. made a radical
turn in its business policy — ending crossshareholding, a common practice among
Japanese banks.
The group announced in May 2021 that
it would eventually sell off all of its shares in
its corporate partners. Such holdings werethen worth about ¥1.4 trillion ($12.8 billion).
“It was our pledge not to hold shares forpolicy purposes as a stable shareholder likein the past,” President Toru Takakura said ina recent interview, part of a monthly series
by Naonori Kimura, a partner for the consulting firm Industrial Growth Platform Inc.
(IGPI). “Cross-shareholding has a history ofbuilding trust with our customer companies, but we decided not to carry over thebusiness practice,” he said. Ending it would
require time, however, because consensus
with the other firms was needed, he added.
The announcement of the new policy
came the month after his appointment aspresident.
The decision was one of a number ofsymbolic actions taken in the changing global business environment, where
financial institutions and companies are

required to take a bigger role in social andenvironmental issues to stay sustainable. Itshows that the trust banks, which conduct
a wider range of business and have longerterm commitments with customers thanordinary Japanese commercial banks, areshifting their core business from conventional interest income to a combination offinancing, asset management and advisory
services that require high expertise.
The drastic policy change also means
the 100-year-old banking group has takena step to stimulate the dynamism of theJapanese stock market. “Such reduction incross-shareholdings will not only improvethe capital efficiency of our finance but also
contribute to a better circulation in Japan’s
capital market,” the May 2021 press releasesaid.
Historically, Japanese banks and theircustomer companies have held shares ineach other to bolster their business ties. The
strategy has helped to cement relations
and at the same time protect against hostile
takeovers. But that insulation from outside
parties has also been criticized by financial
experts and overseas investors as limiting
shareholder-led governance, and mutualshareholding has gradually declined in thepast decades.
The release said the group wanted tocontribute to a positive circulation of funds,
assets and capital and to the improvement of customers’ corporate values. The
group would utilize the capital generated
by selling its mutually held shares, partly“It was our pledge
not to hold shares forpolicy purposes as astable shareholder
like in the past,” said
Takakura.
HIROMICHI MATONO

Toru Takakura, president of Sumitomo Mitsui Trust Holdings Inc. HIROMICHI MATONO

by directing ¥500 billion through the business year ending in March 2031 into impact
equity investments to help address social
issues.
In 2022, Sumitomo Mitsui Trust also
made a strategic partnership with the
New York-based alternative asset manager
Apollo Global Management Inc., aiming tohelp individual investors and pension funds
invest in private assets and for such asset
movements to accelerate the trend of shifting money from savings into investments.
These decisions were based on thegroup’s corporate purpose, set in 2020,“Trust for a flourishing future,” making it
one of the country’s first financial groups tointroduce the concept of a corporate purpose into business management.
In addition to the drastic policy shift,
Sumitomo Mitsui Trust pledged three

Casa del Cibo
Italian cuisine that conveys the appeal of Hachinohe

numerical targets in its midterm management plan for the three years to March
2026. The first was to lift its return on equity
to 10% or higher. The second was to generate a net profit of ¥300 billion or more. The
third aimed for ¥800 trillion in “assets underfiduciary” — its term for the balance ofassets under management plus the balanceof assets under administration plus proprietary investments — so it could improve
its price-to-book ratio (PBR) to above 1.0. A
ratio under 1.0 means a share price is below
the value it would have if the company
were liquidated. The low ratios of many Japanese businesses is a long-term problem.
In order to break away from the past,
Sumitomo Mitsui Trust started something
different. One example of its new types ofbusiness is called “positive impact finance,”in which the group evaluates the posi-

MAIKO MURAOKACNTRIBUTING WRITERTAKEO TERAOCONTRIBUTING WRITER

The Italian restaurant Casa del Cibo islocated in Hachinohe, Aomori Prefecture,
which despite its northeastern location
enjoys much sunshine and has relatively
little snow. The city also has a thriving fishing industry and a morning market that has
become quite popular with tourists.
Casa del Cibo’s owner-chef, Ryohei
Ikemi, was born in Kanagawa Prefecture
and trained at restaurants in Tokyo, but theabundance of high-quality local ingredients
inspired him to open a restaurant in Hachinohe, the hometown of his wife, Etsuko.
When the Tohoku earthquake and tsunami of March 11, 2011, happened, the building housing Ikemi’s home and restaurant
remained intact thanks to its elevated location, but an area on lower ground just a few
minutes’ drive away suffered extensive damage from it. It was in these difficult circumstances that Casa del Cibo opened its doors
at the end of April that year.
Offering lunch and dinner at ¥1,500 and¥2,800 ($10 and $18), the restaurant got off toa promising start, drawing many customers
in its first year. But this changed completely
in year two, when business faltered to thepoint of near-bankruptcy.

At that time Casa del Cibo took part in an
event featuring around 20 of the city’s hotels
and restaurants. During the two-month
event period, Ikemi served bouillabaisse
made with Hachinohe seafood, thus bringing
his restaurant to the attention of many locals.
From that time on, the restaurant steadily
gained fans, mainly from nearby areas, while

simultaneously reinforcing its fine-diningside and gradually raising its prices.
Guests are served by Etsuko — Casa delCibo’s sommelier — and staff. Ikemi prepares
all the dishes by himself. Combined withhouse-made desserts prepared by Etsuko,
who is also a pastry chef, the cuisine is truly
refined and elegant.

SOICHIRO MIYASHITA
GOVERNOR OF AOMORI PREFECTURE

YUICHI KUMAGAI
MAYOR OF HACHINOHE

I would like to congratulate Casa del Cibo on being
selected for the Destination Restaurants List 2023.
Aomori Prefecture — andHachinohe in particular — is blessed with
an abundance of sea produce. Chef Ryohei
Ikemi uses an extensive variety of local
ingredients, and uses his excellent techniqueto serve Italian cuisine that conveys the flavors of the ingredients, widely promoting theappeal of Aomori Prefecture’s food. I hopethat this award will encourage more people
to visit Aomori Prefecture and experience its
delights.

I am very honored that Casadel Cibo in our city has been
selected as one of the Destination Restaurants 2023.
Bordered by the Pacific
Ocean, Hachinohe is blessed with a wide
variety of fresh seafood and other ingredients from its thriving agricultural, livestockand fishing industries.
It is my hope that this award will bean opportunity for many people to visit
Hachinohe and enjoy the city’s rich culinary scene, including chef Ryohei Ikemi’s excellent creations featuring local
ingredients.

NAONORI KIMURA
INDUSTRIAL GROWTH PLATFORM INC.
(IGPI) PARTNER

Sustainable management supports
not only engagement activities
from a long-term
perspective but
also a flexible corporate structure.
Sumitomo Mitsui Trust Holdings
Inc., whose earliest predecessor was
founded 100 years ago, has set “Paving
the Way for the Next 100 Years with
the Power of Trust” as the core policyof its new medium-term management
plan and is carrying out activities forthe sake of the future. The company
has broken new ground: taking a “backcasting” approach by outlining where
it wants to be in 2030, pledging to sell
all its cross-shareholdings and setting numerical targets including a 10%
return on equity.
Of particular note is that it has set
up a sustainability committee geared
toward the creation of social and economic value. It also has pledged to contribute to carbon neutrality and strong
supply chains. As for human well-being,
it actively invests in human capital,
recruiting and training diverse people
with high expertise. Meanwhile, it is taking progressive steps matched by few
other banks, such as launching the joint
venture MFA Inc., which carries out longterm investor engagement activities.
The source of the company’s sustainable management is the power ofengagement, which builds long-term
trust with its customers in the trust
banking business, and a corporate structure that has never been rigid, making it
possible to evolve and transform aheadof changes in the business environment.

New geopark museum, cycle park
showcase Tsukuba’s attractions
ESG/SDGs

Address
Casa del Cibo
1-19-6, Minatotakadai,
Hachinohe, Aomori
http://www.casa-delcibo.com

tive and negative impacts of a company’sbusiness on the environment, society andthe economy and extends loans in such a
way that the company maximizes its positive impacts and limits negative ones. The
group’s technology-based finance team,which was launched in 2021, used its expertise in hydrogen, batteries, chemicals andother crucial areas in this process. Then it
monitors the company’s business activities
by checking disclosed data. In this business,
Sumitomo Mitsui Trust collects not only theinterest on the loans but also service fees.
Last April, the group established thejoint venture MFA Inc., which carries
out ownership engagement activities onbehalf of institutional investors and shareholding financial institutions. It is owned
36% by Sumitomo Mitsui Trust Bank, 25%
by the consulting firm Corporate Directions Inc., 20% by IGPI and 15% by Misaki
Federation Inc.
One reason for the banking group to
back the new business is the increasing
number of passive investments in the
country, where stakeholder engagement is
becoming just a formality and few actively
support boosting corporate values with along-term perspective.
“I believe real engagement activity is necessary in this country, and this thought isthe base of our joining the joint venture,”
Takakura said. “We’ll support companies toboost corporate values. If there is a mediator to help their engagement, it will probably be beneficial for them.”
Over the century since the Trust Act wasenacted in 1922 to rid Japan of hundreds ofbogus funds, after which the Mitsui Trustand Sumitomo Trust were established in
1924 and 1925, trust banks have reinforced
their function to pass on individual and corporate wealth to the next generation. “Ourmission is to realize what we are entrusted
to by thinking about the future with ourcustomers and beneficiaries. We want tostart the next century by sharing this belief
with our employees,” Takakura said.

The Ibaraki city of Tsukuba in November launched a new facility, Mt. Tsukuba
Gate Park, that focuses on promoting thecharms of the Mt. Tsukuba Area Geoparkand supporting Japan’s cycling culture.
City officials stationed there explained
what the facility offers and how they aim
to nurture the civic pride of local residents
and their children.
Mt. Tsukuba Gate Park comprises Tsukuba Geo Museum and Cycle Park Tsukuba. The museum, housed in the buildingof the former Tsukuba Higashi Junior HighSchool, which was closed six years ago,
showcases local products and industries
that are supported by the area’s natural,geographical and geological characteristics.
Ibaraki is known for the Mt. Tsukuba
Area Geopark, which extends across six
cities, including Tsukuba. It is one of the 46
Japanese geoparks certified by the Japan
Geopark Committee. Three distinctive
features of the geopark — Mount Tsukuba,
Lake Kasumigaura and the Kanto Plain —provide scenic beauty and abundant natural resources.
In the main exhibition room of themuseum, visitors receive three cards at
random, each with a question related
to the geopark, such as “What was constructed on Mount Tsukuba to prevent
landslides?” All the answers to the 39

The Tsukuba Gate Park was created at an
abandoned school. TSUKUBA

PAGE: 7

cards are hidden somewhere in the six
installations displayed in the room. The
installations are interactive, with gamification features such as a board gameand pinball. A three-dimensional puzzle
represents the rock composition and vegetation distribution of Mount Tsukuba,
and a sandbox with kinetic sand helps
visitors understand the shape and depthof Lake Kasumigaura. Some exhibits also
show locally produced crops such as lotus
roots and oranges, or tell the history of thearea — for example, the fact that the wide
area that is now Lake Kasumigaura andthe Kanto Plain were undersea in ancient
times.
“The playful features of the installations
allow children to concentrate and learn
while playing,” said Mt. Tsukuba Area
Geopark Promotion Council staff member
Tetsuya Ono.
There are also rooms that show a video
about the charms of the area and display
archaeological objects unearthed in thecity. Another room is for seminars, workshops and events. “We are planning tohold a series of seminars to train guides
who can engage in activities with us toshare and promote the attractions of thegeopark,” said Rie Kamezawa, the managerof the city’s Geopark Office.
The facility has been the destinationof visits from many elementary schools
in the area and is especially focused on
raising kids’ awareness about their hometown. “Learning good points about their
town is a starting point for efforts to preserve its environment and revitalize thearea. This museum is an ideal place fordoing that, and I feel much closer to the
local people than when I was working
inside the city hall building,” Kamezawa
said.
Geopark Office staff Yuri Nagashima said
the facility is a friendly place for local residents. “I am a graduate of this junior highschool. So I was happy when this place
was given a new purpose instead of being
torn down. I think that many people inthis area feel the same way,” she said.

The Tsukuba Geo Museum is a hands-on
exhibition facility. TSUKUBA

There will also be an event on Feb. 24
involving various activities including craft
workshops and a cycling tour.
The old schoolyard is now Cycle Park
Tsukuba, featuring a 380-meter BMX racing course with a 5-meter start ramp thatmeets international standards, based ona partnership agreement that the city
signed with the Yowamushi Pedal cycling
team, headed by Wataru Watanabe, theauthor of the manga series Yowamushi
Pedal.
The park is equipped with a shower
room, a maintenance area, a rest area anda spacious parking lot. This fulfilled a longstanding hope of many cyclists who rideon the Tsukuba Kasumigaura Ring Ring
Road, a scenic 180-kilometer route designated as one of the six National Cycle
Route. Riders had longed for a parking lot
and a place where they could change. Visitors can also rent bicycles to travel outside the facility for ¥500 ($3.50) per day.
Cycle Park Tsukuba is open from Friday
through Monday as well as national holidays. The fee for using the racing courseis ¥2,000 per day for an adult who is not a
Tsukuba resident. Tsukuba Geo Museum
is closed on Tuesdays and admission is
free.
Tsukuba is a member of the Sustainable
Japan Network, a group of companies thatcooperate with this newspaper to spread
information about sustainability in Japan.
You can also be part of the network; scan
the QR code for more details.