partner content

Making sustainability core to portfolio strategy

Asset Management One (AMO) is continuing to enhance and expand its ESG product and engagement offerings for asset owners – a key contributor to the firm’s business that helped it to win AsianInvestor’s ‘Fund House of the Year - Japan’ for 2022.
Making sustainability core to portfolio strategy

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

This plays to the strengths of those fund houses that have put sustainable investing as a core part of their product development.

AMO can count itself in this group. Having focused on sustainable investment since its establishment in 2016, the Japanese asset manager has incorporated it into its philosophy and process.

“Our approach is to create a sustainable future through the power of investment and our strong commitment to putting sustainability into practice across all aspects of management and investment process,” said Minako Takaba, sustainable investment officer at the firm. 

Putting this into practice, AMO has been managing its Japan Equity Impact UCITS fund since before the Sustainable Finance Disclosure Regulation (SFDR) was developed in Europe. Further, it was the only Japanese representative in the Net Zero Asset Managers (NZAM) initiative when it was founded.

Raising the ESG bar

A key area of focus for AMO’s institutional business over the past year or so has been to increase awareness among investors of sustainability transformation initiative.

The catalyst came in September 2021, when the firm set an interim target of JPY30 trillion ($217 billion), equivalent to 53% of its assets under management (AUM) at the time, to be aligned with the net zero scenario by 2030.

A month later, AMO published its Sustainability Report. This outlined the policies, processes and activities to promote and drive sustainability through the firm’s stewardship commitment to clients and beneficiaries.

Also in October 2021, AMO launched a new ESG flagship product. It is managed based on the concept of "attracting investment in companies that will be the driving force of a sustainable planet and society that we want to hand down to the next generation.”

Explained Takaba: “The product uses our extensive expertise and proprietary approach to sustainability, such as leveraging the core materiality framework and materiality map.”

More specifically, the product incorporates nine core materiality issues and three focus areas by considering the interconnectedness of each issue, evaluating business opportunities and management quality, and conducting active engagement with investee companies as well.

This product, in conjunction with the Sustainability Report, has subsequently played a key role in facilitating conversations between AMO’s representatives and more than 300 institutional clients.
“Through our proactive engagement with asset owners, we think they are becoming more aware of the importance and value of sustainability, and as a result, their understanding of our ESG-related products has deepened,” said Takaba.

Driving a differentiated strategy

These developments are spurring AMO to spearhead future ESG-related growth.

For instance, while making an impact clearly matters more today to investors such as insurance companies and banks, not many impact investments exist in Japan yet. “We are looking to expand our existing offering by developing a system to measure impact,” said Takaba.

This aligns with ongoing discussions between the firm and its clients, as well as non-governmental organisations, to better understand the preferences of investors in terms of social returns.

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

The firm’s sustainable investment framework defines the types of companies it will engage or divest from, and although this objective is more of a last resort, it is necessary where AMO reflects research and engagement results on 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 that drove our business,” added Takaba.

Read more here about how AMO is create a sustainable future through the power of investment

For more information, contact AMO

Disclaimer: This document is for informational purposes and does not constitute an offer or solicitation of any investment advisory services in any jurisdiction in which such an offer or solicitation is not authorised or legal. Investment involves risks. Please review all financial material carefully before investing. The opinions expressed are based on market conditions and are subject to change without notice.

¬ Haymarket Media Limited. All rights reserved.