Emerging Japan

Kathlyn Collins, Head of Responsible Investment and Stewardship, says a renewed purpose among regulators and pressure from investors is yielding breakthroughs in the governance and the capital efficiency of Japan’s-listed companies.

Key takeaways

  • There’s a new sense of purpose emerging among Japanese regulators and a focus on ensuring the standing of Japan’s financial markets are preserved and enhanced into the future
  • On-the-ground pressure from asset managers is yielding improvements in board diversity and environmental oversight.
  • Japan's capital efficiency reforms are a potential game-changer. Investors can not only position themselves for earnings-related returns but also for returns generated from increased buybacks and dividends.

Whatever the familiar views are of Japan it’s fair to say things are being shaken up a little. I recently attended a bunch of corporate governance events across Tokyo and there was a real buzz in the air. Japan’s equity markets have performed well this year, its economy seems to be turning a corner and its corporates are in rude health. From the meetings I got a real sense of optimism and purpose.

As part of the Japan Working Group of the Asian Corporate Governance Association (ACGA), a nonprofit focused on improving corporate governance in Asia, I crisscrossed the capital meeting investors, companies and regulators, including the Ministry of Economy, Trade and Industry (METI), the Financial Services Agency (FSA), the Japanese Institute of Certified Public Accountants (JICPA) and the Tokyo Stock Exchange (TSE). I also met with the Japan Stewardship Forum, a group of institutional investors engaged in stewardship activities in Japan, and attended the Principles for Responsible Investment (PRI) conference. While I was in town the Government also held ‘Japan Weeks’, a forum for foreign investors and asset management firms where it presented policies aimed at showcasing Japan’s attractiveness as a global financial hub. It all contributed to a whirlwind of energy and I came away with the impression that a new Japan seems to be emerging.

Renewed Purpose

Renewed Purpose

Kathlyn Collins, Head of Responsible Investment and Stewardship, attends the Principles for Responsible Investment (PRI) in Person conference in Tokyo.