The University of California today (Oct. 21) became the first U.S. pension plan and endowment fund to sign the Japan Stewardship Code, which aims to promote responsible and sustainable economic growth by more actively involving shareholders in investment decisions.
The Japan Stewardship Code was launched last year as part of the Japanese government’s drive to stimulate its economy. The code, modeled after the United Kingdom Stewardship Code, encompasses a set of corporate governance principles designed to encourage more constructive dialogue between corporations and the asset owners and managers that invest in them.
“As long-term shareholders, we recognize how important strong governance is to achieving positive investment returns,” said Jagdeep Bachher, chief investment officer of the University of California Board of Regents. “Good corporate governance and proportionate, transparent, and responsible regulation are vital to well-functioning and sustainable financial markets.”
UC’s decision to sign onto the non-binding Japan Stewardship Code is part of a broader sustainable investment framework adopted by its Office of the Chief Investment Officer earlier this year. That framework outlines the university’s commitment to environmental sustainability, social responsibility and prudent governance.
Bachher said the University of California believes the Japan Stewardship Code, which has a total of nearly 200 signatories, will lead to better shareholder returns over the long run by promoting better financial stewardship, corporate governance, and investment and dialogue. UC decided to sign the code following a visit to Japan by top investment professionals from its Office of the Chief Investment Officer.
“We feel confident that the Japan Stewardship Code will lead to long-term sustainable corporate growth,” said Scott Chan, who heads UC’s public equities team and led the delegation to Japan. “Our support for the code sends a message to Japanese corporations and investment managers about the importance we place on constructive engagement.”
As part of its sustainable investing strategy, the university engages directly with companies it invests in and also partners with external fund managers and other organizations such as Japan’s Government Pension Investment Fund and Financial Services Agency to magnify its voice about the importance of sustainable investing.
The UC Japan Stewardship Code signatory letter and corporate governance policies can be found in the sustainable investment section of the UC OCIO website.