Sumitomo Mitsui Trust Asset Management's Role in Global ESG Advocacy and Net Zero Commitment
David Semaya, Executive Chairman and Representative Director, SUMITOMO MITSUI TRUST ASSET MANAGEMENT Co., Ltd.
In this article, David Semaya, Executive Chairman and Representative Director at Sumitomo Mitsui Trust Asset Management Co., Ltd. Shares Sumitomo Mitsui Trust Asset Management's (SuMi Trust) significant role in global ESG advocacy. In the article David Semaya outlines SuMi Trust’s commitment to sustainability, participation in the Net Zero Asset Managers Initiative as well as its ambitious targets for reducing greenhouse gas emissions by 2030.
Sumitomo Mitsui Trust Asset Management (SuMi Trust) is one of the largest asset management companies in the Asian region. SuMi Trust also endorses the Japanese Stewardship Code and is a signatory to the United Nations Principles for Responsible Investment (PRI), as such it aims to achieve sound growth and sustainability of companies and of society as a whole by encouraging companies to resolve ESG issues through their business activities.
In July 2021, SuMi Trust became a signatory to the Net Zero Asset Managers Initiative (NZAMI), which is under the Glasgow Financial Alliance for Net Zero (GFANZ), an international initiative by financial institutions to pursue a net zero society by 2050, and it expressed its commitment to work towards achieving it’s goal. Further in May 2022, in accordance with its commitments under NZAMI, SuMi Trust announced 2030 interim targets for GHG emissions of asset under management. Our interim target for 2030 is for 50% of assets under management (approximately Yen 43 trillion as of June 2021) to achieve a 50% reduction in the carbon footprint compared to 2019. We shall expand the base of assets as calculation methodologies are developed such as sovereign bonds.
SuMi Trust aims to achieve both interim targets and its ultimate goal of Net-Zero greenhouse gas (GHG) emissions from the companies in which it invests. This is pursued through active engagement, utilizing voting rights, collaborating with asset owners, government agencies, and other stakeholders. SuMi Trust employs sophisticated investment strategies and provides sustainable investment opportunities to its clients.
It is undertaking a broad range of engagements across variety of industries to work towards reducing GHG emissions and tackling climate change. So far, SuMi Trust has identified around 100 companies (40 domestic, 60 overseas) that have a significant impact on reducing global GHG emissions as being a particularly important focus with regards to engagement activity. In exercising its voting rights, SuMi trust policies are to oppose proposals for the appointment of directors if the investee company does not respond to an engagement offer or if, despite continuous engagement, the situation has not improved.
In addition, Sumi Trust is currently actively involved in a number of initiatives to address climate change. It participates in Climate Action 100+ and serves as a lead manager role as well as a global steering committee member representing Asian based investors. Also in Asia, it participates in Asian Utilities Engagement Program conducted by AIGCC (Asia Investor Group on Climate Change), which focus on Asian utilities companies with GHG impact outside of CA100+ coverage, serving as a lead manager in the project. In North America, it participates in the Ceres Working Group on Land Use and Climate Terms of Reference.
Recently, “Transition finance” has gathered interest from wider stakeholders and has become a hot topic among investors. GFANZ established its first country chapter, the Japan Chapter, in Japan to support and facilitate the transition to net zero in the Asia and Pacific (APAC) region, and it started its operation this June. SuMi Trust participated in the Chapter as one of the core working group companies and has been discussing the transition in the APAC region with other member companies.
We were invited as the only panelist from Asian investors to a session called, “planning for transition,” of the “Net Zero Delivery Summit” held by London City last May; there, we discussed the current situation and issue of transition in Asian countries and how institutional investors contribute to facilitating the transition. At the panel discussion, we emphasized the importance of engagement to accelerate the transition by saying that it is indispensable to exercise engagement with global companies with high GHG emissions and to monitor the progress of the reduction as they plan through the EETV (Engage, Encourage, Trust and Verify) process which we follow.
SuMi Trust intends to actively participate in global investor initiatives such as NZAMI, as well as collaboratively work with stakeholders and asset owners to enhance the level of activities to achieve smooth transition towards low carbon society, tackling climate change related issues, in order to accelerate the Net Zero society.
About Sumitomo Mitsui Trust Asset Management
Sumitomo Mitsui Trust Asset Management is a part of Sumitomo Mitsui Trust Holdings and has provided investment management services to both domestic and overseas long-term investors such as pension funds, public funds and defined contributions individual pensions, with total asset management of Yen 85 trillion. We invest mainly in listed global fixed income securities and equities. It has long believed that responding to ESG issues is an integral part of the investment process. As a committed responsible investor, we launched our first SRI (Socially Responsible Investment) fund in 2003 and were one of the founding signatories of the UN Principles for Responsible Investment (PRI) in 2006.We regard stewardship activities such as engaging with companies and exercising voting rights as vital to addressing ESG challenges. Ultimately aiming to improve corporate value of investee companies and enabling us to meet our responsibility to expand investment returns for our clients as part of our stewardship responsibilities.
Learn more about Sumitomo Mitsui Trust Asset Management: https://eu.sumitrust-am.com/
About David Semaya
David Semaya is Executive Chairman and Representative Director of SUMITOMO MITSUI TRUST ASSET MANAGEMENT Co., Ltd. Japan’s largest asset manager with approximately $650 billion in assets under management. David also serves as an Advisor to Sumitomo Mitsui Trust Holdings, Co. Limited. His thirty-five year career spans three continents in executive leadership roles in financial services across the US, Europe, and Asia. Now based in Tokyo, he joined SuMiTrust Asset Management in April 2018.
Previously, David served as Executive Chairman of Nikko Asset Management for four years both in London and in Tokyo. Prior to returning to Japan, he was with Barclays PLC as CEO of UK and Ireland Wealth Management, and Chairman of Barclays Asset Management Ltd. Prior to 2009, he served as CEO for Barclays Global Investors (now Blackrock) Europe and Asia. Until 2004, David was with Merrill Lynch and Co. in a variety of executive leadership positions in both Asset Management and Investment Banking in New York and Tokyo.
David was also formerly a Trustee Director for one of Europe’s largest pension funds and served on the board of the Investment Association and the Wealth Management Association (UK). He currently serves as Chairman of the ICI Global APAC Steering Council. In the non-profit sector, David was formerly a board member and Treasurer for the American School in Japan and currently serves as a trustee and is a member of the finance committee. He also serves on the oversight board of Temple University Japan and as a trustee of a UK humanitarian charity. David was recently appointed to the US-Japan Educational Commission (Fulbright program) by the U.S. Ambassador to Japan.
David holds a BA from The University of Florida, a Masters in Education from Temple University and has completed the Stanford/NUS Executive Program in International Management. David is a dual US/UK National and is fluent in the Japanese language.