Support for Asset Building: Maximizing the Value of Customer Assets
In each of its business domains, Daiwa Securities Group is contributing to maximizing the value of customer assets as well as the corporate value of customers on a medium- to long-term basis by providing them with high-quality solutions that are both optimal to meet their needs and suited to the current economic environment.
Products offered to pursue shared value
Initiatives through Business Activities Such as the Underwriting and Sale of SDG Bonds
Climate change has become a serious threat to all countries. It is said that developing countries are being impacted first and with the gravest results. Climate change may destroy the social initiatives for poverty reduction that have been steadily carried out over the last several decades, and it is impossible to separate it from poverty issues.
In the past few years, initiatives for sustainability have spread worldwide, and along with the expansion of the market for related bonds, customers' interest in sustainability has been growing. As a pioneer for SDG bonds in Japan (including conventional Impact Investment bonds), Daiwa Securities provides customers with opportunities to invest in bonds issued by public organizations, financial institutions, and other issuers for the purpose of solving social issues.
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.
| Issuers | Use of funds | Sales amount (estimate) |
|---|---|---|
| Hyogo Prefecture Local Government Bond* | Green Bond | ¥300 million |
| Saitama Prefecture* | Sustainability Bond | ¥300 million |
| Natixis | Green Bond | ¥3.3 billion |
| Kitakyushu City* | Sustainability Bond | ¥100 million |
| Kawasaki City* | Green Bond | ¥300 million |
| Tokyo Metropolitan Government* | Green Bond | ¥2.1 billion |
- *Sold by multiple companies including Daiwa Securities (the sales amounts shown above are those underwritten by Daiwa Securities).
Comprehensive Asset Consulting Service
In the advent of the 100-year lifespan era, people's life plans are becoming more diversified and complex. In order to support each customer in achieving their respective life targets and making their dreams come true, Daiwa Securities has introduced the "Future Designer" comprehensive asset consultation service, which will be provided from a medium- to long-term viewpoint.
- Inheritance Planning Service
Based on the size of each customer's assets and their wishes regarding estate planning, Daiwa Securities conducts inheritance tax simulations to identify issues to be solved and propose solutions for smooth inheritance. - Asset Management Planning Service
By using highly reputed asset management tools with a proven track record, Daiwa Securities proposes optimal solutions to assist customers in all aspects of asset management, including analyzing their financial assets and helping them make investment decisions.
Moreover, Daiwa Securities in March 2024 was the first in Japan to introduce ESG- and SDGs-orientated analysis. Users can use this tool to analyze companies in light of the following four sustainability-related perspectives to make better investment decisions and improve their medium- to long-term investment performance.
| ESG rating | Analysis and rating of ESG measures and risk management on a seven-point scale (AAA to CCC) |
|---|---|
| Global warming stress test | Analysis of how the portfolio asset value may change if the global average temperature rises by 2°C |
| Prediction of temperature rise | Analysis to show the rise in temperature if global carbon emissions matched those produced by the investment portfolio |
| SDGs-related measures | Evaluation of each brand against the 17 Sustainable Development Goals |
ESG Funds
ESG funds are investment trusts that place an emphasis on ESG factors when selecting companies to invest in, including companies that are working to achieve ESG and SDG targets toward a sustainable society. These funds can disclose ESG information.
By investing in these funds in the financial market, investors can indirectly support countries and companies that are actively working on sustainability.
We are expanding our product lineup to meet diverse customer needs.
Initiatives in Funds for Decarbonization (Daiwa Asset Management)
Daiwa Asset Management has established and manages a carbon neutral technology equity fund (nicknamed "Carbon ZERO"). The fund invests primarily in solution companies that contribute to a decarbonized society from among global equities. Candriam S.C.A., which provides investment advice, aims to achieve zero carbon as a fund by contributing a portion of the fees earned from fund advice to green projects aimed at reducing CO2. The fund's ESG information is disclosed in its Impact Report.
Candriam and some of its sales companies, including Daiwa Securities, donate a portion of trust fees to tree-planting activities in Japan through NPOs. In this way, we create opportunities to walk together with the beneficiaries toward a decarbonized society.
Following its winning of the governor's special prize for green finance at the Tokyo Financial Award 2021, Daiwa Asset Management in February 2024 became a co-recipient with Candriam of the bronze prize at the fifth ESG Finance Awards Japan (investors division).
Initiatives of Fund Wrap Services
In the era of living 100 years, managing assets for the medium to long term is critical. Daiwa Fund Wrap is a service that enables customers with no investment experience or too busy to make investment decisions themselves to start long-term diversified investment by having Daiwa Securities invest in and manage assets on their behalf under a discretionary investment agreement. In providing our services, we strive to communicate closely with our customers to build a relationship of trust.
To make its know-how available to a broader base of customers, Daiwa Securities' fund wrap products are also sold by its business partners, including Japan Post Bank, Shinkin banks and local banks.
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.
- Balance of domestic Wrap accounts: ¥18,814.5 billion (As of March 31, 2024)
- *Source: Data released by the Japan Investment Advisers Association
- Balance of Wrap accounts at Daiwa Securities: ¥4143.0 billion (As of March 31, 2024)
- *Source: Data released by the Japan Investment Advisers Association
- Daiwa Social Contribution Wrap - Daiwa Fund Wrap with a donation service
Amount donated in FY2023: ¥27.31 million (cumulative donations in the last 3 years: ¥78.51 million yen)
- *Total donated amount from customers and from Daiwa Securities
- *Donated to: Food aid (UN WFP), medical care (Doctors Without Borders Japan), child support (Japan Committee for UNICEF), environment (WWF Japan), and disaster recovery (Japan Platform)
Initiatives for Solutions Business
Many small- and medium-sized companies and small-scale enterprises are now facing the issue of business succession due to the aging of their management team or owners. It is said that about half the managers exceeding the age of 70-the average retirement age-in the next 10 years are yet to decide on their successors. Moreover, even the continuity of their business activities, which support regional economies, has recently been at risk. Daiwa Securities recognizes that it is its duty, as a financial institution, to firmly support, in financial terms, small- and medium-sized companies' efforts to pass down their valuable business resources, employment, and technologies to the next generations, thereby helping to maintain regional supply chains. We will support the sustainable development of local communities and the Japanese economy by encouraging the continuation, development, and growth of small- and medium-sized companies of good standing by providing solutions to inheritance, business succession, M&A, and other issues.
Workplace Business Initiative
(Effective Use of System Product WEB Service)
In the workplace business, System Product WEB Service is offered as a support tool for customers building assets. Its aim is to realize a prosperous era of the 100-year life.
The service enables customers to centrally manage their stock-based employee benefit plans (such as stock ownership plans, workplace NISA, and defined contribution pension plans) and stock-based compensation plans (such as specified transfer-restricted stock (RS) and stock options) on a single online platform. The service enables us to support asset-building to help our customers realize their life plans and to actively encourage participation in a company's employee benefit plans, such as stock ownership plans and installment-type investment plans.
Utilizing the latest technologies in the context of digital transformation (DX), for companies and their employees, we are working to build highly flexible coordination based on an application programming interface (API), to provide a high degree of convenience, such as making use of cloud services to make opening accounts more effortless and less time-consuming, and to completely eliminate the need for paper and personal seals in various procedures.
Expansion of Services for Asset-Building Customers through Smartphone-only Securities Company, "Daiwa Connect Securities"
Smartphones and other technical innovations are changing the common perception that securities companies are used only by affluent customers and that securities transactions require an advanced level of financial knowledge. We recognize that generating securities services available to all people in consideration of financial inclusion is an issue facing not only Daiwa Securities Group but also the securities industry as a whole.
Daiwa Connect Securities, which launched its services in July 2020, is a new type of securities company established by the Daiwa Securities Group. It features services that allow everything from account opening to securities trading and asset management to be completed via smartphone and allows beginners to start investing with small amounts easily.
Daiwa Connect Securities also partners with external companies to provide a game app that allows people to learn about investing in a fun way, a reward point investment service that allows people to use the reward points they earn from other services to invest, and a credit card regular investment service where cardmembers pay for their investments by credit card, allowing them to earn reward points from card use. These services provide opportunities to easily learn financial literacy with a small amount of money and diversify access to financial services. The company also provides teenagers with educational support for autonomous asset formation by offering "teen accounts" (for minors only).
Daiwa Connect Securities will continue to develop and provide its services so that all people will be able to access better financial services.
Initiatives Using REITs, Funds and Other Structures to Solve Social Issues
Investment in Healthcare Facilities
Daiwa Real Estate Asset Management managed Nippon Healthcare Investment Corporation, which was Japan's first REIT focusing on healthcare facilities. On April 1, 2020, that REIT was merged with Japan Rental Housing Investments Inc., a REIT focusing on housing that was also managed by Daiwa Real Estate Asset Management, and Daiwa Securities Living Investment Corporation ("DLI"), the J-REIT with the largest amount of healthcare facility assets under management in Japan, was established. DLI invests in prime healthcare facilities that are likely to see stronger demand from society over the medium to long term as the population continues to age. Through such investment, it will contribute to the "Achievement of Good Health and Longevity," a priority issue in Japan identified in the SDGs Implementation Guiding Principles formulated by the government's SDGs Promotion Headquarters.
DLI has also established a social finance framework to provide ESG investment opportunities to investors through social financing and received a Social 1 (F) rating, the highest rating, from Japan Credit Rating Agency, Ltd. (JCR). Based on this framework, DLI has borrowed ¥10.92 billion through a social loan as of March 2024 and issued ¥2.0 billion of social bonds in January 2022, using the funds raised to acquire healthcare facilities.
Total amount of investment in healthcare facilities
- Approximately ¥110.1 billion (as of May 31, 2024)
Investment in Renewable Energy
With regard to infrastructure assets, Daiwa Real Estate Asset Management has been managing photovoltaic power stations since FY2014, and was entrusted in FY2017 with the management of a biomass power generation plant invested in by Daiwa Energy & Infrastructure. In September 2021, the company was entrusted with management of DSREF Amaterasu Core Fund, Investment Limited Partnership, a private fund targeting investment in a solar power project which was established by soliciting investments from domestic institutional investors. The company will continue to expand the balance of its assets under management while striving to accumulate knowledge of investment and management in the renewable energy field.
Management results of renewable energy power plants
- Number of deals: 24
(Hokkaido, Tohoku, Hokuriku, Kanto, Chubu, Kansai, Chugoku, and Shikoku regions) - Output: Approximately 256 MW from solar power plants (excluding output from assets on land with leasehold interest), 20 MW from biomass power plants
- Annual energy output (April 2023 to March 2024):
293,842 kWh at solar power generation facilities and 112,959 kWh at biomass power generation facilities
(Assumed CO2 reduction of 163,113 t-CO2, calculated using emission factors of each regional electric utility) - Balance of assets under management: Approximately ¥108.7 billion
FY2023 Initiatives Taken by the Group's Overseas Offices
DCMA Underwrites Blue Bond by Central American Bank for Economic Integration (CABEI)
In July 2023, DCMA was proud to underwrite a blue bond transaction for a period of ten years denominated in AUD issued under the Blue Bond Framework of The Central American Bank for Economic Integration ("CABEI"). CABEI is a regional supranational that was established with the objective of promoting economic integration and balanced economic and social development in Central America, providing financing to both the public and private sectors for the implementation of projects that foster sustainable development and improve the climate resilience of communities in the region. The proceeds will be used to support various initiatives, including Water Resources Protection, Sustainable Water Management, Renewable Energy, Blue Economy, and Nature Protection. These projects align with CABEI's Blue Taxonomy under its Green Bond framework under the Green Taxonomy publication. Through the underwriting of SDG bonds, DCMA will continue to contribute to the achievement of a sustainable society.
DCMA Underwrites Green Bond by Banco Santander Chile (Santander Chile)
In October 2023, DCMA was proud to underwrite the first green bond under the Santander Chile's ESG Framework to finance green mortgages for a period of two years denominated in JPY.
Banco Santander Chile is the commercial bank in Chile and is part of the global financial institution, Santander Group. The proceeds will be used to finance new green mortgage loans for the purchase of homes that meet recognized energy efficiency industry certifications. This is the first green bond with use of funds for green mortgages in Chile. DCMA is committed to contributing to the conservation of the environment through the issuance of SDG bonds and green bonds.
DCMA Underwrites Sustainable Development Bond by the Inter-American Development Bank (IDB)
In July 2023, DCMA was proud to underwrite a sustainable development bond denominated in AUD for a period of fifteen years issued by the IDB. IDB is committed to promoting the economic and social development of its member countries in Latin America and the Caribbean as an international financial institution. IDB serves as the leading fundraising entity for development projects. Through the adoption of sustainable and climate-friendly practices, IDB seeks to advance economic and social growth in the region while mitigating poverty and inequality, with the proceeds being used towards these efforts in line with IDB's strategic priorities. DCMA is committed to supporting the development of the SDG bond market and contributing to helping resolve environmental challenges via underwriting IDB's initiatives using SDG bonds.
DCMA Underwrites Sustainable Development Bond by International Bank for Reconstruction and Development (IBRD)
In November 2023, DCMA was proud to underwrite a sustainable development bond denominated in Mexican Peso and South African Rand for a period of three years issued by IBRD.
IBRD, owned by 189 member countries, provides support services to eliminate extreme poverty and promote shared prosperity. IBRD is a global financial institution committed to assisting its member countries in socially and environmentally sustainable development projects and programs.
The proceeds will be used as the primary source of loan capital for sustainable development projects and programs designed to promote environmentally conscious economic growth in line with the goals of IBRD.
Supporting ESG knowledge development to contribute to sustainability
Daiwa Capital Markets Europe Limited ("DCME") continues to support the SDGs with the issuance of green bonds and by conducting a firm-wide ESG development program, in partnership with the School of Oriental and African Studies (SOAS), University of London, between January-March 2024.
Across three modules, all employees were equipped with the tools to critically understand ESG challenges and its evolution, articulate these challenges and identify opportunities within the Daiwa product set to create new ESG products, services and solutions, tailored to our clients' needs. Each business area concluded the program by developing their ESG business plan and presenting to CEO Megan McDonald of DCME and professors at SOAS. Most importantly, the program helped employees understand the critical role they play in supporting DCME's strategy.
Investment in Main Sequence, a Venture Capital Fund Backed by the Australian Government
Daiwa Securities Group decided to invest in Main Sequence (MS), an Australian government backed venture capital fund, in July 2023. MS is a venture capital fund established by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in 2017, to commercialize research. MS specializes in Australia's deep tech sector and aims to solve key global challenges, including environmental and social issues, through advanced technologies and innovations. There are many opportunities for collaboration between Japan and Australia in the areas that MS focuses on, such as decarbonization, food and agriculture, healthcare, aerospace, core technologies (quantum computers, cybersecurity, semiconductors), and AI. We aim to promote further collaborations between innovative Australian startup ecosystem and Japanese corporations, investors, startups, and universities, and enhance sustainability through the creation of new capital circulation mechanisms.
Providing Analysis/Proposals on the Economy, Society, and Investment Information
Daiwa Securities Group as an integrated securities group provides, in addition to investment information, a wide range of information on the economy and society. We hope that the measures we propose from a long-term perspective will be helpful to customers, investors and a variety of stakeholders.
Initiatives to Provide Information on ESG (Daiwa Securities)
Daiwa Securities' Equity Research Department is a group of analysts and strategists. They analyze and evaluate information released by companies, and provide stock price information and investment strategies and ideas to institutional investors (such as asset management companies, banks, insurance companies, pension funds).
International agendas, such as the SDGs and the Paris Agreement, have gained much attention in recent years. Driven by this trend, a growing number of investors are using nonfinancial information in relation to the environment, society, and corporate governance when making medium to long term investment decisions. Therefore, the ESG Research Section, which specializes in handling ESG information, within the Equity Research Department has put in place a system for comprehensively analyzing and evaluating financial and nonfinancial information. The ESG Research Section works on writing analysis reports focusing on topics such as climate change, human rights and gender issues, corporate governance systems, and social impact, as well as holding ESG seminars and other activities.
ESG information will become more and more important for companies and society as a whole for achieving sustainable growth over the long term. We strive to provide appropriate ESG information in a timely manner so that institutional investors will be able to expand their investment returns in the medium to long term through responsible investment and purposeful dialogue (engagement).
The Fixed Income, Currency and Commodities (FICC) Research Dept. is working to meet the information needs of institutional investors, including trends in the SDG bond market, climate change and bond markets, and ESG investment performance, with a focus on bonds and interest rates.
The Investment Information Dept. is also proactively providing individual investors with related information through reports on ESG investment, videos and others.
Comprehensive Provision of Information and Policy Proposal Activities
Daiwa Institute of Research (DIR), which assumes the think-tank role of Daiwa Securities Group, provides wide-ranging analysis and information to the public. At DIR, we consider it our mission to engage in comprehensive provision of information and policy proposal activities concerning the financial and capital markets and the real economy. We have always sought to provide up-to-date and in-depth information and a unique viewpoint that has not been presented by others. In order to provide information that satisfies the needs of the public, we also exchange information and hold discussions with businesses, investors, public institutions including governments and municipalities, and various economic groups, as well as overseas think-tanks and media. In this way, we are able to analyze the currents and trends of society and disseminate information.
We also actively deliver ESG information, with the ESG Research Section playing a central role in researching, analyzing, and disseminating related information. In recent years, sustainability disclosure frameworks have evolved rapidly worldwide, with growing interest from both issuers and investors. In FY2023, the Section published 20 reports related to the SDGs and ESG and visited 43 financial companies and business companies to provide SDG/ESG information.
Provision of information by DIR through diverse media
- Number of reports posted on the website: 451 reports (Results for FY2023)
- Full texts of reports available on the website
- Number of recent hits on the research division's page: 2.91million hits (Results for FY2023)
The DIR Research Division conducts a wide range of information dissemination activities, including reports, media appearances, and book publications. The Research Division provides clear explanations of complex economic and social issues and produces high-quality reports, which has increased opportunities to communicate with clients.