Sumitomo Mitsui Trust Asset Management Co., Ltd. (hereinafter, “SMTAM,” “we,” “us,” or “our”), as a responsible institutional investor, considers our exercise of voting rights in connection with entrusted assets (hereinafter, “exercise of voting rights”) to be one of the most important elements of our stewardship activities, and we will strive to ensure that our exercise of voting rights enhances the corporate value and encourages sustainable growth of investee companies, in order to maximize the medium to long term investment returns for our clients (beneficiaries).
In exercising voting rights, we will encourage investee companies to efficiently utilize the shareholder’s equity regarding sustainable growth and to actively develop appropriate corporate governance systems, such as ensuring separation of management supervisory functions and independence of outside officers (directors or corporate auditors), among others. In addition, we will encourage the investee companies to conduct corporate activities appropriately by fully considering the environment and society under soundly developed corporate governance systems.
If any act that disregards the interests of shareholders, controversies or anti-social behavior by an investee company or its management occurs, or its corporate value is damaged due to problems such as poor medium to long term performance, we will consider such act as a serious issue in the investee company’s corporate governance, and we will exercise voting rights in a way that would improve the investee company’s corporate governance. We require investee companies that have been involved in misconducts to provide a full explanation of recurrence prevention measures, progress of improvement measures, and efforts towards improvement of their corporate governance, and we will arrive at a decision on the exercise of voting rights based on the explanations.
At SMTAM, the Executive Officer in charge of the Stewardship Development Department (hereinafter, “the Officer”) exclusively holds all authority relating to our exercise of voting rights, independent from the authority to execute other business activities. In addition, in order for the Officer to appropriately exercise voting rights, we have established the Stewardship Meeting that deliberates on our exercise of voting rights, and we have established the Advisory Committee as an advisory body for the Officer.
The Stewardship Meeting is a meeting to deliberate on our exercise of voting rights, engagements, ESG-related activities and various other activities under Japan’s Stewardship Code. In relation to our exercise of voting rights, the Stewardship Meeting will formulate original plans for the establishment, revision, or abolition of the guidelines for exercise of voting rights and original plans to individually exercise voting rights for a proposal not stipulated in the guidelines. The Stewardship Meeting consists of the chair (the Officer), asset management members (General Managers of the Stewardship Development Department, the Active Investment Department, the Index Investment Department, the Research Investment Department, and the Business Planning Department), a compliance member (General Manager of the Compliance Department) and its secretariat is the Stewardship Development Department.
The Advisory Committee is a body established to make recommendations for various activities under Japan’s Stewardship Code to the Officer. Regarding our exercise of voting rights, the committee will make recommendations for the establishment, revision, or abolition of the guidelines for the exercise of voting rights, decisions concerning whether to support a proposal not stipulated in these guidelines, appropriateness of interpretation of these guidelines for an individual proposal, and verification and improvement of the decision-making process on the exercise of voting rights on a proposal in connection with which a conflict of interest may occur. The committee consists of outside advisory members (outside experts) and officers appointed by the board of directors, General Manager of the Compliance Department, and its secretariat is the Stewardship Development Department.
our exercise of voting rights will be performed as follows:
(1) the guidelines for exercise of voting rights shall be established, revised, or abolished with the approval of the Officer after deliberating at the Stewardship Meeting and consultation to the Advisory Committee;
(2) a decision to exercise the voting regarding a proposal that is stipulated in our guideline shall be made with the approval of the General Manager of the Stewardship Development Department;
(3) a decision to exercise the voting rights regarding a proposal that is not stipulated in our guideline or that requires individual interpretation shall be made with the approval of the Officer after individual deliberation at the Stewardship Meeting and after consultation to the Advisory Committee;
(4) the result of exercising the voting rights shall be reported to the Stewardship Meeting and the Officer.
Concerning foreign equities, we will exercise judgment based on the circumstances for each country, specifically, its economic, political, social and historical foundation and how it has shaped the law, commercial practice and corporate governance. Please see details below.