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June 19, 2003
The Sun is Rising on SRI in Japan
    by William Baue

A major Tokyo public pension fund commits to socially responsible investing, an indication of Japan's growing interest in SRI (part one of a two-part article.)

In March 2003, the Mutual Aid Association for Tokyo Metropolitan Teachers and Officials launched the first socially responsible investing (SRI) pension fund in Japan. Japan has been much slower to adopt SRI than European and North American countries for a number of reasons; these include Japan's recent economic woes as well as its different cultural values (see part two of this article for more on Japanese attitudes toward SRI.) However, a number of SRI vehicles do exist, and informed observers agree that SRI will only grow.

"The Association's leadership on SRI is very significant--their policies are definitely raising the profile of SRI and its significance to pensions investment," said Tessa Tennant, executive director of the Association for Sustainable & Responsible Investment in Asia (ASrIA). "It's a fair bet that other pension funds will soon adopt SRI policies or invest at least some of their portfolio in SRI funds."

The Association, which serves about 112,000 public school teachers and officials in the Tokyo metropolis, committed two billion yen of its 84 billion yen pension portfolio to SRI strategies. The Association is similar to the California Public Employees Retirement Pension System (CalPERS) in the US and the University SuperAnnuation Scheme (USS) in the UK, two other public pension funds that employ SRI strategies. And as with many SRI institutional investments, separate firms provide research and fund management services.

"The Good Bankers provides the Association with tailor-made SRI research, covering environmental as well as social performance of each company focusing on three aspects, namely employee and community education, promotion of females, and contribution to the community," said Sho Ikeda, director of the Good Bankers.

About 100 companies passed the Good Bankers SRI screens, which also covered environmental issues such as environmental accounting and waste reduction.

"Nikko Asset Management provides fundamental financial research and serves as the fund manager," Mr. Ikeda told

Collaboration was not foreign to Nikko and the Good Bankers, which jointly launched the first SRI mutual fund in Japan in August 1999, the Nikko Eco Fund.

"When we established the Eco Fund, we focused on ecology and the environment," said Eiichi Takeda, a corporate planning official with Nikko. "Japanese are keen on the environmental issue, because Japan faced serious environmental pollution in the 1960s and 1970s."

"Then we aimed at women, young people, and new investors, who are interested in ecology and the environment very much," Mr. Takeda told

The Eco Fund, which focuses more on positive than negative screening, quickly attracted more than 100 billion yen in sales not only through brokerage firms, the traditional channel for fund sales in Japan, but also through banks.

"Observing the success of the fund, about ten similar retail funds were put into the market by various investment trust companies," Mr. Ikeda told "However, since then, Japanese stock market has been terribly bad and no other SRI fund had been launched until recently."

Also in 1999, Asahi Life Asset Management Company (ALAMCO) launched an SRI fund named Asunohane, or "Feather of the Future." In January 2003, ALAMCO contracted the Ethibel Group, a Belgium-based SRI research and consultancy agency, to provide SRI screening services.

"ALAMCO came to us for our capacity to examine Japanese companies beyond Japan's borders," said Kyoko Sakuma, project manager for Ethibel's Pacific Project.

Ethibel evaluates Japanese companies' international presence throughout their consolidated groups and supply chains, examining overseas sales and employment practice. Ethibel also conducts dialogue with relevant stakeholders throughout the world.

The proliferation of Japanese SRI vehicles, both at the individual and institutional levels, as well as the spread of SRI research beyond Japan's borders, bodes well for the growth of SRI in Japan.

"There is now a critical mass of individuals and funds involved with SRI for the industry to be self-perpetuating," Ms. Tennant told "There is much discussion about the contribution SRI can make toward helping Japan out of its current problems and toward a sustainable economy."

Part Two of this article will explore the Japanese attitudes toward SRI that may influence SRI's future growth in Japan.


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