More Japanese private asset owners are awakening to ESG investment. AL-IN, IJ’s sister publication for Japanese institutional investors, conducted a second ESG/Sustainability Survey of asset owners in November. The online survey generated responses from 81 institutional investors.

The asset owners surveyed included corporate pension funds (76%), financial corporations (14%), and financial departments of business corporations (7%).


The most recent survey found that 42% of Japanese asset owners are investing in ESG and 30% are planning to ESG investment.  Over 70% of asset owners engage in or plan to engage in ESG investment today, versus 58% in the previous survey taken in 2020 (, although a simple comparison is not appropriate since the earlier survey included only corporate pension funds.  

Respondents listed several reasons for engaging or planning to engage in ESG investment.

The majority (76%) of asset owners engaged in ESG investment were satisfied or mostly satisfied with their ESG investments.  Most said they would maintain or increase their current level of ESG investment.  None reported plans to decrease or divest from ESG.


Which asset classes are they targeting for ESG investment?  While equities represent the most common class of ESG asset, investments in bonds/debts and alternatives are increasing.  ESG has also found a place in private asset investment, especially alternative investment related to infrastructure.  More than half of all respondents invest in domestic equities as part of their ESG portfolios.


Among ESG holdouts, as in the previous survey, most cited the uncertainty of a return as their reason for not engaging or planning to engage in ESG investment.


The survey also asked whether respondents had signed Japan’s Stewardship Code.  Despite some progress since the last survey, acceptance of the Code among corporate pension funds remains disappointingly low.  Only 14% of respondents have signed the Code (versus 9% in 2020) and 16% are planning to sign (14% in 2020), while 70% have no plans to sign (77% in 2020). 

Among asset owners who have signed or plan to sign, the most common reason for accepting the Code was “to empathize with the philosophy of ENG and sustainability” (67%).  Surrounding circumstances also seem to have influenced acceptance, however, with 42% saying "based on the trends of other funds/companies", 21% saying "at the request of a sponsor company or corporate planning board", and 21% saying "at the recommendation of asset managers or consultants” (multiple answers allowed). 

The most common reason given for not planning to sign was operational difficulties (51%), specifically a lack of organizational capacity in HR and company structure.