Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
The Japanese fund house has just launched a series of SRI-minded products and is integrating environmental, social and governance factors into its 20-strong team of analysts, says Minoru Kimura, deputy general manager and head of corporate planning.
"SRI is still not a big trend in Japan like it is in Europe or the US, but we think it might be the next opportunity," he says.
Nissay is producing not just the traditional eco-equity funds, which have a 10-year history in Japan. These work by screening orthodox equity funds for negative factors and emphasising stocks that are seen as pro-sustainable development, often using quantitative tools provided by outsiders such as Good Bankers.
In Nissay's case, it is relying on its own company analysts rather than an external provider's screen to take such factors into account.
It also believes SRI products needn't be limited to stocks, although it does plan to introduce a conventional equity SRI fund later this year to the retail market.
But Nissay is also preparing a global sovereign bond fund that will invest in countries seen to be actively supporting sustainable development (which means a high weighting towards Nordic and other northern European countries), as well as a Japanese real-estate investment trust that will build a portfolio of properties adhering to high environmental or energy-efficient standards.
Kimura says these products will initially target the retail market, which has already demonstrated an appetite for 'green' funds and for thematic funds that evoke environmental themes, such as utility or water funds.
Whether these will also appeal to institutional investors remains to be seen, although he notes that some trust banks such as Mitsubishi UFJ and Sumitomo have expressed the desire for SRI products to market at an institutional as well as a retail level.
Nippon Life has provided seed money for these new products. Nissay has already introduced last month an equity fund tilted towards companies with leading environmental technology. It has also just launched an equity fund for the healthcare industry that promotes wellbeing as well as traditional things such as pharmaceutical or medical-equipment manufacturers. For example, it will look to invest in companies that promote fitness, or even in Nintendo, maker of the Wii game station's popular Wii Fit module.
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