March 11, 2024

“Critical ESG issues” listed by GPIF’s asset managers
In its Stewardship Principles, GPIF stipulates that asset managers should consider ESG factors and thatthey should proactively engage with investee companies on critical ESG issues. Accordingly, GPIF asks
our external asset managers material ESG issues that they consider every year. As a result, the followingissues were identified as material ESG issues among asset managers. The table below represents theissues pointed out by all asset managers, whereas the table on the page 3 shows the percentage ofmanagers who selected each ESG issue as material for each asset. We received responses from 13 asset
managers for domestic equity, 28 foreign equity managers, 14 domestic bond managers and 9 foreign
bond managers.

＜Critical ESG issues listed by all managers in each asset class＞
Domestic
EquityClimateChangeBiodiversity

Human Rights& Community

Board
Structure,Self-evaluation

Minority
Shareholder
RightsCapitalEfficiency

Y 2023

○●

○

○

●

●

●

Y 2022

○●

○

●

●

●

Y 2021○●●

Y 2020○●

Y 2019○ForeignEquity

ClimateChange

Corporate
Governance

Disclosure

Diversity

SupplyChain

Misconduct

○●

○

○

○

○

○●

○

○

○

○

○●

○

○

○

●

○

○

○

○

●

●

○

Biodiversity

Deforestation

Human Rights& Community

Health& Safety

○

○

○

○

Others(Social)○Others(Governance)

Disclosure
○

○

○

○

○

Diversity

SupplyChain

Y 2023○

Y 2022○

Y 2021

○●

○

○

○

Y 2020

○●

○

○

○

Y 2019○●○○Domestic
Bonds

Disclosure○

E (Environmental)

Y 2023
Y 2022◇S (Social)

Y 2021◇G (Governance)

Y 2020◇multiple themes of ESG(*)○: Issues pointed out by all passive equity managers●: Issues pointed out by all active equity managers◇: Issues pointed out by all domestic bond managers
Equity: Listed for a maximum of 5 years. The survey started in 2018.
(The survey results of past years are available on the GPIF website:
https://www.gpif.go.jp/en/investment/stewardship-activities.html).
Bond: No issues were identified by all foreign bond managers since the survey started in 2020.

＜Domestic equities＞
GPIF asked external asset managers entrusted with equity investment about critical ESG issues since
2018. This is the sixth survey to equity managers.
All passive and active managers consider "Disclosure" and "Climate Change" to be a common andcritical issue. Meanwhile, except for "Disclosure" and "Climate Change," passive and active managers
differ in terms of the issues they consider critical. Passive managers recognize a wide range of long-term
issues, including E (environmental) and S (social) issues such as "Diversity," "Supply Chain," and"Human Rights & Community" as more critical, which is the same as before. "Biodiversity" was newly
listed as a critical ESG issue by all passive managers in this year’s survey. The final TNFD (Taskforce on
Nature-related Financial Disclosures) Recommendations on nature-related issues were published in
September 2023, and the disclosure of nature-related is expected to expand in the future. In addition,
Nature Action100, a collaborative initiative related to nature and biodiversity, was launched, and PRI
announced the establishment of the new initiative of collaborative engagement, " Spring" at PRI in
Person held in Tokyo in October 2023, which suggests institutional investors' interests in this issue arealso increasing.
The critical ESG issues selected by all active managers remained unchanged from last year, withrecognizing G (governance) issues such as "Board structure & Self-evaluation," "Minority Shareholder
Rights," and "Capital Efficiency" as more critical.

＜Foreign equities＞
Although the critical ESG issues selected by all foreign equity passive managers have fluctuated fromyear to year, "Climate Change," "Diversity," and "Disclosure" have been identified as critical ESG issues
for the fifth consecutive year. All of these are regarded as material by domestic equity passive managers
as well, indicating that they are common issues for both domestic and foreign equities.

＜Domestic and Foreign bonds＞
GPIF has also asked external asset managers entrusted with bond investment about critical ESG
issues considered from the perspective of corporate bond investors since 2020. This is the fourth survey
to bond managers.
In this survey, there is no issue that all managers recognized as critical; however, "Disclosure" and"Climate Change" are most frequently identified as critical issues by domestic bond managers, and"Climate Change" by foreign bond managers, indicating that regardless of the asset class, "ClimateChange" is considered as a critical issue by most managers.

2Copyright © 2024 Government Pension Investment Fund All rights reserved.

The following table shows the percentage* of managers selected each of the "Critical ESG issues" byasset class.

Critical ESG isssues
Climate Change
Deforestation
Water Stress, Water Security
Biodiversity
Pollution & Resources
Waste Management
Environmental Opportunities
Others (Environment)
Human Rights & CommunityProduct Liability
Health & Safety
Labor Standards
Controversial Sourcing
Social Opportunities
Others (Social)

Board Structure, Self-evaluation

Risk Management
Capital Efficiency
Minority Shareholder Rights
Corporate GovernanceAnti-Corruption
Tax Transparency
Others (Governance)
Supply Chain
Diversity
Disclosure
Misconduct
OthersDomestic Domestic Foreign
Foreign
Doｍestic
EquityEquityEquityEquityBomds
Passive
ActivePassive
Active
100%
100%
100%
92%
93%
83%
29%
75%
33%
36%
83%
43%
75%
42%
43%
100%
71%
50%
54%
71%
50%
43%
50%
29%
29%
67%
71%
50%
25%
36%
67%
71%50%
4%
50%
33%
29%
25%
17%
14%
100%
71%
75%
54%
86%
67%
43%
25%
38%
43%
67%
57%
75%
33%
43%
67%
71%
50%
50%
57%
33%
14%
25%
8%
7%
50%
43%
50%
13%
21%
67%
43%
75%
46%
50%
83%
100%
75%
54%
71%
50%
57%
50%
21%
36%
83%
100%
50%
17%
29%
83%
100%
50%
21%
29%
83%
86%
75%
54%
79%
67%
29%
25%
13%
21%
33%
29%
50%
13%
14%
50%
71%
75%
13%
21%
100%
71%
75%
33%
64%
100%
86%
100%
46%
79%
100%
100%
100%
58%
93%
100%
86%
50%
8%
57%
50%
14%
25%
33%
36%

Foreign
Bonds
78%
33%
44%
33%
56%
56%
22%
33%
67%
33%
44%
33%
11%
33%
33%
33%
33%
22%
22%
56%
44%
22%
44%
56%
44%
44%
11%
44%

E (Environmental)
S (Social)
G (Governance)
multiple themes of ESG(*) Percentage indicates the ratio of the number of managers which selected the relevant issue to the number ofactive/passive asset managers. If an asset manager for equities is entrusted to both active and passive mandates, it
is counted as the one with larger amount of mandate entrusted by GPIF.

3Copyright © 2024 Government Pension Investment Fund All rights reserved.