Our Comments to the “Draft Basic Guidelines on Impact Investment” by the Financial Services Agency of Japan
On June 30, 2023, the Financial Services Agency of Japan released the "Draft Basic Guidelines on Impact Investment" for public comment.[1] Cadira Capital Management believes that these guidelines will greatly support the promotion of impact investment in Japan, and has submitted our comments to the Financial Services Agency.
In line with our mission "Connecting the Investment Chain and Beyond," Cadira Capital Management places great emphasis on dialogue with various stakeholders involved in the investment chain. As we believe that sharing the content of our dialogue with other stakeholders to the extent possible is essential to embodying our mission, we will disclose our comment submitted to the Financial Services Agency here.
Comment #1
Summary
We would like to propose an approach similar to the “comply-or-explain” approach.
Comment and Rationale
As this policy consists of four "requirements" (translator note: FSA’s translation actually uses the term “principles,” but the original Japanese version uses the term “requirements”), we are concerned that it could be interpreted to mean that investment strategies that do not meet all the requirements cannot be called impact investments. While the intent of the guidelines can be read to allow for unique approaches by investment managers, if the nuance of the word " requirements" puts pressure on managers to be more formal in order to avoid criticism of impact washing, this could be a factor that hinders the spread of impact investing as a result.
We believe that by replacing "requirements" with phrases such as "principles" and adopting a "comply-or-explain" approach, as in the Japanese version of the Stewardship Code, it may be possible to accommodate a variety of approaches. In this case, the content presented by asset management companies with their own approaches could be an idea to elevate impact investing as a new methodology, leading to innovation by asset management firms and thus elevating the industry.
Comment #2
Summary
The last bullet point in the detailed section of Requirement 1 (translator note: FSA’s translation actually uses the term “Principle 1,” but the original Japanese version uses the term “Requirement 1”), where it states that “When making investment decisions, consider secondary effects that differ from the ‘intention’ of the investment.” should be moved to Requirement 3.
Comment and Rationale
The last bullet point in the detailed section of Requirement 1 (translator note: FSA’s translation actually uses the term “Principle 1,” but the original Japanese version uses the term “Requirement 1”) states that “When making investment decisions, consider secondary effects that differ from the ‘intention’ of the investment.” We believe it is important that effects that differ from the intention (especially negative effects) are properly measured and managed, but the content of this is not "intention" in Principle 1, but is closely related to "identification, measurement and management of impact" in Principle 3. It may be easier therefore to understand if the location of the description is moved to Requirement 3.
Comment #3
Summary
It would be easier to understand if the description of Requirement 4 were revised to focus on "support".
Comment and Rationale
Requirement 4 seems to be about investors "supporting" investee companies. The word "novelty" catches our attention, but when we read the "Approach" above, we understand that it does not necessarily require novelty only. Therefore, it would be acceptable to write "to help bring about or accelerate changes in the market and customers" instead of the phrase "novelty, etc.".
Similarly, it would be less likely to cause misunderstanding and easier to understand if the English text were written as “acceleration / engagement” instead of “innovation / transformation / acceleration.” In the original text, the first two terms "innovation" and "transformation" could be read to mean that the investee is the main entity, while the third term "acceleration" could be read to mean that the investor is the main entity. However, if this is the case, there is a risk of confusion by conflating the concepts.
If "novelty" is required, it would be more consistent with the overall intent of the Guidelines to require investors, rather than investee companies, to demonstrate novelty in their valuation of and engagement with the company.
[1] https://www.fsa.go.jp/en/news/2023/20230731_4.html
Learn More
The Shift Toward Growth-Oriented Corporate Governance
More than a decade has passed since Japan's corporate governance reforms began in 2015, and this yea...
Reflections on Succession Planning Following the Revision of the Corporate Governance Code
Key Points of the Corporate Governance Code RevisionIn July 2026, the Corporate Governance Code was ...
The Impact of AI's Evolution on Asset Management
AI Adoption: Rapid Spread, Gap in ResultsThe evolution of AI is bringing about a structural shift in...
The Need to Reassess Risks considering Extreme Weather
Growing Cost of Extreme Weather Risk MitigationIn May 2026, CDP (Carbon Disclosure Project, an NGO p...
Survey on Cybersecurity Governance Systems (2026Q1)
In recent years, the cybersecurity risks facing companies have entered a new phase. In April 2026, U...
The Impact of Large-Scale Military Operations Against Iran
Japan’s Crude Oil and LNG ProcurementFollowing the large-scale military operation conducted by the U...
A Review of the Lower House Election Results and Key Themes Ahead
Lower House Election ResultsIn the February 2026 general election for the House of Representatives, ...
Japan’s Evolving Discount Rate — Re-examining Corporate Valuation in a Rising Interest Rate Environment
Interest Rate Trends and BackgroundLong-term interest rates in Japan have been rising. Comparing Jan...
Further Revision of Governance and Shift in Management Resource Allocation: Expanding the Scope of Growth Investment in the Japanese Stock Market
Review of 2025The Japanese equity market in 2025 experienced a broadly strong upward trend. The TOPI...
AI-Powered Threats: How Cybersecurity Became a C-Suite Priority
Cybersecurity DamageIn recent years, cybersecurity incidents have continued to rise sharply. Accordi...
AI-Related Corporate Survey: Internal Training and Policy Status at 34 Listed Companies
At Cadira Capital Management, we conduct surveys after IR meetings with listed companies, focusing o...
Japan's First Female Prime Minister: The Takaichi Administration and New Investment Opportunities
Japan’s First Female Prime MinisterIn October 2025, Sanae Takaichi was elected Prime Minister of Jap...
Defining the Boundaries of Sustainable Investing in an Era of Expanding Defense Spending — Cadira’s Investment Policy
In recent years, rising geopolitical tensions have heightened the importance of the defense industry...
Japan’s Stewardship Code, Third Revision: Accelerating Collaborative Engagement Between Investors and Companies
In June 2025, Japan’s Stewardship Code underwent its third revision. The key points of this revision...
Evolving IR Practices in Japan: Insights from Cadira’s Q2 2025 Survey
At Cadira Capital Management, we conduct ongoing surveys with listed companies following our IR meet...
Staying Grounded Amid Political and Trade Uncertainty in Japan
At Cadira Capital Management, we believe that while macro-level developments such as politics and tr...
Gender Reform as a Catalyst: What Sustainable Investors Should Watch in Japan
On June 11, the World Economic Forum released its Global Gender Gap Report 2025 (*1), in which Japan...
What GPIF’s Stewardship Reports Reveal About the Future of Investor Engagement
In recent years, M&A activity and activist investor engagement have been gaining momentum in the...
From Disclosure to Dialogue: What We Learned from Publishing Our Progress Report 2024
Since the publication of our inaugural Progress Report 2024 in March, we have held discussions ...
Aligning Incentives for Sustainable Growth — Results from Our Survey on Equity-Based Compensation
At Cadira Capital Management, our investment management team conducts post-IR meeting surveys with t...
Agility Matters More Than Ever—The Impact of U.S. Tariff Policy and Implications for Japanese Equities
When the environment is highly uncertain, investors cannot rely solely on a company’s current busine...
Governance Reforms and the Future of Japan’s Listed Subsidiaries: Unlocking Value through Transparency
Efforts to enhance corporate governance in Japan continue to advance steadily. The Tokyo Stock Excha...
On the Possibility of GPIF to engage in Impact Investing
Within Japan's impact investment community, there is growing discussion about the possibility of the...
Acceleration of AI Investment and Its Impact
Massive AI Investments by HyperscalersMajor global IT companies, known as hyperscalers, are aggressi...
On the Publication of the Draft 7th Strategic Energy Plan
On December 17, the Ministry of Economy, Trade, and Industry (METI) of Japan released the draft of t...
Strengthening Human Capital: Insights from Cadira’s Investor–Company Dialogue
Cadira’s investment team conducts post-meeting surveys following IR meetings.These surveys include q...
On Economic Rationale for Sustainability
This has been a year of many elections around the world. Looking back, it seems that support for pop...
Trends in the US Housing Market
Housing was one of the key issues of the 2024 U.S. presidential election. Skyrocketing home prices a...
On Japan’s House of Representatives Election on October 27
Elections to the House of Representatives were held on October 27. The Liberal Democratic Party (LDP...
On the 2024 LDP Presidential Election
On October 1, Shigeru Ishiba was sworn in as Prime Minister of Japan. Prior to this, on September 27...
August Stock Market Volatility and Subsequent Outlook
The Japanese stock market plunged in the first half of August, with the TOPIX posting historic decli...
On the Growth Potential of the Japanese Local Economy
Capital investment in Japan continues to expand. Looking back at capital investment in corporate sta...
Our View on the TOPIX Revision Proposal
On June 10, 2024, the Japan Exchange Group announced a proposal to revise the TOPIX, Japan's benchma...
Impact IPOs: Current Status and Challenges
Cadira Capital Management met with two companies that went public last year as "impact IPOs". Below ...
On the Japanese Government's Support for Impact Investing
The Japanese government has been taking initiatives to promote impact investing. Following the relea...
On the Recent Weakening of the Japanese Yen
The yen-dollar exchange rate reached 160 yen on April 29, 2024. This is the yen's weakest level in 3...
On the Bank of Japan's Rate Hike
On March 19, 2024, the Bank of Japan decided to raise its policy rate from -0.1% to 0-0.1%. This is ...
On the Growing Interest in the Japanese Stock Market
On February 22, 2024, the Nikkei Stock Average reached a new market high for the first time in 34 ye...
Impact Integrated Value (IIV)
How can we effectively integrate both positive and negative impact when making investment decisions?...
Positive Impact Assessment
Integration of positive impact in corporate valuation poses significant challenges. For standardized...
Our Investor Contribution
Engagement is a core activity essential to achieving our mission. It is conducted with the aim of ma...
Sustainable Companies
The Japanese stock market is in a situation where structural changes are creating new investment opp...
Structural Investment Opportunity
At Cadira Capital Management, we believe that investor engagement will bring about a structural chan...
Listed Equity Impact Investing: Challenges and Opportunities
An approach known as "impact investing" is becoming increasingly popular in the investment world. In...
Our Investment Philosophy
At Cadira Capital Management, we believe that "investing for sustainability" will deliver superior r...
Our Views on Geopolitical Risks
The conflict between Israel and Palestine erupted on October 7th, raising concerns about geopolitica...
Perspectives on Equity Investing in a Declining Population
"Is there any reason to invest in countries with declining populations?"This is an unavoidable quest...
Our Comments to the “Draft Basic Guidelines on Impact Investment” by the Financial Services Agency of Japan
On June 30, 2023, the Financial Services Agency of Japan released the "Draft Basic Guidelines on Imp...
Our Views on Exchange Rate Risks
The Bank for International Settlements (BIS) announced that the real effective exchange rate (*1) fo...
Our Bottom-up Approach to Listed Equity Impact Investing
At Cadira Capital Management, we take a unique bottom-up approach to impact investing in public equi...
Important Notice
The content of this website has been prepared by Cadira Capital Management Co., Ltd. (“CCM”) for informational purposes only to professional investors who are expected to make their own investment decisions without undue reliance on such content. The views and strategies described may not be suitable for all investors. Under no circumstances is it to be used or considered as legal or investment advice, a recommendation to buy, an offer to sell, or a solicitation of an offer to buy or sell securities and investors should be advised to consult their own stockbroker, accountant, solicitor, independent financial adviser, or other professional adviser for advice. We accept no liability whatsoever for any direct or consequential loss arising from any use of this content. The information is intended solely to report on investment strategies and opportunities identified by CCM. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. CCM and its affiliates do not warrant the accuracy or completeness of any of the information or data contained herein. References to specific securities and their issuers are for illustrative purpose only and are not intended to be, and should not be interpreted as investment advice or, a recommendation, offer or solicitation for the purpose or sale of any financial investment. This content does not constitute tax advice and as such investors should be advised to consult their own tax advisers regarding the tax consequences of their investment activities. Investment return and principal will fluctuate, so that a client's initial investment may increase or decrease. Investing in securities markets involve risks like those arising from stock and bond markets, currency exchanges rate and interest rate volatility. No part of this content may, without CCM prior written consent, be copied, reproduced, or published by any recipient for any purpose. Past performance is not indicative of future performance.
