2024 Stewardship Code Self-Assessment

Cadira Capital Management Co., Ltd. is committed to its mission of "Connecting the Investment Chain and Beyond" and aims to provide high quality investment returns to its clients while addressing global environmental and social challenges.

The basic principles of the Japanese version of the Stewardship Code, which aim to promote the sustainable growth of portfolio companies and increase the medium- and long-term investment returns for clients and beneficiaries, are consistent with our management philosophy, and we therefore actively accepts these principles and announces its policy on how to respond to them.

We are pleased to report the following self-assessment of our company's compliance with the Japanese Stewardship Code for the one-year period from July 2023 to June 2024.

Principle １

Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities, and publicly disclose it. 

Our investment strategy focuses on companies that can grow while contributing to the sustainability of the world. We will fulfill our stewardship responsibilities as an institutional investor by encouraging management improvements through direct dialogue and voting at shareholder meetings.

In January 2024, we began managing a new listed Japanese equity fund. Prior to the launch of the fund, we held dialogues with companies and encouraged them to make efforts to improve their management. Since the fund's inception, we have also exercised our voting rights at shareholder meetings, thereby expressing our intentions as a shareholder.

Principle 2

Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it. 

We emphasize the importance of a balanced development of the stakeholders of our portfolio companies, including the environment, society and shareholders. Therefore, in fulfilling our stewardship responsibilities, we will ensure that we do not seek to benefit only some of our stakeholders.

In addition, we will establish and follow internal rules and procedures for making investment decisions and exercising voting rights in companies with which we have a business relationship, and will seek the opinions of external advisors to enhance our effectiveness.

As an independent asset manager, there are no specific corporate groups that influence the stewardship activities we develop, so conflicts of interest with our clients and beneficiaries are limited.

As an independent asset manager, we are structurally positioned to avoid conflicts of interest with the companies in which we invest. In fact, we had no conflicts of interest in investment decisions or proxy voting last year.

Principle 3

Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities with an orientation towards the sustainable growth of the companies. 

The core of our research activities is the development and testing of investment hypotheses about the companies in which we invest. An investment hypothesis is a scenario that forecasts changes in the financial and non-financial fundamentals and stock price movements of a company in which we invest. In developing an investment hypothesis, we consider the impact of environmental and social changes on the company and, conversely, the impact of the company on its various stakeholders, including the environment and society. The impact of our engagement activities on the company is also considered as a factor in our investment hypotheses.

Last year, we conducted 404 company research activities. In addition, given the increasing importance of non-financial information in equity investing, we actively gathered information by participating in seminars and events on sustainable and impact investing organized by organizations such as PRI (Principles for Responsible Investment) and GIIN (Global Impact Investing Network).

Principle 4

Institutional investors should seek to arrive at an understanding in common with investee companies and work to solve problems through constructive engagement with investee companies. 

Through direct engagement by investment professionals, we will provide lateral support to our portfolio companies to ensure that their activities create a virtuous cycle. In the event of misconduct or harm to stakeholders, we will work to resolve the situation.

When engaging with portfolio companies, we will include as an option those cases where it is deemed beneficial to do so in collaboration with other stakeholders.

Last year, we had 270 one-on-one meetings (out of 404 research activities). Our investment staff also conducts engagement activities, so each meeting has both a research and an engagement purpose.

We survey our meeting correspondents after each meeting to ensure that the dialogue was relevant. 97.6% of respondents in meetings held between July 2023 and June 2024 answered "Yes (important issues were discussed)" to the question "Did you discuss important issues in your meetings with us? When asked what the "important issues" were for the company, 74.3% said medium to long term policy and 56.3% said sustainability. These results suggest that our meetings with companies have been effective in promoting dialogue from a medium- to long-term perspective. The response rate to the questionnaire during this period was 72.3%.

Principle 5

Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist: it should be designed to contribute to sustainable growth of investee companies.

In exercising its voting rights, we aim to contribute to the creation of a sustainable environment and society by giving instructions in consideration of the interests of the shareholders and stakeholders of the target company, thereby contributing to the long-term interests of its clients.

Since we invest in companies after agreeing with their management policies during the company selection process, our basic policy is to respect management policies. However, in the absence of clear explanations for proposals that we believe are contrary to the interests of shareholders and stakeholders, we will express our opposition or abstain from voting.

In order to ensure transparency in the exercise of voting rights, we publish the results of voting once a year on its website. The disclosure shall include the specific proposals and the reasons for rejecting the proposals.

Our investment managers have made individual decisions and voted on all shareholder proposals since the Fund's inception in January 2024.

Voting results are available here.

Principle 6

Institutional investors in principle should report periodically on how they fulfill their stewardship responsibilities, including their voting responsibilities, to their clients and beneficiaries. 

We will report on the results of its engagement and proxy voting activities in its investment reporting materials and in meetings with clients/beneficiaries. In addition to numerical data, such as the number of dialogues, written reports on the results of the activities should include examples to convey the details of the activities.

We communicate our activities through client materials for the funds we manage and through meetings with our clients. We also communicate our activities through our website and social media. For more information, please click here.

Principle 7

To contribute positively to the sustainable growth of investee companies, institutional investors should develop skills and resources needed to appropriately engage with the companies and to make proper judgements in fulfilling their stewardship activities based on in-depth knowledge of the investee companies and their business environment and consideration of sustainability consistent with their investment management strategies.

In order to properly conduct engagement and exercise voting rights with portfolio companies, we are developing a system and human resources in the Investment Management Department, which plays a central role in this regard.

The most important aspect of developing the system is to share the investment philosophy across the organization. We then seek to strengthen the system over time by implementing consistent processes for investment, engagement, and proxy voting, and by making timely improvements to the processes.

With respect to human resource development, in addition to developing internal training programs on company research and dialogue methods, we will actively seek external training opportunities to enhance the skills of our investment management staff.

The Board of Directors oversees the implementation of each of the above. The Investment Management Department conducts an annual self-assessment of the status of implementation, reports to the Board and publishes the results on the website.

Our investment professionals meet daily and weekly to share investment philosophies and specific investment ideas. We also strive to strengthen our overall internal responsiveness by conducting compliance and sustainability training across the firm.

We hold regular meetings with five external advisors to obtain objective feedback on our activities. The presence of the advisory board is seen as an effective way of improving self-discipline, as they provide us with tough feedback from time to time.

As a measure to develop the next generation, we accepted two student interns with the aim of connecting them with potential future employees and promoting the development of a human resources development system.

We also worked to strengthen our execution capabilities by building relationships with external parties through participation in initiatives such as Japan's Impact Consortium and the Japan Impact-driven Financing Initiative.