Role and Social Responsibilities of the Securities Business
At Daiwa Securities Group, we believe that our role is not only to maintain and develop a fair and dynamic financial market, but also to incorporate a social perspective in finance in order to contribute to building a sustainable society. For example, the securities business - our core operations - plays a key role in society by building a bridge between the needs of investors to manage assets and those of the private and public sectors to raise funds.
On investing in securities, we promote methods of investment that take ESG (environment, society, and governance) factors, such as environmental and social initiatives into account together with financial information.
Supporting Sound Financial and Capital Markets
-Six Roles of the Daiwa Securities Group-
We support companies that need funds, from listing support to consulting. We will continue to support social infrastructure by creating a flow of funds, contributing to the creation of an environment in which innovation is easy to occur, and the creation of a more active and stable financial market.
- Role 1: Fund procurement by companies, etc.
- Role 2: Support for initial public offerings
- Role 3: Assistance in trading of securities
- Role 4: Assistance in asset building
- Role 5: Analysis and provision of information
- Role 6: Protect market trust
Initiatives for Maintaining Market Functions
Role and Importance of Settlement Functions
Securities settlement - a mainstay of the Group's overall operations - is the delivery of stocks, bonds, or other instruments and funds both to and from the buyer and seller of a securities transaction. Settlement functions also serve as a social infrastructure, and therefore security, reliability, and convenience are important. In secure and trusted markets, financial instruments can be reliably converted into cash when necessary. This is the very reason why such markets attract investment money from all over the world and enable companies and others with funding needs to procure funds.
Responsibility as a Securities Company
Any delay in settlement functions could lead to a loss of trust in the market as a whole, which in turn could have a significant impact on the global economy. Daiwa Securities considers it vital to settle transactions accurately and promptly as required in order to ensure that markets function as a social infrastructure and become a driver for economic development. It is therefore continually striving to build the best structure for ensuring the smooth execution of settlement operations.
For this reason, Daiwa Securities has implemented a reliable system that has high processing capability to reliably settle a massive number of transactions. In addition, the company is carrying out its settlement operations with the best mix of the digital world and the real world. This includes the digital transformation (DX) of its operations to ensure efficiency and greater accuracy and personnel with a wide range of knowledge and expertise to quickly grasp the situation and respond appropriately in the event of an irregularity.
Also, in order to continue its settlement operations for the maintenance of the financial system even in the event of contingencies such as natural disasters, Daiwa Securities is working to enhance its operational resilience.
The reliability of settlement is extremely important for maintaining customer trust. We will continue to meet increasingly sophisticated customer needs and quickly provide solutions by taking advantage of our reliable settlement infrastructure and human resources.
Responsible Action as an Institutional Investor
Adoption of "Japan's Stewardship Code"
The Financial Services Agency of Japan published "Principles for Responsible Institutional Investors (Japan's Stewardship Code)" in February 2014. The Code, which has been revised twice, encourages institutional investors to fulfill their responsibilities of enhancing the medium- to long-term investment returns for their clients and beneficiaries by improving and fostering the investee companies' corporate value and sustainable growth through constructive engagement, or purposeful dialogue, based on consideration of medium- to long-term sustainability including ESG factors consistent with their investment management strategies.
In our Group, Daiwa Securities and Daiwa Asset Management have announced their adoption of the Code.
Adoption of Principles for Responsible Institutional Investors (Japan's Stewardship Code)
System at Daiwa Asset Management
Daiwa Asset Management became a signatory to the United Nations-supported Principles for Responsible Investment (PRI) in May 2006. It takes into account ESG initiatives taken by companies when making investment decisions, as it considers that such initiatives can lead to expanding growth capabilities over the medium to long term and reducing risks. Moreover, Daiwa Asset Management published its "ESG Investment Policy" in January 2020 to clarify its approach to ESG. In principle, the Policy applies to all investment strategies of the company.
After announcing its adoption of Japan's Stewardship Code in May 2014, Daiwa Asset Management renewed the announcement of its adoption of the Code in September 2020 in line with the revision of the code, and has since been continuously and actively fulfilling its stewardship responsibilities and striving to improve its initiatives. The company's basic approach to stewardship activities is shown in its Stewardship Policy. Details of its stewardship activities, including status of engagement (such as policy, structure, and a breakdown of activities by category), are released annually in its Stewardship Report. The report's name has been changed to Sustainability Report starting from the April 2023 issue. In addition to the existing contents, the report introduces the sustainability-oriented management that we are working on as a corporation.
ESG Education, Training and Exchange of Information
Daiwa Asset Management has adopted "Enhance Global Sustainability" as part of its action guidelines, and is taking systematic measures that will contribute to the sustainable growth of society.
Education and Training for Executives and Employees
Daiwa Asset Management provides all executives and employees with internal training designed to share knowledge of stewardship activities that should be undertaken by an asset management company as well as overall knowledge of ESG. As ESG, in particular, is a field where new initiatives are being taken daily, the company organizes study meetings aimed at the updating of specific themes as needed.
In January 2024, we newly established an in-house certification system for achieving the titles of "Sustainability Associate" and "Sustainability Leader" and have been encouraging employees to obtain the certification as part of our effort to develop ESG-oriented personnel.
ESG Exchange Meetings for Investee Companies
Daiwa Asset Management places importance on companies' ESG initiatives as it considers that such initiatives can lead to expanding growth capabilities over the medium to long term and reducing risks. On the other hand, it became aware during dialogs with investee companies that the companies were struggling with appropriate methods for ESG disclosure and collection of information. The company therefore invites investees and holds ongoing ESG-related information exchange meetings based on the idea that investees' sharing their initiatives and exchanging information with each other will not only be beneficial to the company but also to future initiatives of the investees.
In September 2023, we invited the chief financial officers (CFOs) of investee companies to attend our third ESG exchange meeting. Recognizing that these financial managers are facing a range of issues, we sought to provide them with an opportunity to discuss governance from the essential perspectives of management strategy and financial strategy and share tips for future measures. At the meeting, participants divided into groups and discussed measures to improve PBR.