Transitioning from “Resource” to “Capital” — Investing for a Sustainable future and Seafood (Part 1)

Transitioning from “Resource” to “Capital” — Investing for a Sustainable future and Seafood (Part 1)

The seafood sector faces many risks, including overfishing, IUU fishing, human rights abuse, and biodiversity loss. How should seafood companies encourage responsible business practices in response to these pressing issues? And just what should be the investors’ role in supporting these endeavors?

Minoru Matsubara, a speaker at the Tokyo Sustainable Seafood Summit 2023 (TSSS 2023), has been investing as part of the Pension Trust Business Planning Division of Resona Bank for 33 years. In January 2020, he became the Executive Officer of the Responsible Investment Division at Resona Asset Management Co., Ltd. Let us hear more from Matsubara about the future of responsible investment in the seafood sector.

The first part of this interview focuses on Matsubara’s present duties and the trends in responsible investment in Japan and abroad.

 

Minoru Matsubara
Minoru Matsubara joined Resona Bank in April 1991 and was assigned to the Pension Trust Business Planning Division. He was then assigned to operational management, planning, and responsible investment in the Investment Development Office, as well as the Public Funds Business Planning Division, the Pension Trust Business Planning Division, the Asset Management Business Planning Division, and more. In April 2023, Matsubara was appointed to his current position. He was also a visiting fellow at the Pension Fund Management Research Center in 2000, a visiting fellow at the Pension Research Center in 2005, and the co-chair and a steering committee member of the Asset Management, Securities, and Investment Banking Working Group (WG) of the Principles for Financial Action for the 21st Century. Aside from these, Matsubara serves as a member of study groups and other committees of the Ministry of Economy, Trade and Industry, the Ministry of the Environment, the Ministry of Agriculture, Forestry and Fisheries, and the Cabinet Office.

 

Money Alone Can’t Make People Happy — Investing in an Ideal Society

— You were appointed Executive Officer of the Responsible Investment Division at Resona Asset Management Co., Ltd. in January 2020. Please tell us the details surrounding your appointment.

I joined Daiwa Bank (now Resona Bank) in 1991 and spent the next 33 years investing for the Pension Trust Business Planning Division. My job was to ease people’s worries about the future by managing, protecting, and increasing pensions entrusted to us. Managing trusts meant holding money important to their owners, and the responsibility of being entrusted with something important was incredibly rewarding. However, I have recently begun to question whether managing and increasing people’s money is truly the only thing we can do to help them prepare for the uncertain future.

Even if someone were to receive a considerable sum of money when they retire, would they be truly happy living in a world where it is 50°C in summer and minus 30°C in winter? I’m sure most would associate a happy retirement with receiving money in a comfortable environment rather than a harsh one. If so, our job of preparing for future uncertainties should extend beyond protecting and increasing entrusted money. We must take care of our environment for days to come. Under this idea, I was appointed Executive Officer of Responsible Investment in 2020 to further our activities.

— What is a responsible investment to begin with?

In our responsible investments, “responsible” consists of two things. The first is the narrow sense of the word—the responsibility to protect and increase the accumulated pension money entrusted to us and to return it to our clients reliably and appropriately. The second is the broader sense—the responsibility to promote efforts toward the ideal society people have come to expect from us. We present a concrete vision of this ideal society through our Sustainability Reports, investing responsibly to achieve it.

Meanwhile, ESG (Environment, Social, and Governance) is a framework that facilitates a concrete image of the ideal society examined upon making responsible investments, and investments that evaluate investee companies from an ESG perspective are called ESG investments.

 

The Duty of Managing Pensions and Creating a Better Society 30 Years From Now

— Please tell us about your current duties.

I am currently engaging in my duties as a Chief Sustainability Officer and Executive Officer of Resona Asset Management. My job is to support companies in their efforts for a sustainable society. Specifically, we use the pension accumulated by the Japanese people as the source of funds to purchase shares in all of the approximately 2,000 companies currently listed on the stock exchange and provide advice and support to companies from a shareholder’s perspective.

We manage large sums of money entrusted to us by public and corporate pension funds. Since all our investments are in publicly listed companies, we go beyond the seafood sector and participate as a shareholder in the electricity, steel, and chemical sectors, all of which significantly impact climate change.

We begin paying out pensions 40 years from the start of their accumulation. In the meantime, we manage the money, invest it, and return it when the owner needs it. Those accumulating their pensions now will get their money back in the 2060s. Thinking about these clients, we can’t help but wonder about  the world’s environment by then. As such, we operate under the commitment to preserve the society we live in now and the society we strive for, ensuring they continue into the future and that our clients can receive their pensions in such a society.

Therefore, those who have entrusted their pension funds to us must monitor how their money is being invested.

 

Identity of Resona Asset Management (Source: Resona Asset Management SUSTAINABILITY REPORT 2022/2023 p.1). The company’s purpose is to ensure a prosperous and happy life for future generations as well as our customers.

 

Responsible Investment is Also Rising in the Seafood Sector to Adapt to Growing Climate Change Concerns

— Japan’s ESG investment in 2022 was approximately $4.3 trillion, a 48% increase over 2020. In the seafood sector, the Thai Union Group raised around 40 billion yen through a sustainability-linked loan, and Maruha Nichiro issued blue bonds in Japan. What are your views regarding these domestic and international trends in responsible investments?

Financial institutions are now expected to play a role not only in improving the so-called blood flow of the economy but also in taking responsibility for the planet’s future. I believe this is why responsible investment and sustainable finance are gaining momentum. Today, climate change is the biggest threat to our planet’s future, and there is no doubt that there is a growing movement to work against it through finance.

If climate change advances, ecosystems will change drastically, resulting in massive damage to the seafood sector, which relies on natural capital. For example, changes in ecosystems mean changes in the species of fish that can be caught, which in turn leads to changes in the fishing grounds and suppliers, resulting in concerns of declining production and quality. Because of this, the seafood sector must take action to adapt to climate change. Adapting to these changes naturally requires money, so the seafood sector inevitably becomes more active in finance.

 

>>>In the second part of this interview, we will hear about the issues surrounding Japan’s seafood industry from Matsubara’s perspective as an investor, as well as points to note in the engagement between the investor and the investee, and what Japan’s companies, financial institutions, and government should do for the future of the seafood industry.

 

 

Original Japanese text: Shino Kawasaki