Financial power is essential to making sustainable seafood mainstream in society.Financial seminar on seafood traceability and business risksThe event was held in March this year and attracted many participants from the financial sector and the fishing industry. ESG investment emphasizes environmental, social and governance initiatives, including in the fishing industry. We spoke to Michiyo Morisawa, who has led the introduction of ESG investment in Japan, about the relationship between investment and sustainability in Japan and how it has changed in recent years.
Mitsuyo Morisawa
Senior Lead of the PRI Secretariat, PhD in Environmental Studies. After working at Citibank and other banks, where he worked on reducing settlement risks between financial institutions, he studied environmental studies at the University of Tokyo Graduate School. With CDP's global expansion, he served as Japan Director from 2005 while still a graduate student until February 2023, where he was responsible for promoting corporate environmental initiatives and information disclosure. In 2, with the establishment of the PRI Japan network, he became PRI Japan Head, concurrently serving as CDP Japan Director. He will assume his current position from 2010.
--Mr. Morisawa, I heard that you have been interested in sustainability since you were working at a financial institution. Could you tell us how you became involved in the initiatives you are currently involved in?
At the financial institution, I was involved in launching bilateral netting in Japan. This is not a job that is generally well known, but with the help of the Financial Services Agency and regional banks, I was tasked with creating a network between Japanese and overseas banks. I think that the experience of learning the basics about the risks of financial transactions and the success of getting people involved in creating a new system are what connect me to my current job.
While I was working, I was interested in sustainability and wanted to get a PhD and enter that world if possible. So I quit my job in finance and entered graduate school, but at the time there were no courses on "sustainability," so I went on to study environmental studies.
I became interested in sustainability in Japan. It stems from something I felt while working at a financial institution. When I interacted with my colleagues in London and New York, I felt that even though Japanese people are so hardworking and work so hard, they don't seem to live rich lives. I wondered why, and thought it was a shame.
──Then you go on to graduate school life, which is a big change.
I didn't want to become a researcher, but I wanted to get my doctorate quickly and actually be involved in that world, so I went to university every day and attended any related seminars that were available.CDP (Carbon Disclosure Project)It was around that time that I learned about it.
CDP is a British NGO founded in 2000 with the idea of incorporating corporate efforts to combat climate change into investment decisions. When I was in graduate school, I attended a CDP briefing session hosted by the Development Bank of Japan and thought, "What an interesting thing they're trying to do!"
They wanted to make information on climate change initiatives, along with corporate financial information, useful for investment decisions. To do this, they sent questionnaires to 500 global companies around the world, compiled and published the responses. At the time, the Global 500 consisted of approximately 50 Japanese companies, 50 European companies, and 400 American companies.
When we tried to expand the target companies, neither economic organizations nor investor associations in Japan showed any interest. So I raised my hand and said, "If no one else is going to do it, I'll take it on." That was 20 years ago, but I thought I had found a very interesting and important point of view, and I felt that I had to do it.
CDP provides a list of questions for disclosure to not only large companies but also small and medium-sized enterprises, public institutions, and local governments.--However, it seems like it will be a very difficult role.
What came in handy was the experience and network I had from my time at the financial institution, which involved working with a variety of people. An old friend of mine had become the Japanese representative for the US rating agency S&P (Standard & Poor's) at a young age, so I consulted him and we thought we could use a sample of 150 S&P companies. This included the 50 companies to which CDP had previously sent questionnaires, so in effect we added 100 companies.
On the other hand, when we spoke with investors, we also heard that 150 companies were not enough to create an index. So we next expanded the number of companies to which we sent questions to to 500. However, at the time, investor awareness was not changing suddenly, and the government was not providing any guidance... We felt a dilemma, but we continued with the project because we wanted people to know about global trends.
The PRI (Principles for Responsible Investment) was established in 2006 at the suggestion of Kofi Annan, then Secretary-General of the United Nations. Its purpose is simple: to incorporate ESG (environmental, social, and governance) initiatives into the evaluation of corporate value in the investment decision-making process. This perspective is important for long-term investment.
Investors in Japan were beginning to sign the petition in support of this, but I wanted to further expand my network in Japan, so I said, "Okay, I'll do that too," and decided to take on the dual role.
The six principles of the PRIWhat motivated you to get so involved?
Both CDI and PRI had a fresh culture that I had never experienced in Japan at the time, in addition to the content of their activities. I visited their headquarters in London and their offices in New York at my own expense, and found that there were young people there who had just finished their master's degree programs, and at a presentation in New York, former President Clinton even spoke for an hour.
A wide variety of people are active in shared offices with cafe corners. The fact that a shared office in Rockefeller Center is available and that a former president has come to speak at the event shows just how important the organization is in society. Realizing the breadth and depth of this community is what motivated me to continue my activities.
It was also impressive to see the role that NGOs play in connecting various perspectives. In Japan, where NGOs are divided into public and private sectors and each is dedicated to its own role, I experienced a different way of working, and it was rewarding to promote this new movement.
PRI's signatures have grown significantly since its founding in 2006--In 2015, Japan's Government Pension Investment Fund (GPIF), which handles the world's largest amount of assets, signed the PRI, and the year was said to be "the first year of ESG investment in Japan." What changes were occurring around this time?
One important concept is that of asset owners. There are several large asset owners in Japan, and GPIF is one of the largest in the world. You are probably familiar with the supply chain in the fisheries industry, but finance also has an "investment chain." Asset owners are located upstream of this chain.
In Japan, they have been lumped together as "investors," but the original idea is that asset owners decide the investment policy for their assets and entrust it to management companies. The importance of asset owners has hardly been recognized in Japan.
In fact, the GPIF's money is not its own, it is ours. We, the beneficiaries, should be watching how it is managed. But in Japan, people don't seem to care much about that. I think this is still a problem.
--What was the reason that GPIF signed the PRI in 2015?
Until then, GPIF had only been buying Japanese government bonds, but with ultra-low interest rates continuing, that alone was no longer sustainable. As a result, in addition to government bonds, GPIF also began investing in domestic stocks, foreign stocks, and foreign bonds. This is a risky investment, so a long-term perspective is necessary. This is why we decided to sign the PRI.
In other words, ESG is important when considering investments from a long-term perspective, because ESG (environmental, social, and governance) initiatives need to be viewed alongside financial information as an important indicator for corporate evaluation.
The Government Pension Investment Fund (GPIF), which manages the nation's pensions, has signed the PRI (bottom left of the image) to ensure the reliability of its long-term fund management (image from the GPIF official website).--How do you view the changes in Japan over the past 10 to 20 years, when thinking about long-term investment has finally begun to take hold?
Political influences play a major role. The GPIF's long-term asset allocation and investment policy changes in 2015 were also driven by decisions by politicians.
Even so, public pensions other than GPIF, pension funds, and corporate pensions were slow to move. It was then Prime Minister Kishida who changed that. As part of a wide range of financial initiatives, he created an opportunity for everyone to think about their own money, including through NISA. Instead of just leaving it in the bank as before, people should invest if they are concerned about interest rates, and if they are going to invest, they should think carefully about where and how to invest.
PRI holds a face-to-face international conference once a year."PRI in Person"was held in Tokyo in 2023. Prime Minister Kishida's speech there, in which he spoke about policies for sustainable growth and investment to resolve social issues, was outstanding and drew thunderous applause. He stated clearly that "at least seven major public pension funds will proceed with the work to sign the PRI," and all of them did so the following year in 7.
Furthermore, asset owners will clarify the investment policy for the money entrusted to them by stakeholders.The common principle isThe Financial Services Agency promoted the Asset Owner Principle, and the appointment of Chief Investment Officers began to progress. Until then, Japan's large public pension funds did not have Chief Investment Officers, even though they handled huge amounts of money, and it was unclear who was responsible for investments.
--The big turning point was the actions of the top political figures.
I believe that Prime Minister Kishida himself will have realized the high level of interest among investors around the world at the PRI In-Person Conference in 2023. Such international conferences are not held very often in Japan, so I would like to work to ensure that more are held. In addition to CDI and PRI, we have also brought a conference called RI Asia (Responsible Investment Asia) to Japan.
It is extremely empowering to come into contact with people from overseas at conferences and experience global trends firsthand. Without this opportunity, we often end up not noticing things.
--There is meaning in witnessing the world's consciousness at an international conference where important players gather.
It's difficult for Japanese people to travel abroad, so I think holding the event in Japan is very significant. If it's held in Japan, there will be many talks that can be heard in Japanese. You can get information and get a real sense of what is important around the world. It will make it easier for people to understand various things.
Part 2Now, I would like to ask about the relationship between the Japanese fishing industry and frameworks for ESG investment and corporate information. In particular, while frameworks to date have been led by Europe and the United States, I asked about the possibility of Japan taking the lead in proposing frameworks and indicators for the fishing industry, and what is needed to achieve this.
Interviewed and written by: Keiko Ihara
He was in charge of design research and concept studies at a general design office until 2002. Since 2008, he has been involved in design research at infield design, and also works as a freelance writer and translator of design-related articles.
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Key terms and concepts to understand seafood sustainability.
