Stewardship Activities Report2022-2023

March 2023

年金積立金管理運用独立行政法人
Government Pension Investment FundFor increasing long-term investment returns,
GPIF will fulfill its stewardship responsibilities bypromoting various activities to encourage longterm perspectives and the sustainable growth ofinvestee companies and the whole capital market.

As indicated in the “Policy to Fulfill Stewardship Responsibilities,” this report covers the following:
Chapter 1. Stewardship & ESG Activities of GPIF; and Chapter 2. “Initiatives and Challenges ofExternal Asset Managers.”
Chapter 3 summarizes “Expectations and Challenges for External Asset Managers and GPIF’s
Action Plans Going Forward” based on the foregoing two chapters.
In addition, the status of shareholders’ voting rights exercised during the period from April 2022 toJune 2022 is shown on pages 45 to 47.

Topics for FY2022<Assessment of stewardship activities for fixed income investment>👉👉 See page 16 for details.

In the fiscal year under review, GPIF began to assess the stewardship activities of external asset managers entrusted with
fixed income investment from the perspective of “how they contribute to the promotion of sustainable growth and the reduction of
credit risks of investee companies.”
The assessment was implemented to confirm if organizations and human resources are well established, for conducting
stewardship activities such as stewardship policy, as well as and principles and systems for managing conflicts of interest. The
assessment of stewardship activities was conducted as part of the “Organization and human resources.”
Evaluation of investment capability
Investment policy
Investment process
Organization and human resources
Provision of information, etc.

As part of “Organization and human resources,” the“Stewardship Activities for fixed income” was assessed.

<Measuring the effects of stewardship activities and ESG investment>👉👉 See page 44 for details.

For the purpose of measuring the effects of stewardship activities and ESG investments, GPIF plans collaborative studies withan external organization in FY2023 and FY2024. In March 2023, GPIF announced an open call for the quantitative analysis
consulting business. The (planned) themes for this project are as follows.

１．Measurement of the effects of stewardship activities

・ Verification of the effects of engagement (Research into the causation between engagement and ESG ratings/ improvement of corporate
value)・ Verification of the exercise of voting rights by external asset managers (Changes in how different when exercising voting rights forcompanies with which they have a potential conflict of interest and other investee companies)

２．Measurement of the effects of ESG investment

・ Verification of the effects of passive investment of equities based on ESG indices (Analysis of the impact of ESG investment on
corporate behavior)・ Study on ESG factors that contribute to the improvement of corporate value and investment returns (Research into the causation
between the ESG factors and the improvement of corporate value/ investment returns)
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<Posting YouTube videos>
GPIF began to post YouTube videos about stewardship and ESG. YouTube video series titled “Understanding GPIF in
10 minutes” introduce GPIF’s stewardship activities and ESG investment for those engaging in ESG activities, IR, andengagement activities with investors at companies.
Videos “Is it safe to manage our pension fund? Let’s Ask Mr. Ueda, CIO of GPIF” and “Frequently asked questions
about GPIF: Let’s Ask Mr. Ueda, CIO of GPIF,” are also now available on YouTube.
Note: All videos are in Japanese only.

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Status of Engagement by GPIF’s External Asset Managers (January to December 2022) (Japanese equities)
Number of companies that held
dialogues

Holddialogues:
946
companies;
Not hold40%
dialogues:
1,401
companies;
60%

Trend of number of dialogues
and companies

Ratio of companies that held dialogues(on a market capitalization basis)

Not holding
dialogues :6%

Number of dialogues held
(passive and active ratios)

Active:18%

Passive:

Holding
dialogues:
94%

Trend of number of dialogues
with executive levels

82%

Number of dialogues held(by theme)

E(Environmental): 23%
G(Governance):
59%

Note: The ratio of the number of companies with which dialogues were held was calculated with thenumber of domestic companies whose shares are held as of March 31, 2022, as a denominator.
Passive and active ratios are counted by the mandates entrusted more by GPIF.

S(Social):18%👉👉See pages 27 to 29 for the status of engagement.

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Characteristics of Four Engagement-enhanced Passive Managers and their Status of Progress👉👉See pages 31 to 38 for moredetails of each manager.

Status of progress (examples)

Characteristics of engagement

Asset Management One

Started in 2018.
Engagement on 18 ESG issues is conducted by ESG analysts withinvestment experience of over 20 years and the person in charge of voting
rights, in collaboration with fund managers and analysts of the asset
management division. The engagement activity makes tangible investee
companies’ challenges, contributing to the improvement of their corporate
value.

FIL Investments

Started in 2018.
Aim for efficient enhancement of β by urging companies with a strong
impact on indices to make reforms based on knowledge of analysts of active
investments. The agenda of engagement are identified from theperspectives of creating corporate value, and the improvement of
profitability and growth potential is pursued by enhancing companies’
competitiveness.

Sumitomo Mitsui Trust Asset

Started in 2021.
Adopt multi-engagement model in which the upper management(chairperson and president) actively participate in engagement. The effects
of engagement are maximized for the increase of corporate value by
combining the top-down approach based on the ESG materiality and thebottom-up approach from the business operation levels.

Management

Resona Asset Management

At the beginning of FY 2022+

At the end of Q3, FY2022

Started in 2021.
Engagement based on the analyses of integrated reports using AI. The
improvement of corporate value of investee companies is sought by setting
the encouragement of disclosure and improvement of quality of integrated
reports as the interim target and a trigger. At present, the scope is expanded
to the Securities Report and also to TCFD-based analysis.

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Chapter 1

Stewardship & ESG Activities of GPIF
1.

Introduction・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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2.

History of GPIF’s Stewardship Activities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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3.

Stewardship Activities for GPIF ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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4.

Status of Participation in Global Initiatives ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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5.

Initiatives for the Sustainable Growth of the Whole Capital Market ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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6.

Engagement with External Asset Managers ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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7.

Assessment of “Stewardship Activities” by Asset Managers for Equity Investment・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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8.

Assessment of “Stewardship Activities” for Other Assets－Fixed Income Investment ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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9.

Assessment of “Stewardship Activities” for Other Assets－Alternative Investment・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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10.

Engagement with Index Providers・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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11.

Initiatives for Promoting Dialogues between Asset Managers and Investee Companies・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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12.

Enhancing Collaboration with Relevant Organizations ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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Chapter 2

Chapter 3

Initiatives and Challenges of External Asset Managers
1.

GPIF’s View on Current Status of External Asset Managers ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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2.

Status of Engagement by Domestic External Asset Managers Entrusted with Japanese Equities (Jan 2022 to Dec 2022)・・・・・・・・・・・・

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3.

Passive Investment Models Focusing on Stewardship Activities “Engagement-enhanced Passive“・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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4.

Critical ESG Issues ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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Expectations & Challenges for External Asset Managers and GPIF’s Action Plans Going Forward

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Status of Exercise of Shareholders’ Voting Rights (Apr 2022 to Jun 2022) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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Stewardship Principles・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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Proxy Voting Principles・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

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Chapter 1 Stewardship &ESG Activities of GPIF

1. Introduction
GPIF signed Japan’s Stewardship Code (hereinafter, “the Japan Code”) in May 2014.
In the Japan Code, “stewardship responsibilities” refers to the responsibilities of institutional investors to enhance medium- to long-term
investment returns for their clients and beneficiaries (including ultimate beneficiaries; the same shall apply hereafter) by improving andfostering the investee companies’ corporate value and sustainable growth through constructive engagement, or purposeful dialogue(engagement), based on in-depth knowledge of the companies and their business environment and consideration of sustainability (mediumto long-term sustainability including ESG factors) consistent with their investment management strategies.
In accordance with the Policy to Fulfill Stewardship Responsibilities which GPIF formulated for the signing, GPIF will endeavor to achieve
its mission to contribute to the stability of pension system management by focusing on the expansion of long-term investment returns forpension recipients through various activities to fulfill the stewardship responsibilities.
The Japan Code consists of the following eight principles.
The Principles of the Codeof the Code
So as to promote sustainable growth of the investee company and enhance the medium-The
and Principles
long-term investment
return of clients and beneficiaries,
1. Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities, and publicly disclose it.
2. Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.
3. Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities with an orientation towards the sustainablegrowth of the companies.
4. Institutional investors should seek to arrive at an understanding in common with investee companies and work to solve problems through constructive engagement withinvestee companies.
5. Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; itshould be designed to contribute to the sustainable growth of investee companies.
6. Institutional investors in principle should report periodically on how they fulfill their stewardship responsibilities, including their voting responsibilities, to their clients andbeneficiaries.
7. To contribute positively to the sustainable growth of investee companies, institutional investors should develop skills and resources needed to appropriately engage with thecompanies and to make proper judgments in fulfilling their stewardship activities based on in-depth knowledge of the investee companies and their business environment andconsideration of sustainability consistent with their investment management strategies.
8. Service providers for institutional investors should endeavor to contribute to the enhancement of the functions of the entire investment chain by appropriately providing
services for institutional investors to fulfill their stewardship responsibilities.

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2. History of GPIF’s Stewardship Activities

2014-16
May 2014
Accepted Japan’s Stewardship Code.
Established “Policy to Fulfill StewardshipResponsibilities.”
March 2015
Established “Investment Principles.”▶“Stewardship activities in equity investment.”
September 2015
Signed “Principles for Responsible Investment(PRI).”▶Enhanced initiatives for ESG.

2017-192020-23

June 2017
Established “Stewardship
Principles” and “Proxy Voting Principles.”▶Requested compliance from asset managers forequity investment.

February 2020
Partial revisions to “Stewardship Principles” and “Proxy
Voting Principles.”▶Requested compliance from managers of all domestic
and foreign assets.

August 2017
Endorsed the revised Japan’s Stewardship Code.

April 2020
Partial revisions to “Investment Principles”▶Following the revisions to the Basic Policy of Reserves,
the revised Principle describes investments taking into
consideration the sustainable growth of investee
companies and the capital market as a whole as well as
ESG.

October 2017
Partial revision to “Investment Principles.”▶Stewardship activities including ESG-oriented
initiatives were expanded to all assets.
November 2019
Partial revision to “Policy to Fulfill StewardshipResponsibilities.”▶Contribute to sustainable growth of markets.

June 2020
Endorsed the second revision to Japan’s Stewardship
Code.
Partial revision to “Policy to Fulfill StewardshipResponsibilities”▶Expanded the scope of subject assets to all domestic
and foreign assets.
▶Clarified consideration of ESG factors.

Assessment of stewardship activities for equity investment
Assessment of stewardship activities for alternative asset investment
Assessment of stewardship activities
for fixed income investment
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3. Stewardship Activities for GPIF
GPIF is a universal owner with a very large fund size and a widely diversified portfolio, and a cross-generational
investor designed as a part of a 100-year sustainable pension scheme. Given such features, prevention of activities
that impede corporates’ long-term growth as well as sustainability of the overall capital market is essential for us tosecure our long-term investment returns. GPIF contributes towards the sustainable growth of the capital market throughthe following activities.
As GPIF invests in equities and exercises voting rights through its external asset managers, we promote constructive
dialogues (engagement) between asset managers and investee companies, taking into consideration ESG
factors that contributes to sustainable growth. Improvement of long-term corporate value will lead to growth ofthe overall economy, which will eventually enhance our investment returns. GPIF shall fulfill our stewardship
responsibilities by promoting engagement and building a win-win environment in the investment chain.

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4. Status of participation in global initiatives
Signed in September 2015
Six principles advocated in 2006 by Mr. Annan, then Secretary General of the United Nations, which
demand institutional investors to include ESG in the investment process.
Participated in Asset Owner Technical Advisory Committee, Global Policy Reference Group and Japan
Network Advisory Committee. In the recent assessment, we were awarded ★★★★ ratings for Investment &Stewardship Policy.
Joined the 30% Club in the U.K., and the Thirty Percent Coalition of the U.S. in November 2016.
Joined the 30% Club in Japan in December 2019.
Established to seek diversity in boards of directors, with the aim of achieving 30% female directors.
Joined in October 2018
A five-year initiative led by investors, established in September 2017. Via dialogues with companies that are
significantly influential in formulating possible solutions to global environmental issues, it focuses on the
improvement of climate change-related governance, initiatives for the reduction of greenhouse gas
emissions, the enhancement of information disclosure, etc.
GPIF, as an asset owner, has also joined its Asia Advisory Group, which provides the steering committeewith advice on the characteristics of the Asian region.
Supported in December 2018
Established by the FSB (Financial Stability Board) at the request of the G20 Finance Ministers and Central
Bank Governors Meeting. In June 2017, the TCFD published voluntary recommendations to encourage
information disclosure on the financial impact of climate-related risks and opportunities to enable appropriate
investment decisions by investors.
Joined in August 2019
Established by a U.S. public pension fund with the aim of promoting shareholders’ rights and corporate
governance and collaborating in the U.S.
Joined in August 2019
An industry association established by institutional investors, focusing on improvement of corporate
governance and encouragement of stewardship activities with the aim of promoting efficient markets andsustainable economy.
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5. Initiatives for the Sustainable Growth of the Whole Capital Market
As a cross-generational investor and a universal owner, it is indispensable for GPIF that the whole capital market grows in a sustainable manner.
Prohibited from in-house investing of equity by the relevant law, GPIF invests and exercises voting rights through external asset managers.
Therefore, GPIF promotes dialogues between its external asset managers and investee companies. GPIF believes that disclosure is important for
both parties to conduct efficient dialogues. Particularly, disclosure of ESG information is likely to gain in importance as non-financial information
disclosure becomes more significant going forward.
GPIF participates in the following domestic organizations which promote disclosure. Agreeing with the purpose of the JPX ESG Knowledge Hub,
GPIF has been a supporter since its establishment in November 2020. In February 2023, GPIF also participated in the ESG Disclosure Study Group.
Participated as a supporter in November 2020.
ￚ ESG Knowledge Hub was established in November 2020 by JPX from the viewpoint of promoting
disclosure of ESG information by listed companies for the purpose of enabling one-stop access tocontent and information which will help understand the ESG investments, and making the ESG
Knowledge Hub a community that connects listed companies, investors, and related organizations.
ￚ The purposes of ESG Knowledge Hub is consistent with significance of GPIF’s stewardship activities
that is to encourage engagement between its external asset managers and investee companies taking
into consideration ESG factors that contribute to sustainable growth. GPIF believes that the progressof ESG disclosure by listed Japanese companies will enhance the Japanese stock market.
ￚ GPIF agreed with the purpose of its establishment, and participated as a “supporter” from the
beginning, with a qualification for participation as an investor and related organization. (As of now,there are approximately 50 supporters, consisting of domestic and overseas investors as well as
related organizations including ministries and other government agencies.)
Participated as an observer in February 2023.
ￚ The major challenge for many Japanese companies and institutional investors is how they should
face the trend of ESG disclosure that has been dramatically changing globally. ESG Disclosure Study
Group was established in June 2020 with the aim of providing listed companies and investors with
opportunities for free and open discussions while enriching ideas on the ideal disclosure of nonfinancial information, which will contribute to the long-term improvement of corporate value, while
paying close attention to global trends.
ￚ Main activities include: 1) search for effective and efficient framework of ESG information disclosure,2) accumulation of implementation examples (verified) relating to ESG information disclosure, 3)
promotion of mutual understanding among stakeholders for better decision making, and 4) publicationof white papers on the study results.

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96. Engagement with External Asset Managers
ￚ GPIF conducts communication with external asset managers by “engagement model” that emphasizes on two-way communication while
expressing our way of thinking toward stewardship responsibilities. Regarding meetings with external asset managers, GPIF has alsoestablished a system to hold meetings and conduct questionnaire surveys as necessary such as stewardship meetings according to adhoc themes and necessary issues, in addition to the general evaluation meeting held on an annual basis.
ￚ In 2022, GPIF held most of the meetings online due to the COVID-19 pandemic as in the previous year. With online tools, the number of
meetings and seminars hosted by asset managers increased, as well as opportunities for dialogues and information exchanges withoverseas asset managers. In the second half of the year, some local offices resumed in-person meetings owing to the easing of travel
restriction.
ￚ GPIF hold briefings for external asset managers in addition to individual meetings when we establish new policies or implement significant
changes. We focus on two-way communication by exchanging opinions and providing feedback in order to adequately explain the
background and concepts of these policies and changes, through Q&A sessions and follow-up questionnaires.
ￚ Since GPIF selected new foreign equity managers in 2022, briefings for external asset managers were held as follows, in addition toindividual engagement including new asset managers concerning GPIF’s way of thinking and the matters required of external asset
managers.

<Briefing for external asset managers>ￚHeld in February 2023.
GPIF explained “Review of the 4th Medium-term Target Period and Future Prospects” (Source: Materials for the Committee of Pension
Fund Management), bidirectional communication, stewardship, and other matters, followed by discussion.

<Exchange of opinions with the third-party committee members of external asset managers>

ￚ Under the Japan Code, “Institutional investors are required to establish and announce governance systems such as an independent boardof directors and a third-party committee which decides on and supervises the exercise of voting rights in order to prevent conflicts ofinterest, etc.” GPIF also believes that an independent board of directors and a third-party committee play extremely important roles insecuring independence and transparency as asset managers and in preventing conflicts of interest.

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ￚ Therefore, we continuously hold meetings with outside directors and the third-party committee members of our external asset managers
who assume such important roles. At the meeting for 2022, we explained our stewardship activities and what we ask of the asset managers,
and exchanged opinions on a wide range of themes such as the status of the committee’s activities, effectiveness of governance andmanagement of conflicts of interest, and diversity such as women’s participation within the asset managers.
ￚ At the previous meeting which was held right after many asset managers established a third-party committee, the discussion was mainlyon the solution of the existing problems including independence of the asset management divisions and conflicts of interests such as
exercising voting rights. Now that almost all of such problems have been solved and organized, it seems that the central issues haveshifted to forward-looking discussions for the future.

<Supporting status for the PRI and TCFD by external asset managers>

ￚ In the Stewardship Principles, GPIF has stipulated “ESG integration into the investment process” and requires our external asset
managers to sign the PRI. In the revision in February 2020, GPIF also requires our external asset managers to proactively participate invarious initiatives.

ￚ GPIF conducted a questionnaire survey and interviews with our external asset managers entrusted with equity and fixed-income, asking
the status of their participation in initiatives such as PRI and TCFD. The status of support for the PRI and TCFD, as well as the status of
their disclosure are outlined below. Participation in TCFD is an example of initiatives, to which an increasing number of Japanesecompanies have expressed their support.
ￚ All external asset managers, including newly appointed, entrusted with equity, fixed-income, and alternative asset investments, aresignatories of the PRI.
ￚ 90% of external asset managers have expressed their support for TCFD, including those who have supported TCFD in their corporategroup. Many asset managers who have not expressed their support are currently under review.
ￚ Of the asset managers who agree with TCFD, 85% have implemented the disclosure. Some asset managers are now considering
disclosure for the next fiscal year. Some issued independent publications such as a TCFD Report or Climate Report, and others posted
their disclosure as a part of their sustainability report or similar publication. Also, some asset managers posted announcement on theirwebsites, or regarded the PRI reporting as their disclosure. Many asset managers are positive toward better disclosure in any way.
ￚ In many cases TCFD disclosure is the engagement theme with investee companies. Knowledge and experience of disclosure by asset
managers are likely to serve as reference and encouragement to corporate disclosure while sharing the current status.

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<Critical ESG issues listed by asset managers>
ￚ In the Stewardship Principles, GPIF states “ESG integration into the investment process.” Based on this, GPIF conducts a questionnaire
survey and interviews every year concerning “Critical ESG issues” selected by each external asset manager entrusted with equity.
ￚ The interview results were published in March 2023 as “Critical ESG Issues listed by GPIF’s asset managers” on the following site:
https://www.gpif.go.jp/en/investment/20230420_esg_issues_en.pdf
ￚ Please refer to page 39 for “Critical ESG Issues” listed by GPIF’s asset managers entrusted with equity. The changes in invested domestic
equities for the past three years are also on page 41.
ￚ Based on the results, GPIF ascertained why they highlighted such issues and how they engage with investee companies regarding them.
ￚ GPIF also ascertained the “Critical ESG Issues” considered by each asset manager entrusted with fixed income (see page 40). Questions
on fixed income investment were asked on the assumption of corporate bonds. For government and public bonds, GPIF received open
answers if asset managers established critical ESG issues.
ￚ In order to promote constructive dialogue between investee companies and investors, GPIF also asked investee companies their principle
ESG themes in the “8th Survey of Listed Companies Regarding Institutional Investors’ Stewardship Activities” conducted in January 2023.

<ESG integration>
ￚ GPIF is committed to “ESG integration into the investment process” in the Stewardship Principles. In the Stewardship Activities Report
2021, GPIF stated “ESG integration across different investment styles” under the section of “Expectations and Challenges for External
Asset Managers”.
ￚ As a signatory to PRI, GPIF defines ESG integration in accordance with PRI’s definition as follows.
“ESG should be expressly and systematically incorporated in investment analysis and investment decisions.”[Assessment of ESG Integration]

ￚ From the comprehensive assessment (for equity and fixed-income) in 2019, GPIF began including the assessment of ESG Integration aspart of “Investment process.” ESG Policy, ESG data gathering and importance analysis, assessment of impact on the corporates/sectors,
application to investment decisions, etc. are assessed in the management process.

ￚ ESG-related engagement and exercise of voting rights are assessed as part of the “Stewardship Activities”.

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＜Request for disclosure of the details of proxy voting records＞
In the Proxy Voting Principles, GPIF asks our external asset managers to publicly disclose proxy voting records for each investee company.
The following are asset managers for domestic equities. It should be noted, however, that the frequency and details of the disclosure varydepending on each asset manager, and GPIF will continue to conduct engagement for the improvement of disclosure.
[Asset managers that have publicly disclosed the details of proxy voting records (GPIF’s external asset managers for domestic equities)]
Asset managers entrusted with equity investment

Websites of the disclosure of proxy voting records

Asset Management One

http://www.am-one.co.jp/company/voting/

Invesco Asset Management (Japan)

https://www.invesco.com/jp/ja/policies/proxy.html

Capital International (Capital International, Inc.)https://www.capitalgroup.com/advisor/jp/ja/proxy-voting.html

Schroders Investment Management (Japan)

https://www.schroders.com/ja-jp/jp/asset-management/about-schroders/proxy-voting/Nomura Asset Management

https://www.nomura-am.co.jp/special/esg/responsibility_investment/vote.html

FIL Investments (Japan)

https://www.fidelity.co.jp/about-fidelity/policies/investment/voting

BlackRock Japan

https://www.blackrock.com/jp/individual/ja/about-us/important-information/voting

Sumitomo Mitsui DS Asset Management

https://www.smd-am.co.jp/corporate/responsible_investment/voting/report/

Sumitomo Mitsui Trust Asset Management

https://www.smtam.jp/company/policy/voting/result/

Mitsubishi UFJ Trust and Banking

https://www.tr.mufg.jp/houjin/jutaku/about_stewardship.html

Lazard Japan Asset Management

https://www.lazardassetmanagement.com/jp/ja_jp/references/sustainable-investing

Russell Investments Japan

https://russellinvestments.com/jp/legal/proxy(Russell Investments Implementation Services, LLC.)
Resona Asset Management

https://www.resona-am.co.jp/investors/giketuken.html

Note: Names in parentheses indicate subcontractors. URLs are based on information as of March 10, 2023.
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7. Assessment of “Stewardship Activities” by asset managers for equity investment
ￚ

A comprehensive assessment of asset managers is conducted through qualitative assessment while taking into consideration quantitative
achievements.

ￚ

Approximately 90% of GPIF’s equity is passively managed, and GPIF invests in a wide range of listed companies. For the improvement of returns for
GPIF, the sustainability of the entire market is crucial. Therefore, we believe that it is critical for passive managers to implement engagement activities,
which would encourage investee companies to increase their corporate value and the sustainable growth of the entire market from the long-term
perspectives.

ￚIn the May 2017 revision to Japan’s Stewardship Code, the importance of dialogue in passive investment is clarified, and the possibility of collaborative
engagement is also referred to as a means of dialogue. Furthermore, in the second revision of the Stewardship Code published in March 2020,“consideration of sustainability consistent with investment management strategies (medium- to long-term sustainability including ESG factors)” wasadded to the definitions of the Stewardship Responsibilities. Thus, ESG to fulfill stewardship responsibilities has been growing increasingly important.

ￚThe second revision clarifies the expectations for Stewardship activities with consideration of ESG factors, particularly its significance in passive
investment. GPIF highly evaluates asset managers who fulfill stewardship responsibilities more effectively if the preconditions are similar.

ￚWith respect to Stewardship activities, passive managers are assessed in terms of their contribution to the sustainable growth of the market, whereas
active managers are assessed in terms of their contribution to increasing shareholder value of the investee companies in the long run.

ￚ

Since the introduction of the Stewardship Code in 2014, the stewardship activities of asset managers have been formalistically well organized.
Following the second revision of the Stewardship Code, GPIF changed the assessment system of initiatives for stewardship responsibilities to asystem in which more substantial activities are highly evaluated. This new assessment system has been adopted starting from 2020 comprehensive
assessment.

ￚIn this assessment, we exchange opinions on how asset managers are working on stewardship activities, while confirming the following points.
Information obtained from external providers is also referred.

 Framework (organizations, management of conflicts of interest)
 Endorsement status of Japan’s Stewardship Code and the Principles for Responsible Investment (PRI) Stewardship activities (policy, status, implementation of engagement)
 ESG activities including responses to their critical ESG issues listed by asset managers

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 Exercise of voting rights (topics, cases where judgments are divided within asset managers, process of
judgments on exercising shareholder proposals, and others)
 Responses to GPIF’s Stewardship Principles and Proxy Voting Principles, including disclosing the detailsof proxy voting recordsￚ

In cases we acknowledge concerns about governance of external asset managers, such as conflicts of interest, through reports and interviews, wecommunicate our concerns and engage in various opportunities, aiming to alleviate such concerns.

WeightEquity passive

Investment policy, investment
process, organization, humanresources, etc.

70%

Stewardship responsibilities

30%

Viewpoints of assessment ofstewardship activities

Contribution to the sustainable growth of themarketBase for the assessment

Equity active

90%
10%
Contribution to increasing shareholder valueof the investee companies in the long term(Common to both passive and active)
Stewardship Code, GPIF’s Stewardship Principles and Proxy Voting Principles

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8. Assessment of “Stewardship Activities” for Other Assets－Fixed income investment
ￚ The scope of assets under the Stewardship Responsibilities was expanded to include all assets in accordance with the revised UK
Stewardship Code that took effect in January 2020 (“The UK Stewardship Code 2020”). While the assets subject to assessment had been
assumed to be Japanese listed equities, it was explicitly stated in the second revision of the Japan Code in March 2020 that other assets
are also applicable. Accordingly, the stewardship activities of fixed-income investors have made further progress.
ￚ In response to the second revision to the Japan Code, GPIF expand the scope of assets subject to the “Policy to Fulfill StewardshipResponsibilities” from equity to all assets including fixed income in June 2020, and has been considering assessment methods for fixedincome asset managers. As part of such initiatives, GPIF conducted a questionnaire survey on stewardship activities by external asset
managers for fixed income in 2020. In the survey, GPIF ascertained the current measures on overall stewardship activities by external
asset managers, including the status of implementation of engagement activities, as well as their future plans and challenges.
ￚ Based on the above, stewardship activities by external asset managers for fixed income have been assessed since FY2022 in terms of
their contribution to encouraging the sustainable growth of investee companies and reducing credit risks.
ￚ At this stage, it is hard to say that evaluation methods for individual engagement have been established. Therefore, their stewardship
activities will be evaluated in an item of “organization and human resources”, by assessing the status of establishment of organizations
and human resources for stewardship activities, including policies and systems such as stewardship policies and the management ofconflicts of interest.
ￚ

GPIF makes assessments on the status of organizations and human resources to implement stewardship activities by external asset
managers, while confirming the following points.

 Framework (organizations, management of conflicts of interest)
 Endorsement status of Japan’s Stewardship Code and the Principles for Responsible Investment (PRI) Policy for Stewardship Activities
 Response to the GPIF’s Stewardship Principles (applicable items), etc.

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9. Assessment of “Stewardship Activities” for Other Assets－Alternative Investment
ￚ

Alternative assets (infrastructure, real estate, private equity) are an asset class in which asset managers may have an impact directly on
ESG activities of investee companies. As a result, mainly global investors focusing on ESG has been increasing when selecting investment
managers. At GPIF, stewardship responsibilities and the initiatives for ESG have been critical item for evaluation since starting call for
application of investment managers in April 2017.

ￚAfter selecting investment managers, GPIF requests them to submit “ESG Report” on a regular basis, based on which GPIF evaluates
their initiatives for stewardship responsibilities in the comprehensive assessment. As the fund of funds type investment has been currently
adopted in alternative investment, we exchange opinions concerning how the gatekeepers and fund of funds managers implement
stewardship activities. Evaluation items are listed below.

 Framework (organizations, management of conflicts of interest, etc.)
 Endorsement status of the Principles for Responsible Investment (PRI) Stewardship activities including ESG (policy, status, implementation of engagement, and response to
ESG issues according to the characteristics of the assets)ￚIn March 2020, as a real estate investor member, GPIF joined “GRESB*,” an initiative providing a benchmark for ESG (Environmental,
Social, and Governance) in real estate and infrastructure investments. In August 2022, GPIF joined GRESB as Japan’s first infrastructure
investor. In the assessment of external investment managers, GPIF also confirms the status of their use of data provided by GRESB.

ￚWhile all investment managers are signatories to the PRI at the level of gatekeepers and fund of funds managers, not all managers at theinvestee funds are necessarily so.

ￚWhen choosing investment destination, both gatekeepers and fund of funds managers confirm ESG activities of investee. Afterappointment, they conduct engagement with investee, including encouragement of the establishment of ESG policies.

*Outline of GRESB:GRESB is an initiative established in 2009 mainly by European pension funds and provides ESG benchmarks for real estate andinfrastructure investments. GRESB assesses the initiatives and achievements of ESG investments by real estate companies, realestate funds, infrastructure business operators and infrastructure funds on an annual basis. According to the annual assessment
for 2021, more than 1,500 real estate companies and funds and more than 700 infrastructure business operators and funds
participated, and the amount of the subject real assets reached approximately 6.4 trillion U.S. dollars. More than 150 institutional
investors use the assessment results to select investee companies to conduct monitoring and engagement as investor members.
GRESB® and the related logo are trademarks owned by GRESB BV and are used with permission.

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10. Engagement with index providers
ￚ In passive investment, the important factor of success is benchmark selection, rather than the investment skill. However, asset owners
including GPIF have not exerted much efforts for selecting benchmarks as it should be. With that in mind, GPIF partially introduced the“Index Posting System” in FY2019 with the aim of effectively gathering information on various indices in order to enhance our overall fundmanagement.
ￚ GPIF has implemented due diligence and engagement, as we have gradually acknowledged the significance of assessment of index
providers’ organization structure as well as governance system when selecting benchmarks such as ESG index. Specifically, GPIF strictly
examines the relationships between stakeholders (shareholders and major customers) and rating agencies/index providers, their decisionmaking processes (whether they have independent committees, what they discussed), and whether they engage in any businesses thatare likely to fall under conflicts of interest, such as consulting services for companies. GPIF believes index providers should be responsible
for establishing solid governance systems and implementing investor-oriented decision-making, according to their increasing presence
year after year.
ￚ Since April 2022, the “Technical Committee for ESG Evaluation and Data Providers, etc.”, established under the FSA, has discussed thecurrent status concerning ESG rating and data, the challenges of the related parties to provide and use ESG rating and data appropriately,
the future prospect, and other wide scope of items. At the 15th Expert Panel on Sustainable Finance in December 2022, the “Code of
Conduct for ESG Evaluation and Data Providers” was reported and then published. The FSA urged ESG rating agencies and data
providers to accept the said Code of Conduct, and called on them to announce on their own websites and inform the FSA that they
accepted it if they decided to do so. The FSA plans to publish the status of agreement and acceptance in June 2023, and the status
regarding the provision of data in the Code of Conduct in June 2024 in a form of list which GPIF will look into.
ￚ Furthermore, GPIF, as an asset owner, has proactively participated and provided opinions in the consultation meetings held by index
providers and ESG rating agencies when they consider changing index methodologies and ESG assessment methodologies. GPIF
encourages external asset managers to give similar attention.
ￚ GPIF has been reviewing our contract style with index providers while enhancing our commitment to indices. We believe that the alignment
with not only index providers but also passive managers would be reinforced if the index license fee is directly borne by GPIF.

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11. Initiatives for Promoting Dialogues between Asset Managers and Investee Companies<Survey of companies listed on the 1st Section of the Tokyo Stock Exchange>

ￚ GPIF conducted our first survey of JPX-Nikkei Index 400 companies in January 2016 with the aim of assessing the stewardship activities
of external asset managers and understanding the actual status of “constructive dialogue” (engagement). Since the third survey in 2018,
we expanded the subjects to companies listed on the TSE’s first section, in order to gain direct feedback from a wide range of companies.
Due to changes in the TSE’s market segments, the subjects were changed to the constituents of TOPIX in the eighth survey conductedin January 2023.

ￚ The survey questions were as follows: (1) Evaluation concerning stewardship activities of GPIF’s asset managers; (2) Actual statusconcerning “constructive dialogue” (engagement); (3) Changes in the past one year; (4) IR and ESG activities of investee companies;and (5) GPIF’s initiatives.
ￚ In the seventh survey conducted in January 2022, 709 companies responded, which accounted for 32.5% of the subject 2,183 companies
listed on the TSE’s first section.
ￚ The overview of the survey results is as follows: For the first time, more than 50% of the companies responded that they had observed desirable changes in institutional investors.
 The time frame of the long-term vision of companies has been further extended.
 The number of companies that make voluntary disclosure of non-financial information has significantly increased.
 Awareness of ESG themes has been raised reflecting the revision to Japan’s Corporate Governance Code.
ￚ The result of the survey is available here: https://www.gpif.go.jp/en/investment/summary_report_of_the_7th_survey.pdf

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<“Excellent Integrated Reports” and “Most-improved Integrated Reports” selected by GPIF’s asset managers
entrusted with domestic equity investment>
ￚ

GPIF considers integrated reports as an important tool of constructive dialogue to improve corporate value, and believes they are
instrumental for interactive engagement between external asset managers and investee companies.

ￚ

Therefore, since 2016 GPIF has requested external asset managers for domestic equities to nominate companies that have publishedexcellent integrated reports, with an aim of encouraging companies to start publishing or enhancing integrated reports, as well as
encouraging investors to utilize them. For the seventh year, GPIF requested asset managers to nominate up to 10 “excellent integrated
reports” and 10 “most-improved integrated reports” in December 2022. GPIF compiled the result and announced them in February 22,2023.

ￚ In this report, we have also included “The Status and Method of Use of Integrated Reports by GPIF’s Asset Managers,” anticipating that
Integrated Reports will serve as meaningful disclosure for both asset managers and investee companies. (For details including asset
managers’ comments, please see the following website:
https://www.gpif.go.jp/en/investment/excellent.most-improved-integrated-reports_2023_03.pdf )ￚ We received positive feedback from companies, such as “the management began to pay more attention to the integrated reports,” “Found
more active collaboration among relevant staff and departments,” “Raised awareness of the integrated reports within the company,”“Observed PR effects through the company website and social media,” “Helps us to prepare our next integrated reports,” to name a few.
ￚ Backed by the heightened awareness from the business side, we will continue this initiative as a tool to make dialogues between investee
companies and asset managers more useful.

○ Excellent Integrated Reports

GPIF’s asset managers for domestic equities named a total of 67 companies for their “excellent integrated reports.” The following
companies were highly evaluated by four or more respondents as publishers of “excellent integrated reports.”◇ ITOCHU Corporation◇ Hitachi, Ltd.
◇ OMRON Corporation

7 asset managers
6 asset managers
6 asset managers○ Most-improved Integrated Reports◇ RICOH COMPANY, LTD.
◇ Tokio Marine Holdings, Inc.
◇ Ajinomoto Co., Inc.

6 asset managers
5 asset managers
4 asset managers

GPIF’s asset managers entrusted with domestic equity investment named a total of 95 companies for the “most-improved integrated
reports.” There were no reports that were highly evaluated by four or more respondents as publishers of the “most-improved integrated
reports.”
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<“Excellent TCFD Disclosure” selected by GPIF’s asset managers entrusted with equity investment>ￚ The Corporate Governance Code revised in June 2021 stipulates that “companies listed on the Prime Market should collect and analyze
the necessary data on the impact of climate change-related risks and earning opportunities on their business activities and profits, andenhance the quality and quantity of disclosure based on the TCFD recommendations, which are an internationally well-establisheddisclosure framework, or an equivalent framework.”
ￚ Examples of companies that have provided TCFD disclosure ahead of others are useful for other companies that intend to implement
TCFD disclosure in the future. TCFD is a framework of disclosure shared worldwide, and we believe that referring to examples ofcompanies outside Japan will be also meaningful. Therefore, following last year, we request our external asset managers entrusted withdomestic and foreign equities to select “excellent TCFD disclosure.”
ￚ GPIF asked asset managers entrusted with equities to nominate up to five companies that provided “excellent TCFD disclosure,” and also
to nominate up to three companies that provided “excellent disclosure of (1) governance, (2) strategy, (3) risk management, and (4)metrics and targets,” respectively. GPIF compiled the results and announced them in March 2023.
ￚ TCFD has been a topic in discussions for international disclosure standards and its significance is expected to further increase going
forward. Since TCFD disclosure will likely become indispensable for global companies in the future, GPIF will continue to announce theresult of “excellent TCFD disclosure.”○ Excellent TCFD Disclosure (Japanese companies)

GPIF’s asset managers entrusted with domestic equities named a total of 28 companies for their “excellent TCFD disclosure.” The following
companies were highly evaluated by four or more respondents as publishers of “excellent TCFD disclosure.”◇ Kirin Holdings Company, Limited 10 asset managers◇ Hitachi, Ltd.

◇ RICOH COMPANY, LTD.

◇ ITOCHU Corporation 4 asset managers

5 asset managers

Please visit the website for details, including the comments of the asset managers

7 asset managers

https://www.gpif.go.jp/en/investment/202305_excellent_TCFD_disclosure_en.pdf○ Excellent TCFD Disclosure (overseas companies)

GPIF’s asset managers entrusted with foreign equities named a total of 60 companies for their “excellent TCFD disclosure.” Amongthem, the following companies were highly evaluated by three or more respondents as publishers of “excellent TCFD disclosure.”◇ BHP GROUP LTD 4 asset managers◇ MICROSOFT CORP

4 asset managers◇ CITIGROUP INC◇ JPMORGAN CHASE & CO

3 asset managers

3 asset managers

Please visit the website for the details, including the comments of the asset managers

https://www.gpif.go.jp/en/investment/202303_excellent_TCFD_disclosure_en.pdf

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12. Enhancing Collaboration with Relevant Organizations<Collaboration with Global Asset Owners>[Global Asset Owners’ Forum]ￚ Established as a forum for continuous exchange of opinions to further fulfill our stewardship responsibilities with the aim of utilizing mutual
knowledge with foreign public pension funds and others. The first conference was held in Tokyo in November 2016. GPIF, CalPERS and
CalSTRS served as co-organizers.
ￚ Members except for co-organizers include the following (as of March 2023):[USA] Florida State Board of Administration, The Regents of University of California, The World Bank; [Canada] bcIMC, OTPP; [Europe]
NBIM, APG, PGGM, AP2, ERAFP, USS; [Singapore] GIC; [Australia] HESTAￚWe decided not to hold the conference in 2020 and 2021 due to the COVID-19 pandemic. In 2022, individual meetings were held at thetime of various conference opportunities or their visit to Japan. There were also opportunities for exchanging opinions on not only
stewardship and ESG but also a wide range of matters including asset management in general or risk management.

＜Presentations at various seminars and international conferences (since last reported)＞
October 2022: “TCFD Summit 2022” hosted by METI (Ministry of Economy, Trade and Industry).
November 2022: IFC Japan Day
November 2022: PRI Webinar Series
November 2022: Paris Europlace Tokyo International Financial Forum 2022
November 2022: Japan Investment Conference 2022 hosted by CFA Society Japan

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Chapter 2 Initiatives and Challengesof External Asset Managers

1. GPIF’s View on Current Status of External Asset Managers<External Asset Managers’ Governance Structures and Management of Conflicts of Interest with Their Parent
Companies>
The form in its entirety is well-organized, despite some problems remaining. Continuous consideration, reviews andimprovement should be done to make it more effective.
In the past few years, at Japanese asset managers for equities, organizational segregation aimed at preventing conflicts of interest
between the asset management divisions and other divisions has been promoted, including by way of company split or integration of theasset management divisions. In a case where the divisions were split and organized as a separate company, various initiatives are quickly
put into practice under the leadership of the top management.



The compensation schemes for executives and employees of asset managers ultimately reflect their position within the Group, therelationship with a parent company, and their corporate culture, which suggests the importance of the compensation scheme and the
incentive system.

At all Japanese asset managers, the formalistic aspect is well-organized with the appointment of outside directors and the establishmentof a third-party committee consisting mainly of outside directors. Some asset managers appointed senior executives and officers fromoutside of the company.

 some asset managers seem to have challenges in identifying investees to be managed in terms of conflicts of interest, in responding to
misconduct when it occurred in their parent company or group companies, including exercise of voting rights. Meanwhile a certain levelof improvement has been observed in the responses to exercise of voting rights to parent company or group companies.


It was revealed that some foreign asset managers have no organizational segregation or no tangible scheme secured from outside toprevent conflicts of interest, which indicates that their superiority has no solid basis as expected. Some asset managers, however, sought
to enhance management on the assumption that conflicts of interest would occur in a wide range of entities, including all discretionary
investment customers and their parent companies.



Going forward, in order to further make it more effective, the improvement of transparency will be also expected in addition to continuous
consideration, reviews, and upgrading.

It is confirmed that management of conflicts of interest in voting and voting guidelines are formalistically well organized.

However, given an increase in the number of shareholder proposals to both Japanese and foreign asset managers, their parent company
and group companies, there are some cases in which the current rules for decision processes for shareholder proposals are unable tofunction to the fullest. While some asset managers have already changed their decision processes, GPIF will continue to request otherasset managers to improve that as one of their future challenges.
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<Organization, systems, policies, etc. in the stewardship activities>

The overall quality has been improved in both activities and its speed conducted by each asset manager. In addition to their companywide
commitments, in the case where an asset manager is a member of a financial group, the group as a whole has more strongly committed
itself to stewardship and ESG.



Most external asset managers, both in passive and active investment, have developed policies for engagement and ESG. Their corporate
principles and philosophy are applied to each policy, and developed to continue initiatives as a corporate body, which are reviewed on aregular basis. As for domestic equity investment, initiatives have become more advanced by taking actions from an early stage,corresponding to changes in the business environment, including responses to the enactment of the revised Corporate Governance Codeand the review of market segments.

In stewardship reports, some asset managers established and disclosed their stewardship activity plans from medium- to long-term
perspectives, including specific priority and other activities planned for several years ahead, while others demonstrated their best practices
for governance.

In the past a few years, some passive and also active managers have established and enhanced a designated department in charge of
stewardship activities. On the other hand, in some recent cases, reorganization is implemented within the asset management divisions,from a perspective of collaborating with investment teams.



As mentioned above, while active managers implement engagement, their definitions of engagement and their actions vary dependingon their organizational structures and investment styles. Some managers have a designated department in charge of their stewardship
activities including engagement, while others do not. The collaboration between investment and stewardship activities has advanced in
the former case. For the latter case, it would be important to consider that the commitment of the fund manager, reflecting it in thecompensation system, the leadership to design more organized activities, and who and how to lead the coordination with external parties
in collaborative initiatives, etc.

Information sharing has advanced by introducing in-house platforms and systems which unitarily manage global engagement, and someasset managers recently focus on data analysis by using data scientist teams.

Because of the characteristics of the job, the principal members engaging in stewardship activities and engagement are often relatively
well-experienced. However, these employees retiring in recent years, teams tend to be more sustainable by appointing younger
employees including new graduates and personnel with diversified backgrounds.

Among domestic and foreign equity funds as well as foreign fixed income funds, there are several SFDR 8-qualified funds (mostly due totheir businesses and customers in Europe).



As various initiatives were implemented, GPIF’s Stewardship Principles and Proxy Voting Principles seem to have penetrated to a certain
extent in asset managers for equities. Going forward, we will conduct dialogues with asset managers for fixed income as well.
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<Stewardship Activities on Equity Investment: Engagement>Some external asset managers send letters to investee companies as a tool to communicate their views or an opportunity to start dialogues
with the management. Continuous monitoring is necessary to see how they develop engagement by using letters as the starting point.

All asset managers for domestic and foreign equities answered that they have taken measures for ESG issues. Some other asset
managers implement dialogues concerning ESG in their engagement with small-and medium-sized companies.



We believe that integrated reports and corporate governance reports are both primary tools for two-way communication upon measuresfor ESG issues as well as engagement. While we recognize that asset managers have been moving forward on their use of those tools,
we expect analysts and fund managers, in addition to specialists in stewardship and ESG, to use these reports further. Going forward, it
is expected that further expansion of disclosure will be required, such as sustainability disclosure for Securities Reports, and TCFD and
ISSB disclosure standards for global disclosure in addition to integrated reports. Therefore, it will be important to consider how suchdisclosure can be effectively utilized in asset management and engagement.

Some managers including Japanese asset managers are promoting reform measures of not only investee companies but also the entire
investment chain, by submitting public comments to overseas regulatory authorities, or engaging with stock exchanges and index
providers proactively.

Japanese asset managers participate in collaborative engagement such as CA100+ more proactively than foreign asset managers. As awhole, more and more asset managers join global initiatives, utilizing them as platforms to gain expertise and conduct joint engagements.

More asset managers, both in passive and active investment, have participated in joint engagement even though they had previously
focused on engagement solely by themselves. The status of use of joint engagement varies among asset managers, though. GPIF willcontinue to ascertain how they are actually involved in and utilize the collaborative engagement going forward.

 Many asset managers not only participated in joint initiatives but also worked together from the establishment phase. The Net Zero AssetManagers initiative, launched in December 2020, comprises the majority of GPIF’s external asset managers, and in some cases theyinterviewed GPIF’s way of thinking with reporting their plans ahead. In FY2022, the establishment of Nature Action 100 was announced
and PRI Advance was launched, as new joint initiatives concerning biodiversity or human rights. GPIF will make sure how they will be
involved in such initiatives.

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<Stewardship Activities on Equity Investment: Exercise of Voting Rights>



We positively assess asset managers depending on the case, when they exercised their voting rights in a way that is not necessarily
pursuant to voting policies but in line with their activities or actual situations as a result of engagement. As we consider voting along withengagement, we expect them to take measures that will contribute to enhancing long-term corporate value. Some asset managers sendout strong messages in voting policies and utilize them for engagement, while others have introduced cross-shareholding systems and
TSR standards.

In the announcement of the results of exercising individual voting rights by asset managers for domestic equities, there were differencesin timing, frequency, and items of disclosure, although many asset managers made quarterly disclosures so that the announced results
would be of help in the dialogue after the general meeting of shareholders. Some cases seemed to be inappropriate for dialogues withcompanies towards next year’s general meeting of shareholders. Meanwhile some active foreign asset managers provided direct feedback
on voting results from the person in charge to their investee companies and send documents to inform the results and reasons for opposing
an investee company’s proposal. The disclosure of voting guidelines and voting results by Japanese asset managers tends to be moreenhanced. Some asset managers for foreign equity published their approval or disapproval of the voting decision in advance as part oftheir engagement escalation strategy.



In the case where external asset managers for domestic equities oppose an investee company’s proposal, all of them disclose the reasonsfor such decision. While responses to shareholder proposals vary, the reasons for exercising voting rights for approval and/or opposition
are disclosed. Some asset managers implement their own ideas by flagging investee companies such as business partners in the Groupin which conflicts of interest are likely to take place, or by providing more detailed explanations than usual. Other asset managers disclose
the reference on their stewardship and exercise of voting rights. Some foreign asset managers of equity voluntarily disclose the result of
exercise of voting rights.

When some asset managers for domestic equities asking their investees to increase independent external directors as well as diversity,
they allow an almost one-year grace period from the announcement of change in voting policy before taking effect, and inform theirinvestees of the change and implemented engagement during such a period.

Both asset managers for domestic and foreign equities use proxy advisory firms. The majority of them use these firms in order to collectinformation, outsource administrative services concerning exercising of voting rights, and manage conflicts of interest in exercising voting
rights for their own company, parent company, and the Group companies. Only a small number of cases used the recommendations ofadvisory firms for the exercise of voting rights of the investees other than those requiring management of conflicts of interest. Even whenusing proxy advisory firms, for subject to engagement activities, GPIF requires asset managers to make final decisions by themselves,
taking into account the status of engagement and the contents of proposals. GPIF uses the result of recommendations provided by ISS
and Glass Lewis for analysis after the General Meeting of Shareholders.



Regarding voting instruction errors, administrative errors made by custodians, and unexercised votes, we have requested asset managers
and custodians to take appropriate measures, considering the importance of exercising voting rights.
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2. Status of Engagement by Domestic External Asset Managers Entrusted withJapanese Equities (January 2022 to December 2022)
Number of companies that held
dialogues

Holding
dialogues :946 companies;40%

Not holding
dialogues:
1,401 companies;
60%

Ratio of companies that held dialogues(on a market capitalization basis)
Not holding
dialogues
6%
Holding
dialogues
94%

Note: Each ratio was calculated using the number of domestic companies whose shares are held as of March 31, 2022, as a denominator.
The total number of companies with which engagement was conducted by GPIF’s external asset managers for domestic equities fromJanuary 2022 to December 2022 was 946.
In terms of the number of companies, engagement was conducted with 40% of the companies whose shares are held. In terms of market
capitalization, engagement was conducted with 94% of the companies.

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7,000
6,000
5,000

1,000

3,800

140

950

3,300

120

2,800

100

2,300

80

1,800

60

1,300

40

800

20

900

4,000
850
3,000
800

2,000

750

1,000
0

2017

2018

2019

Number of dialogues held

2020

2021

2022

Number of companies (right axis)

700

300

2017

2018

2019

2020

2021

2022

0

President
Executives except for President (including executive officers)
Of whom, outside directors (right axis)

The above charts represent the trend of the number of dialogues held from January to December every year in the past six years.
While a temporary drop in the number of dialogues is recorded in 2020 in which the COVID-19 pandemic broke out for the first time, thenumber of engagements increased compared with the past years. The chart on the right represents the status of engagement conductedwith executive levels.
Please note that GPIF does not highly evaluate asset managers only with the number of engagements in order to avoid the increase inperfunctory interviews.
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Number of dialogues held (by theme)

Number of dialogues held
(passive and active ratios)

E(Environmental)
23%(Left chart)

G（Governance）
59%

S (Social)
18%

Active:18%
Passive:82%(Left chart)
The chart represents ESG engagements by theme conducted by GPIF’s asset managers for domestic equities from January 2022 to
December 2022. Governance includes the explanations on agenda of general meetings and related dialogues.
(Right chart)
The chart shows if passive or active investors conducted engagement. When an asset manager is entrusted with both active and passive
investments, it is counted as the one with larger amount of mandate entrusted by GPIF.

29

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3. Passive Investment Models Focusing on Stewardship Activities“Engagement-enhanced Passive”(1)

Overview and points for selection of passive investment models focusing on stewardship
activitiesￚWith the aims of improving the overall market through stewardship activities, as well as diversifying and enhancing how to approachstewardship activities, GPIF started to adopt passive investment models focusing on stewardship activities from 2018.

ￚ

In the selection of the model, we review their investment process, stewardship policies, and the entire business model includingorganizational systems and fee levels in order to implement such process and policies.

ￚIn 2018, we adopted Asset Management One and FIL Investments (Japan) as engagement-enhanced passive managers. In FY2021,
following new applications from several asset managers, we newly adopted Sumitomo Mitsui Trust Asset Management Co., Ltd., andResona Asset Management Co., Ltd.

Key points for selection＜Setting of appropriate KPI＞
 Medium- to long-term goals for engagement activities
 Annual plan for the achievement (Milestone)＜Engagement system and method＞
 Organizations and persons in charge of stewardship activities Methods of engagement

Evaluation method after
adoption

For evaluation going forward, thestatus of achievement of the KPI as
indicated on the left and themilestone for the following fiscal
year will be evaluated.
GPIF will renew the contract basedon this result.

30

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(2) Status of progress in asset managers: (i) Asset Management One<Companies subject to engagement activities and management of milestones>

 Establish 18 ESG issues, and clarify the direction of engagement by showing theIssues (locating problems), Goals (outcomes to be realized) and Action(company’s initiatives). Implement engagement based on each issue at target
companies.
 In the approaches to ESG, there are mainly two perspectives of “Return” and“Risk.” The “Risk Perspective” is fundamental and more emphasis on the “Return
Perspective”.

Responsible
investment

Investment Division

 Establish 8-level milestones, and periodically report GPIF the progress ofengagement from the establishment of issues to their solutions.

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<Status of progress>
 The number of issues subject to the management of milestones up to Q3 FY2022 was 452. The largest number among the ESG
issues was in “Governance and Disclosure.” Up to 3Q FY2022, progress was observed in 63% of the engagement on schedule or ahead of schedule. By milestones, “1. Identifying
ESG issues” decreased whereas “7. Plans implemented” and “8. Completing engagement” increased.
 Up to 3Q FY2022, 40 issues were completed.
Composition of ESG
issues for engagement

At the beginning of FY 2022+
At the start of additional engagements
during the period

At the end of Q3, FY2022

Source: The charts were taken from “Engagement Report” and “Sustainability Report 2022” of Asset Management One.

32

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(2) Status of progress in asset managers: (ii) FIL Investments (Japan)<Companies subject to engagement activities and management of milestones>
 With the expertise of analysts of active investment, efficiently increase β by encouraging large-cap companies to reform theirmindset. In order to improve corporate value, identify the agenda of engagement and engage with companies, by which profitability
and growth capability will be improved caused by strong competitiveness.
 Specifically, narrow the subject companies for engagement by such conditions as (1) market capitalization of one trillion yen or more;and (2) corporate value is expected to improve by 50% or more, to implement engagement with large caps which are likely to havesignificant impacts on market capitalization.
 The status of progress is managed using three indicators of input, output and outcome*, and is periodically reported to GPIF.
 In 2021, FIL Investments (Japan) also verified the effects of engagement through an external organization from an academic
standpoint.

Four Steps of Engagement

Engagement Counterpart

Source: “Four Steps of Engagement” and “Engagement Counterpart” are from Fidelity’s Report on Investment Trusts.

33

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<Status of progress>

 Progress was observed in almost all subject companies. As a result of dialogues with a wide range of internal and external parties
including the upper management, officers and outside directors, we observed some kind of “output” (action taken by the company) inmany companies. Following the continued engagement activities, some investee companies entered a phase of working toward theenhancement of profitability and growth, for example by autonomously reviewing their business portfolios, making them no longer
subject to active engagement activities. These companies are being replaced with other companies with problems, in order to improve
the overall performance of the index by expanding the scope of those subject to engagement activities.
 FIL Investments (Japan) established three indicators of ‘input’, ‘output’ and ‘outcome’* in order to manage the progress of theengagement activities in the “engagement-enhanced passive investment,” granting points to each indicator according to the degrees
of progress. Agenda and timeline vary depending on the subject company. The input indicator advanced to almost 70% of the overallplan thanks to the intensive dialogues to date. Through the cycle of monitoring inputs and outputs, evaluation and re-input, FIL
Investments (Japan) will continue to endeavor to bring about an outcome. The accumulative status of progress is shown below.

*Input:Sharing of awareness of issues based onevidence toward the improvement ofcorporate value, and requests forconsideration concerning measures proposedby investors to solve such issues.
Output:Corporate activities, achievements
Outcome: Stock price performance, its components suchas financial performance and the perception
by the stock market (valuation, sell-side
rating, etc.), and corporate activities strongly
relating to these.
Input

OutputOutcomeEach input, output and outcome represent the total rate of progress against
the planned value of the entire mandate. (The maximum rate is 300%.)

34

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(2) Status of progress in asset managers: (iii) Sumitomo Mitsui Trust Asset Management<Companies subject to engagement activities and management of milestones>

 Engagement is promoted through the commitment and active participation of the top management (Chairperson and President).
Issues are set for “ESG 12 Theme” and 30 priority activity items selected based on ESG Materiality. Targets (medium-term goals) for
each investee company are set by backcasting from the goals (long-term goals) for specific ESG Theme, and engagement is
implemented with the aim of achieving the targets.
 In addition to engagement with investee companies, activities through various initiatives are carried out and engagement is
implemented targeting a wide range of stakeholders including market participants in order to increase the probability of achieving
such targets.
 By setting milestones in six stages, the status of progress in engagement activities from issue setting to the resolution of issues isreported to GPIF periodically.

35

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<Status of progress>

 In 2022, the priority of engagement of “Natural capital and resource protection” and “Human rights and human capital” was raised inaddition to “Climate change issues,” “Promotion of corporate activities” and “Governance reform.” Focusing on supply chains, theestablishment of themes increased in “Natural capital and resource protection” strongly relating to climate change and “Human rights”
in addition to climate change issues (Scope 3). Furthermore, the establishment of themes relating to “Human capital” increased for the
improvement of efficiency of management strategy such as revisions of the human resources portfolio in line with the reform of thebusiness portfolio. The activities were based on mutual relationships and consideration of simultaneous achievements.

 In the E (Environment) area in which high priority themes are included, many companies advanced to Step 4 (Sharing the awarenessof issues with management team). Similarly, regarding issues of G (Governance), there are more companies that advanced to Step 5(Implementation of measures) and Step 6 (Issue resolution). In the S (Society) area in which “Human rights and human capital” isincluded and the priority order was raised in this fiscal year, the companies that advanced to Step 3 (Sharing the awareness of issues
with persons in charge) increased significantly.
Composition by top-down type engagement theme*The figures of July2022～June2023 shows the engagement plan
「Sustainable local society」 changed to more inclusive 「Social business opportunities

Status of progress for FY2022 (July 2022 to March 2023) (preliminary *)36

Copyright © 2023 Government Pension Investment Fund All rights reserved.

(2) Status of progress in asset managers: (iv) Resona Asset Management<Companies subject to engagement activities and management of milestones>

Engagement starts with an analysis of the current status of the integrated report. In the analysis of integrated reports using in-house
AI technology, the focus points of integrated reports are set as evaluation items and scored in order to identify issues.

Engagement managers provide feedback on AI evaluation scores and dialogue on the value creation story of the target company, andpromote the improvement of corporate value triggered by the improvement of non-financial information disclosure (integrated report).



Milestones aiming to improve corporate value are set for each target company, and both the progress of engagement activities fromissue setting to issue solving and changes on the above-mentioned AI assessment score over time are regularly reported to GPIF.

<Status of progress>

From FY2023, the scope of AI analysis will be expanded to include the Securities Report in addition to the Integrated Report, thereby
the TCFD-based disclosure and the human resources strategies will be quantified and scored.
37

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When engagement is held with a company, a document containing comments of the engagement manager attached to the quantified
score will be provided for an exchange of opinions.
Regarding subject companies’ integrated reports, the improvement (of quality) of the content has advanced as a whole (meaning thatthe average value of the subject companies’ AI scores has risen). In the “Consideration of Human Resources Strategy,” the degree of
improvement by advanced companies accounts for a significant portion, making the whole picture have a high score. The breakdown
illustrated in the right chart below shows that the improvement has been made mainly based on the items referred to in the “Ito Reporton Human Capital Management.” In order to avoid deterioration of corporate value due to insufficient disclosure and to increase
corporate value, continuous improvement and implementation of strategies disclosed in the integrated report are crucial. Therefore, wewill further increase the depth of the relevant discussions.
Integrated Report AI Score of the Company Subject to Engagement (Overall)Integrated Report AI Score of the Company Subject to Engagement(Human resources strategy)* The calculation of AI score is outlined in the paper “Method of calculating the disclosure score of climate change risks in the Securities Report” presented at the 2021 (the 56th)
winter session of the Japanese Association of Financial Econometrics and Engineering (JAFEE).

Notes 1. The average value of AI scores of integrated reports of companies subject to engagement were calculated for the subject accounting periods of FY2020 (April 2019 to March 2020), FY2021 (April 2020 to March 2021) and FY2022 (April 2021
to March 2022.
2. To facilitate the time series comparison of AI scores, the deviation values of AI scores for the period from 2020 to 2022 were calculated based on the AI score in 2021 (the average value of all integrated reports is 50).
3. The AI scores of integrated reports calculated by Resona Asset Management based on the text information of corporate websites and EDINET. The AI scores of integrated reports as of January 2023 taken from 2020 to 2022 are averaged byitem and graphed.

38

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4. Critical ESG Issues“Critical ESG Issues” pointed out by more than 50% of passive/active asset managers(*) are listed below. If an asset manager for Japaneseequities is entrusted to both active and passive mandates, it is counted as the one with larger amount of mandate entrusted by GPIF.
(*) The percentage shown below represents the ratio of the number of managers which selected the relevant issue to the number ofactive/passive asset managers.
＜Passive managers of domestic equities＞＜Active managers of domestic equities＞＜Passive managers of foreign equities＞

Climate Change

100%

Climate Change

100%

Climate Change

100%

Climate Change

86%

Supply Chain

100%

Disclosure

100%

Disclosure

100%

Disclosure71%

Disclosure

100%

Minority Shareholder Rights

100%

Diversity

100%

Corporate Governance71%

Misconduct

100%

Board Structure, Self-evaluation 100%

Biodiversity

100%

Board Structure, Self-evaluation

71%

Corporate Governance

100%

Capital Efficiency

100%

Human Rights & Community

100%

Diversity67%

Human Rights & Community

100%

Misconduct

86%

Health & Safety

100%

Biodiversity

57%＜Active managers of foreign equities＞

Diversity

100%

Diversity

86%

Deforestation

100%

Human Rights & Community

57%

Biodiversity

83%

Supply Chain

71%

Others (Governance)

100%

Health & Safety

57%

Capital Efficiency

83%

Others (Governance)

71%

Corporate Governance

75%

Labor Standards

52%

Board Structure, Self-evaluation

83%

Corporate Governance71%

Board Structure, Self-evaluation

75%

Minority Shareholder Rights

83%

Labor Standards

71%

Labor Standards

75%

Environmental Opportunities

67%

Human Rights & Community

71%

Capital Efficiency

75%

Waste Management

67%

Waste Management

57%

Water Stress, Water Security

75%

Water Stress, Water Security

67%

Biodiversity

57%

Others75%

Deforestation

67%

Environmental Opportunities

57%

Supply Chain

75%

Anti-Corruption

67%

Pollution & Resources

57%

Risk Management

75%

Labor Standards

67%

Health & Safety

57%

Minority Shareholder Rights

75%

Health & Safety

67%

Environmental Opportunities

75%

Others (Social)

67%

Others (Environment)

75%

Product Liability

67%

39

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4. Critical ESG Issues (continued)
GPIF also asked asset managers entrusted for fixed-income about critical ESG issues considered from the viewpoint of corporate bondinvestors. The results are listed below.
“Critical ESG issues” pointed out by more than 50% of asset managers* of each mandate are listed below.
(*) The percentage shown below represents the ratio of the number of managers which selected the relevant issue to the number ofactive/passive asset managers.
＜Domestic bonds＞＜Foreign bonds＞

Disclosure

100%

Climate Change

88%

Climate Change

93%

Human Rights & Community

76%

Corporate Governance86%

Supply Chain71%

Supply Chain

71%

Pollution & Resources

65%

Board Structure, Self-evaluation

71%

Corporate Governance65%

Human Rights & Community

71%

Diversity

65%

Misconduct

64%

Waste Management

59%

Labor Standards

64%

Disclosure

59%

Diversity

64%

Anti-Corruption

59%

Environmental Opportunities

57%

Deforestation

53%

Water Stress, Water Security

53%

Others53%

Board Structure, Self-evaluation

53%

Health & Safety53%

Product Liability

53%

Labor Standards

53%

40

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4. Critical ESG Issues (Trend of domestic equities for the past three years)
Climate Change
Waste Management
Environmental Opportunities
E
Pollution & Resources（Environmental）
Water Stress, Water Security
Biodiversity
Deforestation

S（Social）

Passive managers of domestic equities
2022
2021
2020

Active managers of domestic equities
2022
2021
2020

Human Rights & Community
Labor Standards
Others (Social)
Health & Safety
Product Liability

Board Structure, Self-evaluation
Minority Shareholder Rights
G
Capital Efficiency（Governance） Corporate Governance
Others (Governance)
Anti-Corruption
ESG(multiple
themes)Disclosure
Supply Chain
Diversity
Misconduct
100%
80%-100%
50%-80%50% or less

41

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Chapter 3 Expectations & Challenges
for External Asset Managers and
GPIF’s Action Plans Going Forward

Expectations and Challenges for External Asset Managers
Integrate GPIF’s Stewardship Principles and Proxy Voting Principles in their operations at all levels
throughout their organizations
 Governance and conflicts of interest
 Enhance the governance.
 Formulate and review effective measures to prevent conflicts of interest
 Integration of investment and stewardship/ ESG
 Collaborate between investment and stewardship activities
 Propose and establish models for passive investment focusing on stewardship activities Practice ESG integration tailored to different investment styles
 Strengthening of engagement including exercise of voting rights
 Implement engagement activities based on new ESG issues that takes into account environmental changes and contributeto enhancing corporate value Promote engagement strategy in accordance with the stages of investee companies
 Integrate ESG issues and engagement on proxy voting principles
 Stewardship activities in fixed income investments
 Messages and disclosure for investee companies Implement stewardship activities in line with messages to investee companies (consistency of speech and action)
 Improve the quality of disclosure Disclosure of voting principles and the result of exercise of voting rights
 Disclosure in line with TCFD Recommendation
 Disclosure of critical ESG issues (materiality)
42

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GPIF’s Action Plans Going Forward

 “Enhance engagement” with external asset managers focusing on two-way communication• Assessing the compliance status of GPIF’s Stewardship Principles and Proxy Voting Principles• Confirming the governance systems of external asset managers• Conducting dialogues with each internal position from the top management to persons in charge, according to themes• Conducting dialogues with the third-party and other committees as required• Confirming new ESG issues that contribute to enhancing corporate value• Recognizing challenges relating to engagement subject companies and sharing their evaluation among the investment teamand stewardship team
 Establish passive investment models focusing on stewardship activities
 Take further consideration on the evaluation method of ESG integration
 Examine evaluation methods of stewardship responsibilities in fixed income investment
 Conduct joint researches with external organizations on the measurement of achievement and effects of engagement
including ESG (See next page.)

43

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GPIF’s Action Plans Going Forward: Measurement of Effects of Stewardship Activities
and ESG Investment
・

GPIF believes that regarding stewardship activities and ESG, the longer the investment horizon is, the more the effect ofimprovement of returns after risk adjustments can be expected.

・ Meanwhile, given that data have been accumulated as a corresponding period of time passed since the beginning of each initiative,
we will conduct quantitative measurement of effects as follows from FY2023 to FY2024, collaborating with a consulting service
provider that has expertise in statistical analysis, for the purpose of appropriately implementing Plan-Do-Check-Act (PDCA) cycles.
■Outline of the measurement of effects
Project theme
Measurement of the effects ofstewardship activities

Measurement of effects of
ESG investment

Specific content (example)

Verification of the effects of engagement

Research into the causation between the engagementand ESG ratings/ improvement of corporate value

Verification of the exercise of voting rights byexternal asset managers

Changes in how different when exercising voting rights
for companies with which they have a potential conflict ofinterest and other investee companies

Verification of the effects of passive
investment of equities based on ESG indices

Analysis of the impact of ESG investment on corporate
behavior

Study on ESG factors that contribute to theimprovement of corporate value andinvestment returns

Research into the causation between the ESG factors
and the improvement of corporate value/ investment
returns

Note: The project themes and their implementation period are subject to change.

■Public noticehttps://www.gpif.go.jp/info/procurement/
44

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Status of Exercise of
Shareholders’ Voting Rights(April 2022 to June 2022)

1. Domestic Equities(1) Exercise of voting rights by external asset managers

All external asset managers (31 funds) exercised their voting rights.

(2) Exercise of voting rights by type of proposal(Total number of proposals)
Proposals pertaining to capital
policy(excluding items pertaining tochanges to the articles ofincorporation)

Proposals pertaining to
Director remuneration, etc.

Proposals pertaining to company organization

Proposals

Total number ofvoting rights
exercisedManagement
proposals

Total

Approved

OpposedShareholder
proposals

Total

Approved

Opposed

Appointmentof Statutory
Auditors

Of which
Appointmentof Outside
Statutory
Auditors

Appointmentof Statutory
Auditors

Director
remuneration

Director
bonuses

Director
Retirement
bonuses

Granting ofStockoptions

Dividends

Acquisitionoftreasurystock

Mergers,transfer ofbusiness,company
split, etc.

Proposals
pertaining tochanges tothe articles
ofincorporation

Poison Pill
(Rights Plan)
Other
proposals

Appointment
of Directors

Of which
Appointmentof Outside
Directors

120,694

48,687

9,253

6,334

305

4,872

819

584

450

9,708

127

328

16,767

405

0

232

164,544

120,349

48,546

9,191

6,299

305

4,810

819

584

450

9,538

0

328

14,959

405

0

196

161,934(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(0.0%)(100.0%)(100.0%)(100.0%)(0.0%)(100.0%)(100.0%)106,71142,782

8,206

5,344

305

4,599

696

80

355

9,301

0

321

14,74723

0

161

145,505(88.7%)(88.1%)(89.3%)(84.8%)(100.0%)(95.6%)(85.0%)(13.7%)(78.9%)(97.5%)(0.0%)(97.9%)(98.6%)(5.7%)(0.0%)(82.1%)(89.9%)

13,638

5,764

985

955

0

211

123

504

95

237

0

7

212

382

0

35

16,429(11.3%)(11.9%)(10.7%)(15.2%)(0.0%)(4.4%)(15.0%)(86.3%)(21.1%)(2.5%)(0.0%)(2.1%)(1.4%)(94.3%)(0.0%)(17.9%)(10.1%)

345

141

62

35

0

62

0

0

0

170

127

0

1,808

0

0

36

2,610

(100.0%)(100.0%)(100.0%)(100.0%)(0.0%)(100.0%)(0.0%)(0.0%)(0.0%)(100.0%)(100.0%)(0.0%)(100.0%)(0.0%)(0.0%)(100.0%)(100.0%)

5

2

16

15

0

7

0

0

0

33

22

0

175

0

0

4

262

(1.4%)(1.4%)(25.8%)(42.9%)(0.0%)(11.3%)(0.0%)(0.0%)(0.0%)(19.4%)(17.3%)(0.0%)(9.7%)(0.0%)(0.0%)(11.1%)(10.0%)

340

139

46

20

0

55

0

0

0

137

105

0

1,633

0

0

32

2,348

(98.6%)(98.6%)(74.2%)(57.1%)(0.0%)(88.7%)(0.0%)(0.0%)(0.0%)(80.6%)(82.7%)(0.0%)(90.3%)(0.0%)(0.0%)(88.9%)(90.0%)

Notes:*Figures in parentheses represent percentages for each proposal. The total percentage may not add up to 100 due to rounding.
*There were no cases of non-exercise nor abstentions.
*Resolutions of J-REIT general meetings of investors are included above.

Warning
type

Total

Trust
type

45

Copyright © 2023 Government Pension Investment Fund All rights reserved.

2. Foreign Equities(1) Exercise of voting rights by external asset managers
All external asset managers (26 funds) exercised their voting rights.
(In some cases, voting rights were not exercised in the subject countries for institutional reasons, etc.)(2) Exercise of voting rights by type of proposal
Proposals pertaining to company
organization(Total number of proposals)

Proposals pertaining to Director remuneration,etc. Proposals pert

Proposals pertaining to capital
policy (excluding items pertaining
to changes to the articles ofincorporation)

Proposals

Total number ofvoting rights
exercisedManagement
proposals

Total

Approved

OpposedShareholder
proposals

Total

Approved

OpposedDirector
remuneration

Director
bonuses

Director
retirement
bonuses

Grantingof stock
options

Dividends

Acquisitionof treasury
stock

Mergers,transfer ofbusiness,company
split, etc.

Other proposals

Proposals
pertaining tochanges tothe articles
ofincorporation

Warningtype
poisonpill

Total

Approval of
financialstatements
andstatutory
reports

Other
proposals

Appointment
of Directors

Appointmentof Statutory
Auditors

AppointmentofAccounting
Auditors

94,204

4,251

10,912

21,376

112

17

4,459

7,947

5,026

6,678

6,759

161

10,65543,564

216,121

93,524

3,757

10,856

21,206

112

5

4,435

7,917

5,026

6,669

6,220

160

10,65538,826

209,368(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)(100.0%)75,632

3,229

9,162

15,708

98

1

2,735

7,885

4,826

5,328

5,387

129

10,35532,851

173,326(80.9%)(85.9%)(84.4%)(74.1%)(87.5%)(20.0%)(61.7%)(99.6%)(96.0%)(79.9%)(86.6%)(80.6%)(97.2%)(84.6%)(82.8%)

17,892

528

1,694

5,498

14

4

1,700

32

200

1,341

833

31

300

5,975

36,042(19.1%)(14.1%)(15.6%)(25.9%)(12.5%)(80.0%)(38.3%)(0.4%)(4.0%)(20.1%)(13.4%)(19.4%)(2.8%)(15.4%)(17.2%)

680

494

56

170

0

12

24

30

0

9

539

1

0

4,738

6,753

(100.0%)(100.0%)(100.0%)(100.0%)(0.0%)(100.0%)(100.0%)(100.0%)(0.0%)(100.0%)(100.0%)(100.0%)(0.0%)(100.0%)(100.0%)

496

381

45

38

0

3

18

0

0

0

187

1

0

2,357

3,526

(72.9%)(77.1%)(80.4%)(22.4%)(0.0%)(25.0%)(75.0%)(0.0%)(0.0%)(0.0%)(34.7%)(100.0%)(0.0%)(49.7%)(52.2%)

184

113

11

132

0

9

6

30

0

9

352

0

0

2,381

3,227

(27.1%)(22.9%)(19.6%)(77.6%)(0.0%)(75.0%)(25.0%)(100.0%)(0.0%)(100.0%)(65.3%)(0.0%)(0.0%)(50.3%)(47.8%)

Notes:*Figures in parentheses represent percentages for each proposal. The total percentage may not add up to 100 due to rounding*“Opposed” figures include 3,392 abstentions.

46

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3. Comparison of the number of exercises of voting rights by fiscal year (Period from April to June)* Comparison of the number of opposition to management proposals, etc., and the number of approvals of shareholder proposals by fiscal
year
FY2008Domestic
equityOpposition to the
management
proposals orabstention fromvotingApproval ofshareholder
proposals

ForeignequityOpposition to the
management
proposals orabstention fromvotingApproval ofshareholder
proposals

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

14,00915,472

17,67422,07418,044

16,191

12,911

14,266

13,40812,491

15,061

22,25022,821

17,022

16,429

10.2%

8.7%

11.6%

13.3%

11.6%

11.5%

9.5%

8.4%

7.9%

8.5%

10.3%

11.1%

12.3%

10.4%

10.1%

37

42

47

34

58

34

56

55

65

167

129

215

319

154

262

3.5%

3.1%

2.6%

1.9%

2.7%

2.3%

2.9%

2.8%

4.7%

7.8%

8.8%

12.0%

12.2%

8.9%

10.0%

6,427

8,849

7,293

6,087

5,422

7,161

7,269

10,778

11,162

13,076

17,061

17,51017,73428,38536,042

6.5%

8.1%

6.9%

5.3%

4.9%

6.0%

6.7%

7.5%

7.7%

8.7%

10.3%

12.4%

13.1%

15.9%

17.2%

1,745

2,821

2,085

1,486

1,655

1,503

1,483

2,650

2,630

3,295

2,849

2,504

2,008

2,772

3,526

29.7%

44.2%

38.9%

32.9%

35.2%

32.0%

40.3%

47.4%

43.0%

50.5%

53.3%

52.7%

43.8%

53.9%

52.2%

47

Copyright © 2023 Government Pension Investment Fund All rights reserved.

48

Copyright © 2023 Government Pension Investment Fund All rights reserved.

49

Copyright © 2023 Government Pension Investment Fund All rights reserved.

Investment Principles

March 26, 2015
Revised: October 2, 2017
Last revised: April 1, 2020

[1] Our overarching goal is to contribute to the stability of the national pension system by securing the investment

returns that it requires with minimal risk and from a long-term perspective, to the sole benefit of pension
recipients.

[2] Our primary investment strategy is diversification by asset class, region, and timeframe. While market prices
may fluctuate in the short term, GPIF will take full advantage of our long-term investment horizon to achieve
investment returns in a more stable and efficient manner, while simultaneously ensuring sufficient liquidity to
pay pension benefits.
[3] We formulate our overall policy asset mix and manage risks at the portfolio, asset class, and investment
manager level. We utilize both passive and active management in order to achieve benchmark returns (i.e.,
average market returns) and seek untapped profitable investment opportunities.
[4] We believe that sustainable growth of investee companies and the capital market as a whole are vital inenhancing long-term investment returns. In order to secure such returns for pension beneficiaries, therefore,
we promote the incorporation of non-financial environmental, social, and governance (ESG) factors into theinvestment process in addition to financial factors.
[5] In order to enhance long-term investment returns and fulfill our stewardship responsibilities, we shall advancevarious initiatives (including the consideration of ESG factors) that promote long-termism and the sustainablegrowth of investee companies and the capital market as a whole.