SUMITOMO LIFE

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Asset Management

 Sumitomo Life manages assets with safety and security in mind so that we can continue to reliably pay insurance claims and benefit payments to our customers into the future. As the existence of a sustainable society is a prerequisite, we engage in asset management that takes into account sustainability over the medium to long term, including ESG (Environment, Social and Governance) factors(responsible investment)

Safe and secure asset management

 Sumitomo Life applies Asset and Liability Management (ALM) considering the long-term characteristics of life insurance liabilities. Our basic policy is to secure stable earnings while controlling risks appropriately by investing mainly in long-term interest-bearing assets including public and corporate bonds and loans under ALM. Furthermore, we aim to sustainably improve corporate value by managing stocks and other risk assets within an acceptable risk amount.

     

Sustainable asset management (responsible investment)

 By promoting responsible investment that takes into account ESG and other factors that support
sustainability over the medium to long term, we strive to contribute to the realization of a sustainable society as a responsible institutional investor, and to enhance investment returns over the medium to long term at the same time.


【Actions】

 Responsible investment specifically refers to ESG investment and stewardship activities.

ESG investment Stewardship activities
・Investment that takes into account non-
financial information including ESG factors in addition to financial information
・Constructive and purposeful dialogue with investees and activities relating to the exercise of voting rights in accordance with
the Japan’s Stewardship Code


【Basic Principles on Responsible Investment】

 The following basic principle on responsible investment have been established based on the
Principles for Responsible Investment (PRI※1) and Japan’s Stewardship Code (SSC). 

※1:Investment principles for investors put forward by the United Nations in 2006 that calls for investors to incorporate an ESG perspective in the investment process when considering investees.

Basic Principles
1.The Company shall systematically consider non-financial information including ESG factors and make investment decisions based on the characteristics of each asset.
2-1.In stewardship activities, the Company shall accurately assess the conditions (including sustainability) of investees, seek to share mutual understanding with them through
dialogue and exercising voting rights, encourage them to improve problems, and promote their
medium- to long-term corporate value improvement and sustainable growth.
2-2.The Company shall request investees that it engages in dialogue with to appropriately disclose information on ESG issues.
2-3.The Company shall establish guidelines that clarify the criteria for exercising voting
rights and other related matters, and exercise voting rights accordingly.
2-4.The Company shall perform stewardship activities in accordance with the Sumitomo
Life Group Code of Conduct, the Conflict of Interest Management Policy, and the Conflict of
Interest Management Regulations, while complying with laws, regulations and provisions
related to the management of conflicts of interest.
3.In addition to individual dialogue, the Company shall collaborate with other institutional
investors to resolve globally important ESG issues such as climate change response through
participation in Japanese and overseas initiatives. The Company shall also endeavor to
promote responsible investment by actively participating in various meetings held by such
initiatives, etc.
4.The Company shall publicly disclose information on its efforts for responsible investment
(including the disclosure items stipulated by the Stewardship Code) via its website and by other means, and regularly update the information.
5. To appropriately implement the PDCA cycle, the Company shall set up the “Responsible
Investment Committee” and establish other structures as necessary, while aiming to develop
human resources with necessary skills and knowledge.


【Social Issues to be Focused on Through Responsible Investment】

 While Sumitomo Life duly acknowledges the importance of all the 17 targets in the SDGs as issues
to be addressed through responsible investment, we particularly focus on the following social issues in light of our characteristics as an institutional investor.

Our Focus Areas Description Related SDGs
Climate change response ・An urgent issue for the whole world and an important issue that could cause damage to the asset value. We will encourage the transition to a carbon-free society through responsible investment. SDGsロゴ7 SDGsロゴ13
Health and welfare / Aging
population
・As a life insurance company, we will address the issues of health and welfare and aging population,including COVID-19 response. SDGsロゴ3
Economic growth
(including diversity)
・As a major institutional investor in Japan, we will promote the medium- to long-term corporate value improvement of investees through dialogue and contribute to the growth of the Japanese economy as a whole, including regional economies. We will also address diversity, including the active participation of women, as an important issue. SDGsロゴ5 SDGsロゴ8
Development of social
infrastructure
・As an institutional investor who manages assets over the medium- to long-term, we will provide medium- to long-term funding for the development of social infrastructure. SDGsロゴ9 SDGsロゴ11

ESG investment

 ESG investment takes into account non-financial information including ESG factors as well as
financial information. We focus on (1) ESG integration, (2) Thematic investment, and (3) Negative
screening. 

    [Method 1] ESG integration: A method that incorporates ESG perspectives in addition to
quantitative financial information in the investment decision-making process. As non-financial
information including ESG initiatives impacts the corporate value of investees in the medium to long term, we assess them upon identifying material ESG issues (“materiality”) by industry for stocks and credit assets (bonds and loans).

   We plan to start ESG integration for all assets by the end of fiscal 2021. 


<ESG integration>

図ESG integration

  [Method 2] Thematic investment: We study and invest in bonds and other assets aimed at solving
ESG issues not only to gain investment returns but also to contribute to achieving the SDGs. We are
promoting thematic investment by setting up a goal amount in the three-year medium-term
business plan, which was rolled out in fiscal 2020.   

Thematic investment
target
Cumulative total: JPY500 billion
(3-year period from FY2020 to FY2022)

<Major investments to date>

Major projects Related SDGs Items※2

◆Investment in Sustainable
Development Bond

We invested in a Sustainable Development
Bond issued by the International Bank for
Reconstruction and Development (IBRD) to
support the health care sector, including
COVID-19 response measures. (May 2020)
SDGsロゴ3

◆ Investment in green bond (1)

We invested in a green bond issued by Société Nationale SNCF SA (SNCF) to finance projects related to the maintenance, upgrades, and
energy efficiency of the high speed lines and
rail systems. (March 2021)
SDGsロゴ9 SDGsロゴ13

◆Investment in green bond (2)

We invested in Tokyo Green Bonds issued by the Tokyo Metropolitan Government aiming
for the creation of a “smart city,” to finance
environmental projects. (October 2019, etc.)
SDGsロゴ7 SDGsロゴ11 SDGsロゴ13

◆Investment in social bond

We invested in a social bond issued by the
International Finance Corporation (IFC) to
support private companies in developing
countries that have been affected by economic downturn caused by the spread of COVID-19. (June 2020)
SDGsロゴ3

◆Investment in sustainability bond

We invested in a sustainability bond issued
by the Japan Railway Construction, Transport and Technology Agency (JRTT) to finance railway construction projects and joint ownership shipbuilding projects. (May 2020, etc.)
SDGsロゴ11 SDGsロゴ13

◆Investment in a scheme to tackle
COVID-19

We invested in a credit line scheme to support those tackling COVID-19 set up by the African Export-Import Bank. (December 2020)
SDGsロゴ1 SDGsロゴ2 SDGsロゴ3

◆Investment in positive impact
financing

We extended corporate loans that screen
corporate activities by analyzing and
assessing their impact on the environment, society and economy so as to provide them continuous support. (August 2020, etc.)

SDGsロゴ3 SDGsロゴ5 SDGsロゴ6

◆Investment in microfinance fund

We invested in the Japan ASEAN Women Empowerment Fund which was formed to support women’s entrepreneurship in ASEAN countries by extending investments and loans to microfinance institutions. (September 2019, etc.)
SDGsロゴ1 SDGsロゴ5 SDGsロゴ10

◆Investment in renewable energy
fund

We invested in the Global Renewable Power Fund III, an infrastructure fund that specializes in investing in renewable energy-related facilities. (November 2020)
SDGsロゴ7 SDGsロゴ9 SDGsロゴ13

◆Investment in solar power project
financing in Japan

We extended investments and loans to several solar power generation projects in Japan.
SDGsロゴ7 SDGsロゴ13

◆Investment in environment-friendly real estate properties

About 100 tenanted buildings owned by Sumitomo Life across the country promote energy conservation by installing energy-saving equipment and carefully setting the temperature of air conditioners.
SDGsロゴ7 SDGsロゴ11 SDGsロゴ13

※2:The above SDG logos represent the main goals to which Sumitomo Life believes it contributes through its investment activities.


 [Method 3] Negative screening: A method to exclude specific industries and uses of funds from the
scope of investments. We prohibit investments in the manufacturers of certain weapons (biological
and chemical weapons, anti-personnel landmines, cluster munitions, specific conventional
weapons), as well as investments to finance coal-fired power generation projects.



Stewardship activities 

     

 We believe that constructive engagement, or purposeful dialogue that takes sustainability into
consideration will lead to an increase in corporate value and the sustainable growth of investees,
which in turn will contribute to expanding investment returns over the medium- to long-term.
Therefore, we endorsed the Principles for Responsible Institutional Investors (Japan’s Stewardship
Code) and actively engage in stewardship activities to fulfill our stewardship responsibilities.


External Recognition (Result of the PRI Assessment)

【Result of the 2020 PRI Assessment】

 We became a signatory to the PRI in April 2019 and received the first assessment results. We will
utilize this result to further improve our responsible investment. 

Module Details Sumitomo
Life
Median
Score
Strategy and Governance Responsible investment policy and Governanc
Listed Equity – Incorporation Incorporation of ESG factors into the process of listed equity investment
Listed Equity – Active Ownership Engagement and voting A+ B
Fixed Income※3 Incorporation of ESG factors into the process of fixed income investment B B
Property Incorporation of ESG factors into the process of property investment B B

※3: Fixed income score is the average score of three modules (SSA, Corporate Financial and Corporate Non-Financial)

Governance

 From fiscal 2021, Sumitomo Life established a responsible investment structure under the
supervision of the Responsible Investment Team of the Investment Planning Department, and
appropriately implements the PDCA cycle through the framework of the Responsible Investment
Committee(※4) and the Responsible Investment Meeting.(※5) We are also working to improve our
responsible investment by making use of annual assessment results based on the PRI and the
frameworks and expertise of external initiatives. 

※4: The Committee is composed of outside experts and was reorganized from the former Third-party Committee Regarding Stewardship
Activities.

※5:Newly established as a meeting body to discuss and improve the level of responsible investment activities throughout the asset
investment division.

図governance

External Initiatives

TCFD
Task Force on Climate-Related
Financial Disclosures
・A private sector-led task force established by the Financial Stability Board (FSB) in December 2015. In June 2017, TCFD released its final report (TCFD recommendations) providing a framework for companies’ voluntary disclosure of information regarding climate-related risks and opportunities
・Sumitomo Life announced the endorsement of the TCFD recommendations in March 2019.     
PRI

Principles for Responsible Investment      
・A set of investment principles launched by the United Nations in 2006 that calls for institutional investors to incorporate ESG perspectives into their investment decision-making processes.
・Sumitomo Life signed the PRI in April 2019.
CA100+      
Climate Action100+
・An initiative to seek the reduction of greenhouse gas emissions through engagement with companies (five-year project that started in December 2017).
・Sumitomo Life signed the initiative in December 2020.
CDP
CDP
・An initiative to encourage major companies around the world to disclose information on climate change, water, forests, etc., and to engage in collaborative engagement. Launched in 2000.
・Sumitomo Life signed the CDP in December 2020.