GPIF allocates $6.2 billion to new ESG Japan equity index
Japan’s Government Pension Investment Fund allocated ¥760 billion ($6.2 billion) to a new ESG index, the FTSE Blossom Japan Sector Relative index, GPIF President Masataka Miyazono said Wednesday.
The Tokyo-based pension fund, the world’s largest with ¥199.3 trillion in assets, said in a news release that FTSE Russell’s ESG ratings as well as evaluations of company management’s “attitude toward (the) risks and opportunities of climate change” will be considered when selecting constituents for the new benchmark.
The index — designed to have a small tracking error relative to its 1,391-constituent FTSE Japan All Cap parent — is a “tilt index,” as opposed to one engaging in negative screening. It has a large investment capacity on the strength of its 494 constituents — more than twice that of benchmarks GPIF currently uses: the FTSE Blossom Japan index, with 230 constituents, and the MSCI Japan ESG Select Leaders Index, with 222.
A portion of the ¥760 billion allocated to the FTSE Blossom Japan Sector Relative index is new money but some has been shifted from passive investments tracking other ESG indexes the fund has selected over the past five years, according to the news release.
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