The world’s largest investor, Japan’s Government Pension Investment Fund (GPIF), has allocated $3.7bn to track the newly-launched Morningstar Japan ex-REIT Gender Diversity Tilt index in partnership with Equileap.
The index debuted in March with the $1.4trn GPIF using it as the basis for its Japan-based gender diversity investment strategy.
This accompanies its existing $3.4bn mandate based on the Morningstar Developed Markets ex-Japan Gender Diversity index which was first implemented in December 2020.
The new benchmark adjusts constituent weightings based on the 19 metrics of the Equileap gender scorecard, covering company performance on equal compensation, whether gender pay gap data are published, work-life balance, equal parental leave and protecting women in the supply chain.
Its 930 constituents are sector-neutral, with low tracking error and turnover versus its parent benchmark. Some weightings including Sony, Mitsubishi UFJ Financial and Daiichi Sankyo are emphasised owing to the companies’ diversity policies.
Miyazono Masataka, president of GPIF, commented: “Based on our belief that the sustainable growth of investee companies and the whole market is crucial for the stable investment returns from assets under management, GPIF takes gender diversity, as one of the ESG factors, into consideration in its passive investment in domestic and foreign equities.
“We have newly adopted [this index] and have begun passive investment by withdrawing a portion of assets from the passive investment managed under the existing ESG indices and redistributing it to the new index.”
Yu-Tsung Chang, president of Morningstar-owned Ibbotson Associates Japan, added: “Japan has the largest median gender pay gap of the G7 countries. And, while we have made some progress in recent years on gender diversity metrics, there is clearly much more work to be done to raise the level of gender diversity in our corporations.”
Diana van Maasdijk, CEO of Equileap, told ETF Stream the new mandate is the largest using Equileap’s scorecard to-date, with GPIF also relying on the firm’s gender data for its wider ESG reporting.
“The GPIF are leaders in this space. It sends a clear message to companies that this is an important issue for the biggest investor in the world and companies need to step up their game.
“I would hope the fact GPIF has looked to gender-based investing twice will get other pension funds to consider its importance."