Action through Product Development and Distribution

For Addressing Social Issues and Contributing to Future Development of Society and Financial and Capital Markets

Impact Investment

Impact Investment is a type of investment that not only pursues economic benefits, but also uses funds raised solely to solve social issues, such as poverty and environmental problems. Daiwa Securities Group sells SDG bonds,* which are issued by public organizations, financial institutions, and other issuers for the purpose of solving social issues, to customers in Japan as a pioneer for Impact Investment bonds in the country.

  • *A generic term for bonds the proceeds of which are used for projects that contribute to SDGs (including conventional Impact Investment bonds)

Initiatives in FY2018

Among the various issues faced by the world today, climate change has become a serious threat to all countries. Developing countries are being impacted first and with the gravest results. Climate change may destroy the social initiatives for poverty issues that have been steadily carried out over the last several decades. It is no longer possible to separate poverty issues from climate change issues.
In the last few years, the concept of SDGs has penetrated worldwide, and along with the expansion of the market for related bonds, customers ' interest has been growing. With this as a background, Daiwa Securities, as a pioneer for Impact Investment bonds in Japan, provides customers with opportunities to invest in bonds issued by public organizations, financial institutions, and other issuers for the purpose of solving social issues.
In September 2018, we sold MOL Blue Ocean Environmental Bonds, the first green bonds issued by an operating company in Japan (sold by two securities companies - Daiwa Securities and Nomura Securities). Through the underwriting and sale of green bonds issued in Japan, following the Tokyo Green Bonds (foreign currency-denominated) issued in FY2017 by the Tokyo Metropolitan Government, we helped to expand trends towards utilizing precious funds from retail investors for environmental measures.
Daiwa Securities Group will continue to contribute to solving social issues through its business activities, including the underwriting and sale of Green Bonds and other SDG bonds (Impact Investment bonds).

Green Bonds for Retail Investors Sold by Daiwa Securities

Issuers Use of funds Sales amount
Mitsui O.S.K. Lines (MOL)*
(MOL Blue Ocean Environmental Bonds)
Appropriated for prevention of air and marine pollution and for environmental conservation (Green Projects) such as marine biodiversity conservation ¥3.0 billion
The Tokyo Metropolitan Government* Appropriated for development of smart energy cities, conservation of the natural environment, adaptation to climate change, etc. ¥2.0 billion
Odakyu Electric Railway* Appropriated for projects that have positive effects on the environment ¥1.1 billion
Export-Import Bank of Korea (two currencies) Commitment to low carbon emission and climate resilient growth across the globe ¥5.1 billion
  • *Sold by multiple companies including Daiwa Securities (the sales amounts shown above are those underwritten by Daiwa Securities).

Results of SDGs bonds (Impact Investment bonds) for retail investors

  • Daiwa Securities cumulative sales: ¥697.4 billion
  • *Figures have been rounded off
  • *Source: Daiwa Securities (From March 2008 to March 2019)
  • Daiwa Securities' share in the Japanese market
    Total ¥1,407.7 billion
  • *Figures have been rounded off
  • *Source: Daiwa Securities (From March 2008 to March 2019)
  • Environment-related bonds for retail investors sold by Daiwa Securities in FY2018 Four issues totaling: ¥11.2 billion
  • *Figures have been rounded off
  • SDGs related to Impact Investment bonds sold in the past

SRI Investment Trusts

SRI investment trusts are a mixture of stocks and bonds that take into account factors other than financial performance, such as ethics and social and environmental objectives, in addition to assessments of the sales and profits of the investment candidates. We offer eco funds that limit non-financial assessments to environmental performance, and investment trusts that focus on Impact Investment and select issues from an SDG perspective. By investing in these trusts, through the financial markets, investors can indirectly support countries and corporations that are proactively involved in ESG and SDG initiatives.

Results of SRI investment trusts

  • Balance in Daiwa Securities Group (* Including Daiwa SB Investments ) : ¥228.6 billion
    * Source: Daiwa Securities
  • Balance in Daiwa Securities Group (* Not including Daiwa SB Investments) : ¥122.7 billion
    * Source: Daiwa Securities

Daiwa Securities' share in the Japanese market

  • 38%
    * Including Daiwa SB Investments
  • 26%
    * Not including Daiwa SB Investments
  • Total: ¥524.1 billion
    * Source: Daiwa Fund Consulting (As of March 31, 2019)

Major "Fund Wrap" services newly introduced or improved in FY2018

  • Balance of domestic Wrap accounts : ¥8,827.2 billion
    (As of March 31, 2019)
    * Source: Data released by the Japan Investment Advisers Association
  • Balance of Wrap accounts at Daiwa Securities: ¥2,145.7 billion
    (As of March 31, 2019)
    * Source: Data released by the Japan Investment Advisers Association
  • Minimum investment amount for Fund Wrap Premium lowered to ¥10,000 in June 2018
  • Gift service taking advantage of the calendar year taxation system for Fund Wrap Premium launched in July 2018
  • Inheritance Set Plan launched in January 2019

Daiwa Social Contribution Wrap - Daiwa Fund Wrap with a donation service

  • Amount donated in FY2018: ¥7.82 million
    * Total donated amount from customers and from Daiwa Securities
  • Donated to United Nations World Food Programme, Medecins Sans Frontieres Japan, WWF Japan, Japan Committee for UNICEF, Japan Platform

Development and Provision of Superior Financial and Investment Products

While the importance of asset management in the "100-year life era" is increasingly gaining attention, Daiwa Securities considers the development and provision of superior products to be one of our major missions in society, and strives to develop new products and improve their quality.

Initiatives of Fund Wrap Services

Daiwa Fund Wrap is a service enabling even those who are busy or have no investment experience to easily start medium- to long-term diversified investment. Under a discretionary investment contract, Daiwa Securities invests and manages assets on behalf of our customers. We offer plans that enable each customer to make diversified global investments according to their investment policy, as do professional institutional investors such as those managing public pension assets. It has become more important than ever for a large number of investors to manage their assets efficiently and stably through diversified global investment, in particular as a measure to address prolonged low interest rates, which have made it difficult to find attractive investment options. Daiwa Fund Wrap is a service offered to customers over the medium to long term. We provide thorough explanations before the conclusion of a contract, report investment performance regularly every three months, and hold follow-up seminars whenever necessary. We thus ensure close communication with customers and seek to build a relationship of trust with them.
In addition, Daiwa Fund Wrap Premium, launched in October 2016, now offers a more detailed service, enabling customers to have multiple investment portfolios and design them in a highly customized manner. In particular, the inheritance recipient designation service and the gift service taking advantage of the calendar year taxation system, which became available in July 2018, are services that can satisfy customers with a strong interest in inheritance tax measures.
Moreover, Daiwa Fund Wrap Online, launched in January 2017, proposes the most suitable investment style from a minimum investment amount of ¥10,000 by utilizing Robo-Advisor technology. We thus provide a service enabling customers who prefer long-term asset management to easily engage in globally diversified investments online.
To keep attracting customers over the long term, we will continue our initiatives to implement better structures and systems so as to improve our performance and the quality of our services.

Initiatives by Daiwa Asset Management

For Daiwa Asset Management, one of the pillars of building a stable, superior asset management capability is to take appropriate risks in managing active funds. We have therefore built a support system by collecting information from the research division and other relevant specialist teams. This system enables fund managers to take risks after thorough examination. In particular, we are striving to improve our ability to select companies with good prospects to make this a major source for strong investment performance.
We focus especially on ESG information from a long-term perspective. Daiwa Asset Management has placed personnel in charge of ESG within the Fund Management Division to promote ESG investment in an organized manner as a signatory to both the United Nations' Principles for Responsible Investment (PRI) and the Principles for Financial Action for the 21st Century. Since adopting the Japanese version of the Stewardship Code, we have been working to deepen our dialogue with investee companies by means such as holding dialogue with the theme of integrated reports. In October 2018, we established the Stewardship & ESG Section within the Investment Planning Department to further incorporate an ESG perspective and strengthen monitoring*.
It is especially important to always grasp current trends and customer needs for the development of products. We are therefore striving to maintain close communication by holding seminars for customers and through operation of our unique call center. We are also building a structure that assists companies marketing our products to support the transition from savings to asset building.

  • *In October 2019, the Stewardship & ESG Section was transferred from the Investment Planning Department to the Research Department.

Initiatives Using Investment Corporations and Other Structures to Solve Social Issues

Daiwa Real Estate Asset Management Co. Ltd. makes investments and manages infrastructure assets through investment corporations and fund structures to solve social issues.
Nippon Healthcare Investment Corporation, which was listed on the Tokyo Stock Exchange in November 2014, invests in healthcare facilities that are likely to see stronger demand from society over the longer term as the number of senior citizens increases. With regard to infrastructure assets, the company has been managing photovoltaic power stations since FY2014, and was entrusted in FY2017 with the work operating a biomass power generation plant invested in by Daiwa PI Partners. Daiwa Real Estate Asset Management has been continuously expanding the balance of its assets under management while striving to accumulate knowledge of investment and management in the renewable energy field. The company will fulfil its role of providing funds not only to the renewable energy field but also to the development of a broad range of social infrastructure, including logistics facilities, and the privatization of publicly-operated businesses.

Nippon Healthcare Investment Corporation Total amount of assets acquired

  • Approximately ¥19.7 billion
    (As of March 31, 2019)

Management results of renewable energy power plants and logistics facilities

Renewable energy power plants
  • Number of deals: 14 (Hokkaido, Tohoku, Hokuriku, Kanto, Chubu, Kansai, Chugoku, and Shikoku regions)
  • Output: Approximately 81 MW
  • Balance of assets under management: Approximately ¥29.2 billion
Logistics facilities
  • Balance of assets under management: Approximately ¥24.6 billion (As of March 31, 2019)

Response to FinTech and artificial intelligence (AI)

Since starting Daiwa Online Trade, Japan's first Internet-based securities brokerage service, in 1996, Daiwa Securities has provided various products and services successively over a period of more than 20 years. Due to the widespread use of portable information devices and the development of information communications technology, the importance of Internet channels has increased even more in recent years, with the number of accounts held under contract for Daiwa Online Trade topping 3.3 million as of the end of March 2019. Of Daiwa Securities' total stock transactions, approximately 80% are carried out via the online trading service, underscoring the fact that Daiwa Online Trade has become an indispensable channel for Daiwa Securities.
We lowered the minimum contract amount of Daiwa Fund Wrap Online, which was launched in 2017, to ¥10,000 in June 2018. This enables more customers to realize the appeal of full-scale international diversified global investments utilizing the Robo-Advisor function. We also created an animated video to promote the service on the Internet, including on our website. Daiwa Securities has also been providing the Daiwa Securities Market Information Skill for Amazon Alexa, a cloud-based voice service, since February 2018, and has made it newly available for Amazon Echo Spot. In addition, we started providing Kabu Talk, a tool for the latest market information, as an Alexa Skill. We have also been providing Daiwa Securities Stock News for Google Home since December 2018. Furthermore, in February 2019, we introduced a login function using a biometric authentication system to Kabu Walk, a smartphone application with a domestic stocks trading function provided on iPhones and Android devices. We believe that by actively using such new technologies, including AI and FinTech - an amalgamation of finance and information technology - we will stimulate interest in securities investment among individuals, especially younger generations, who have not previously been familiar with securities investment, and thereby support a shift from savings to asset building. In that way, we can contribute to Japan 's sound economic development. As the use of various AI-based services is currently spreading and the development of FinTech is accelerating, new financial services leveraging these technologies are becoming easily available. We will keep track of such trends and endeavor to continue enhancing convenience and providing quality services as a channel chosen by next-generation affluent customers and young customers with particular focus on inbound marketing.

Daiwa Online Trade

  • Number of contract accounts: 3,310,201 accounts
    (As of the end of March 2019)