In light of our social responsibilities as a life insurance company, we will manage all asset classes in our portfolio taking into account adequate asset class characteristics and regional specificities. We will also take a mid- to long-term approach considering environmental, social, and governance (ESG) perspectives. Taking into consideration the mission and public nature of the life insurance business, as well as our approach to important social challenges, we do not invest in certain companies and businesses. Aiming to achieve "a secure future with economic security" through responsible investment, we will seek to shape sustainability outcomes to realize a sustainable society, while also striving to secure long-term stable investment returns.
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1.Nippon Life integrates ESG factors into all asset classes in order to contribute to solving social issues. Specifically, we conduct proprietary ESG evaluation (assignment of ESG ratings) for all asset classes and use it for investment decisions.
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2.For equities, corporate bonds, loans, and real estate, we apply proprietary portfolio allocation rules which limit the investment into lower rated investments. The rule aims to prioritize capital allocation to higher rated investments as well as to encourage positive ESG developments through engagements to companies that have greater room for improvement.
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3.For Thematic Investment, which we define as investments in which the use of proceeds contributes to the attainment of SDGs, Nippon Life will prioritize investment opportunities that will deliver superior sustainability outcomes.
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4.In our engagement activity, Nippon Life requests disclosure of non-financial information encompassing ESG perspectives and conducts dialogue with a focus on the ESG topics we deem important, as well as implementing appropriate stewardship activities. Through these efforts, we support the sustainable growth of investees and the creation of sustainability outcomes. In addition, we also participate in ESG initiatives including collaborative engagement initiatives. In cases when engagement is unsuccessful after multiple years, we consider options such as voting against the company's proposals in accordance with the Guidelines for Exercise of Voting Rights, as well as revisiting our investment view which may trigger reduction of investments.
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5.Nippon Life's basic stance regarding responsible investment is to take a mid- to long-term perspective as well as to respect the diversity of country, industry sector, and company. We are generally not in favor of taking a short-term, one-size-fits-all approach. However, from the perspective of the mission and public nature of the life insurance business, and our responses to important social issues, we do not invest in certain companies and businesses (Negative screening). Considering factors such as trends in international treaties, and standards formulated by various initiatives both domestic and international, we will continue to revise the target scope regularly through our reports, website and other disclosure material.
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6.As part of our customer-centric business operation, Nippon Life will engage with our customers (policyholders) to grasp awareness and values around responsible investment. This will allow us to reflect our beneficiaries' view into our responsible investment and strengthen the customer's confidence.
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7.Nippon Life participates in various responsible investment related initiatives as well as government sponsored committees and working groups, both domestic and international. We provide feedback reflecting the regional specificities of Japan when adequate. We also conduct policy engagement so that there is an alignment between our sustainability outcomes goals and the policy actions.
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8.Nippon Life actively builds relationships and communicates about its responsible investment activity with a wide range of stakeholders around the world, including financial institutions, governments, and local communities so that we contribute to the expansion of responsible investment and furthermore the sound development of financial markets.
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9.In order to enhance responsible investment and create synergies within the Group, Nippon Life actively shares responsible investment expertise and challenges throughout the Group.
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10.From the standpoint of preventing conflicts of interest, Nippon Life has implemented a structure of splitting sales units and investment management units. Regardless of business relationships, investment management units can make an independent decision in proxy voting.
Key Sustainability Themes of the Investment Management Unit (including stewardship activities)
We have identified six key sustainability themes for our asset management activities: "Climate change," "Natural capital," "Regional economies," "Global health (public health)," "Respect for human rights," and "Human capital." We will periodically review these key sustainability themes in light of changes in the external environment and social conditions.
Activities to Resolve Key Sustainability Themes
"Climate change" is one of the priority issues that we must confront globally. According to research by the Intergovernmental Panel on Climate Change (IPCC), which consists of scientists from around the world, and other studies, a significant reduction in greenhouse gas emissions will be required. In order to achieve our 2030 GHG emission reduction target as well as to achieve net zero by 2050, Nippon Life will provide finance to businesses that support decarbonization and also engage with high emitting companies to encourage their decarbonization effort.
As for "Natural capital," there is an urgent need to transition to a nature-positive approach to halt the loss of natural capital and put it on a path to recovery, as the destruction of nature and degradation of habitats continue due to the expansion of economic activities. We endorse the recommendations of the TNFD and will continue to promote efforts and improve disclosure related to the conservation and restoration of natural capital.
We think that the "Regional economies" are facing social issues unique to Japan, such as regional disparities caused by an aging and declining population, and that addressing these issues is essential for achieving economic growth across the country. Going forward, we will contribute to the development of regional economies by investing in small and medium-sized enterprises and office buildings throughout Japan, in collaboration with regional financial institutions that share our values and vision.
"Global health" is a critical social issue that not only directly impacts people's health but also has a negative impact on society and the economy as a whole, requiring public-private partnerships to mitigate risks. As a life insurance company, we believe we have a significant role to play in addressing social issues such as improving access to healthcare and extending healthy life expectancy. Based on this belief, we will work alongside financial institutions in Japan and abroad to help resolve these issues.
"Human rights" are the rights with which all people are inherently endowed, and violation of these rights, such as forced labor, discrimination, and harassment, have become problems. Since the United Nations formulated its Guiding Principles on Business and Human Rights in 2011, there has been an international outcry for human rights conscious corporate management, and governments around the world are working to establish standards. In Japan, the government published guidelines for respecting human rights in 2022. In Nippon Life's investment activity, initiatives reflecting those guidelines will be implemented.
"Human capital" is a concept that views human resources as capital and seeks to maximize their value, and we recognize that it is an important theme in corporate management that leads to mid- to long-term improvements in corporate value, regardless of industry. In particular, we recognize the importance of linking corporate strategy and human resource strategy, regardless of industry sector, and will support efforts related to corporate human capital management.
Other topics include well-being, diversity, executive remuneration, minority interests, takeover defense measures, and independence of directors. Nippon Life provides regular updates on these topics through our reports, website and other disclosure material.
