Enhanced collectivity: Japan's stewardship overhaul focused on boosting involvement
Japan is set to reform its Stewardship Code, with the aim of strengthening collaborative engagement among institutional investors, particularly on climate-related and other ESG issues. This move is expected to foster more constructive dialogue between investors and companies, encouraging a shift towards sustainable corporate growth and long-term value creation.
The revised Stewardship Code encourages investors to engage collectively rather than individually with companies, making engagement on complex and systemic issues like climate change more effective. This collective action strengthens the investors’ voice, making it harder for companies to ignore important ESG concerns.
The reform also seeks to improve transparency regarding who the beneficial shareholders are, allowing for clearer identification of investor coalitions taking climate-related stances and increasing accountability in stewardship efforts.
By fostering “constructive dialogue” through collective engagement, the reform supports deeper and more consistent discussions on climate risks and sustainable strategies between institutional investors and companies. The Financial Services Agency (FSA) plans to facilitate forums where companies and investors can share good engagement practices, particularly those related to stewardship and ESG topics like climate change.
The change in rules encourages more proactive investor behavior and recognizes the value of collaborative engagement in supporting a more constructive dialogue with companies. While the effects of the proposed changes might not be immediately noticeable, they could have a lasting impact given the wider context of rising institutional investor participation in Japanese boardrooms.
Norges Bank Investment Management (NBIM), which manages the Norway’s Government Pension Fund Global, holds equity in over 1400 of Japan’s listed entities. Valerie Kwan, director of stewardship & corporate engagement at the Asia Investor Group on Climate Change (AIGCC), welcomed the proposed changes, emphasizing the importance of incorporating financial materiality aspects into investors' investment strategies.
The reform is aligned with Japan’s broader goal of positioning the country as a leading asset management center with strong corporate governance that supports sustainable growth. The FSA has not explicitly mentioned 'climate' in the draft revision, but it reinforces the foundation for stewardship activities that include sustainability-related dialogue.
The reform of the Stewardship Code could make the Japanese proxy season one to watch out for, as it may affect the tone, channel, and quality of conversations about the happenings in companies. As Japan approaches its AGM season, with JERA, Tokyo Electric Power Company, J-Power, and Nippon Steel hosting their annual shareholder meetings on respective dates in May, June, and undisclosed dates, the impact of the reform is eagerly anticipated.
[1] Financial Service Agency (FSA), Japan (2025), Draft Revision of the Stewardship Code. [2] Norges Bank Investment Management (NBIM) (2025), Statement on Japan's Proposed Stewardship Code Reform. [3] Asia Investor Group on Climate Change (AIGCC) (2025), Response to Japan's Proposed Stewardship Code Reform. [4] Valerie Kwan, Director of Stewardship & Corporate Engagement, AIGCC (2025), Interview with Financial Times.
- The revised Stewardship Code in Japan encourages investors to collaborate, focusing on significant ESG issues such as climate change, thereby positioning technology and education-and-self-development resources more effectively for fostering sustainable finance and personal-finance practices.
- By investing in over 1400 Japanese listed entities, Norges Bank Investment Management (NBIM) asserts its dedication to corporate sustainability, aligning with the general-news story about Japan's proposed Stewardship Code reform.
- This reform has paved the way for more proactive and purposeful investing, encouraging business leaders to prioritize investing in sustainable and ESG-related strategies that benefit not only their companies but also the broader lifestyle sector, including entertainment and sports.
- With ongoing discussions fostered through the stewardship and ESG-centered initiatives, various education-and-self-development opportunities are being established to enhance the understanding and skills required for constructive dialogue in personal-finance and finance circles.
- As the proposed Stewardship Code reform gains support, it is hoped that institutional investors will continue to champion this movement, igniting a positive ripple effect on corporate behavior for long-term value creation and sustainable growth within both local and global markets.
