Placing sustainability at the heart of the portfolio strategy | Partner Content

As asset owners around the world increasingly apply a sharper sustainability lens to their allocations, ESG-related investments are becoming more central to their portfolios.

This plays to the strengths of fund companies that have placed sustainable investing at the heart of their product development.

AMO can be counted in this group. Focused on sustainable investing since its creation in 2016, the Japanese asset manager has integrated it into its philosophy and process.

“Our approach is to create a sustainable future through the power of investment and our strong commitment to practice sustainability in all aspects of the management and investment process,” said Minako Takaba, Head of Sustainable Investments within society.

Putting this into practice, AMO ran its Japan Equity Impact UCITS fund long before the Sustainable Finance Disclosure Regulation (SFDR) was developed in Europe. Additionally, he was the sole Japanese representative of the Net Zero Asset Managers (NZAM) initiative when it was established.

Raising the ESG Bar

Over the past year or so, one of the main areas of focus of AMO’s institutional business has been to increase investor awareness of the sustainability transformation initiative.

The catalyst came in September 2021, when the company set an interim target of 30 trillion yen ($217 billion), or 53% of its assets under management (AUM) at the time, to align with the net zero scenario by 2030.

A month later, AMO published its sustainability report. This described the policies, processes and activities to promote and foster sustainability through the company’s stewardship commitment to customers and beneficiaries.

Also in October 2021, AMO launched a new ESG flagship. It is run on the concept of “attracting investment to businesses that will drive a sustainable planet and society that we want to pass on to the next generation”.

Takaba explained, “The product utilizes our extensive expertise and proprietary approach to sustainability, such as leveraging the Core Materiality Framework and Materiality Map.”

Specifically, the product incorporates nine core materiality issues and three focus areas by considering the interrelationship of each issue, assessing business opportunities and quality of management, and also engaging in active dialogue with companies. transmitters.

This product, in conjunction with the sustainability report, subsequently played a key role in facilitating conversations between AMO representatives and over 300 institutional clients.
“Through our proactive engagement with asset owners, we believe they are increasingly aware of the importance and value of sustainability, and therefore their understanding of our ESG-related products. deepened,” Takaba said.

Driving a differentiated strategy

These developments encourage AMO to spearhead future ESG-related growth.

For example, although having an impact is clearly more important today for investors such as insurance companies and banks, there are not yet many impact investments in Japan. “We are looking to expand our existing offering by developing a system to measure impact,” Takaba said.

This aligns with ongoing discussions between the company and its customers, as well as non-governmental organizations, to better understand investors’ preferences for social return.

Another important area for AMO is expanding its base of global asset owners. “My goal is to connect investors and facilitate escalation with beneficiary companies,” she added.

The company’s sustainable investing framework defines the types of companies it will engage in or divest from, and while this goal is more of a last resort, there is a need for the SIO to reflect research findings and commitment to portfolio construction to pursue responsible investments.

Such initiatives reflect the broader growth that AMO is achieving across its business. “We have seen significant progress in our new products, services and technologies which have boosted our business,” Takaba added.


Learn more here on how AMO is creating a sustainable future through the power of investment

For more information, contact OMA

Disclaimer: This document is provided for informational purposes only and does not constitute an offer or solicitation of investment advisory services in any jurisdiction in which such offer or solicitation is not authorized or legal. Investing involves risk. Please read all financial documents carefully before investing. Opinions expressed are based on market conditions and are subject to change without notice.

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Don F. Davis