Coupland Cardiff Asset Management LLP (“CCAM”) Response to Japan’s Stewardship Code Principles

This document sets out CCAM’s approach to the principles and guidance of the 2020 Japan Stewardship Code.

Principle 1

Institutional investors should have a clear policy on how they fulfil their stewardship responsibilities, and publicly disclose it.

CCAM has created this statement to provide an understanding to our investors, and potential investors, as to our approach to our stewardship responsibilities, and this statement is publicly available at our website

Our Engagement and Shareholder Rights statement (including our Proxy Voting policy), as well as our ESG policy, also reflect our approach to stewardship and are available on our website.

Principle 2

Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

CCAM has a Conflicts of Interest policy in place to identify and manage actual and potential conflicts of interest arising from its engagement with companies. CCAM maintains a conflicts register. All identified conflicts of interests are reported at least annually to senior management. The compliance department carries out a periodic review of any identified conflicts to ensure that appropriate steps have been taken to address and manage them.

The Conflicts of Interest Policy highlights that clients may have conflicting interests which impedes CCAM’s ability to fairly perform its duties. e.g. clients may not support the voting and engagement activities of CCAM. For example, where we are voting against management or engaging on issues where they do not adhere to best practice. There may also be conflicts between clients, for example in the prioritisation of team resource or identifying and engaging on material aspects and topics of engagement.

The mitigation we have put in place in relation to this risk is that any potential conflicts between clients will be considered at the outset of any potential client relationship and during the course of the relationship. Any potential conflicts identified will be discussed at Partners meetings and an appropriate course of action agreed to ensure that CCAM acts in the clients’ best interests at all times; this may involve declining business or terminating an existing relationship.

CCAM’s Remuneration Code promotes sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profiles, fund rules or instruments of incorporation of the client it manages. The remuneration policy is in line with business and strategy, objective, values and interests of CCAM and the client it manages and includes measures to avoid conflicts of interest.

In terms of governance, the Partners of CCAM span different departments, and they are also advised and assisted by a segregated Legal and Compliance function, and external legal and compliance advice is sought where required.

Principle 3

Institutional investors should monitor investee companies so that they can appropriately fulfil their stewardship responsibilities with an orientation towards the sustainable growth of the companies.

As per our Engagement and Shareholder Rights Statement, CCAM will always endeavour to act in the best interests of its clients as stewards of their capital. Although we do not aspire to be an activist investor, we recognise the importance of regular and responsible engagement with companies in which it invests.

As well as review and assessment of third party research and engagement with country and industry experts, members of the investment team engage in one-on-one meetings and telephone calls with senior management or Investor Relations representatives of companies. The purpose of such engagement includes:

  • understanding key drivers of growth;
  • understanding competitive positioning;
  • assessing the alignment of management goals and strategy with those of shareholders;
  • assessing corporate governance; and
  • assessing the environmental, social, governance and sustainability risk profile

CCAM’s dialogue with companies has developed over a number of years and we seek open and constructive dialogue with management and board members, in order to broaden our knowledge of a company’s strategy, operations and risk identification and management, and to ensure any concerns we might have are addressed. Where we might have specific concerns with management’s strategy, company performance (financial and non-financial), and risk profile, or where we deem it necessary to protect it clients’ interests, we will consider escalating this to senior management or seriously consider disposing of our position.

In addition, once an investment is made we will engage with other institutional investors over material matters impacting all shareholders when required.

ESG factors are integrated into the CCAM’s bottom up investment process and these issues are considered alongside financial and strategic issues during assessment and engagement with companies. The relevant Portfolio Manager is responsible for engagement on ESG matters and monitoring is carried out via investment reviews.

CCAM also has a published ESG policy and is a signatory to UN Principles for Responsible Investment (“UNPRI”).

Principle 4

Institutional investors should seek to arrive at an understanding in common with investee companies and work to solve problems through constructive engagement with investee companies.

As set out above, CCAM will engage with investee companies where necessary and escalate any concerns/problems.

Principle 5

Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; it should be designed to contribute to the sustainable growth of investee companies.

Further to our Engagement and Shareholder Rights Statement, our primary voting policy is to protect or enhance the economic value of our investments on behalf of our clients. CCAM will vote against any agenda that threatens this position, in particular concerns over inappropriate incentives, changes in capital structure and mergers or acquisitions which are seen as detrimental to the creation of business value.

CCAM votes all shares where we have our clients’ authority to do so, assuming there are no conflicts of interest. All voting decisions are made in consultation with, and approval by, the portfolio managers. Once the proxy votes are submitted, they are recorded by CCAM. A Proxy voting summary is available on the CCAM website.

Principle 6

Institutional investors in principle should report periodically on how they fulfil their stewardship responsibilities, including their voting responsibilities, to their clients and beneficiaries.

A proxy voting summary is available on our website. CCAM is a signatory to UNPRI and we annually report on our activities and progress on implementing the PRI according to the PRI reporting framework. We do not currently publish details beyond PRI reporting requirements but are willing to provide more detail to clients and prospective clients upon request.

Principle 7

To contribute positively to the sustainable growth of investee companies, institutional investors should develop skills and resources needed to appropriately engage with the companies and to make proper judgments in fulfilling their stewardship activities based on in-depth knowledge of the investee companies and their business environment and consideration of sustainability consistent with their investment management strategies.

CCAM’s investment philosophy emphasises fundamental, proprietary research, to identify potential companies, supported, where possible, by direct company meetings conducted by the dedicated and experienced Asian and Japanese teams at CCAM.

As per our Engagement and Shareholder Rights Statement, CCAM will always endeavour to act in the best interests of its clients as stewards of their capital. Although we do not aspire to be an activist investor, we recognise the importance of regular and responsible engagement with companies in which it invests.

CCAM also has a published ESG policy and is a signatory to UN PRI. As a signatory to the Principles, CCAM publicly commits to adopt and implement the UNPRI principles, where consistent with our fiduciary responsibilities. We also commit to evaluate the effectiveness and improve the content of the Principles over time. We believe this will improve our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader interests of society.

All partners and employees of CCAM are required to conduct their duties in a responsible manner and in accordance with the following:

  • To aim to grow the assets under our management for the benefit of our investors;
  • To act as a responsible steward of our investors capital;
  • To integrate Environmental, Social and Governance considerations into the investment decision making;
    process in a cohesive and considered manner in line with the 6 Principles of Responsible Investing;
  • To provide transparency to our clients where requested.

This statement will be reviewed annually or more frequently if required and is intended as an overview only.