In 2014, J-STAR became a signatory to the United Nations-supported Principles for Responsible Investment (“PRI”) to express our commitment towards incorporating Environment, Social, and Governance (“ESG”) in our business activities.
We believe that ESG issues have the potential to impact both our own activities, as well as those of our investee companies. J-STAR supports small to mid-sized Japanese companies not only through capital solutions, but also through our investment & monitoring process. Prior to signing the PRI, J-STAR’s investment activities already incorporated ESG-related aspects of our business. By becoming a PRI signatory, we wish to demonstrate our commitment to responsible investment to all our stakeholders and to further strengthen our fiduciary duty towards investors, investee companies and their management and employees.
Environmental, Social and Governance (ESG) Policy Statement
We recognize that Environmental, Social and Governance (ESG) issues can have a material impact on both our own operations and those of the portfolio companies in which we invest. In keeping with our investment philosophy of delivering increased benefits to all society, we have developed this ESG policy taking into consideration the expectations of our stakeholders, globally recognized existing standards, such as the Principles for Responsible Investment (PRI), and our fiduciary duty to our clients.
As the person with ultimate responsibility for the ESG policy, the CEO bears responsibility and controls the development, implementation and continuous improvement of the policy. To ensure it remains relevant to our investment activities, the policy’s effectiveness and implementation will be reviewed by the board on an annual basis with revisions to the policy made as considered appropriate. Training on ESG matters will be incorporated into annual employee training programs to ensure that ESG matters can be managed within their activities.
By adopting this policy we will be able to promote our responsible investment activities through our risk evaluation process, improve both our own performance and of our portfolio companies, and contribute to realizing sustainable society. The policy will be applied to portfolio companies in which we invest following its introduction.
J-STAR partners and employees will, to the best of their ability:
- Comply, as a minimum, with applicable laws and regulations and, where appropriate, relevant international standards governing ESG including corporate governance, the protection of the environment, labor, occupational health & safety, product stewardship and human rights in jurisdictions where we conduct business.
- Adhere to the highest standards of conduct intended to avoid even the appearance of negligent, unfair or improper practices including in relation to anti-bribery and corruption, and anti-social forces, and also intended to manage conflict of interests.
- Screen new investment opportunities against our existing negative screening lists which are developed reflecting the approaches of our stakeholders. Assessments will be made on a case-by-case basis of opportunities not on our existing lists but which carry similar risks.
- Identify ESG risks and opportunities including ones from climate change and other megatrends through our due diligence process when considering whether to invest in target companies, manage ESG risks and opportunities following acquisition and, at the time of exit consider the appropriate disclosure of material ESG matters, impacts and steps taken to manage them.
- Seek to grow and improve portfolio companies by encouraging them to adopt approaches to ESG risk and opportunity management in a manner that is consistent with the nature of their operations.
- Discuss ESG performance, in a manner appropriate to the nature of operations, in regular communications with portfolio companies, including in event of serious incidents which result in loss of life, serious injury, or material effect on the environment or breach of regulations, and contribute to sustainable growth of portfolio companies.
- Disclose material ESG related information to our Limited Partners, as required, in a timely manner and integrated into existing reporting processes and, in a way that is consistent with their initiatives in these areas.
The six Principles of PRI
Principle 1: We will incorporate ESG issues into investment analysis.
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
Principle 6: We will each report on our activities and progress towards implementing the Principles.