GPIF’s CIO: ‘ESG is very important for our investments’

The Japanese pension plan expects all its investment managers to integrate ESG in their investment decision making, Hiromichi Mizuno explained at the Milken Institute Global Conference on Wednesday.

The Government Pension Investment Fund has been pushing ESG through all its investments, Hiromichi Mizuno, executive managing director and chief investment officer at the Japanese pension plan said Wednesday.

“We have to make sure capital markets and the financial system are sustainable,” he told the audience at the 2017 Milken Institute Global Conference. “For the financial system to be sustainable, the social system has to be sustainable. For the social system to be sustainable, the environment has to be sustainable. That's the big picture we have.”

Japan's $1.4 trillion pension fund recently began a search for private equity, real estate and infrastructure asset managers to establish separately managed accounts. It has earmarked 5 percent for alternatives that will be invested in private equity, real estate and infrastructure. Mizuno noted at the conference that the plan outsources 100 percent of its investment managers across asset classes.

Although Asian investors are often viewed as being less concerned by ESG issues than their European counterparts, Mizuno wants to make sure that is not the case for GPIF.

“We keep telling people ESG is very important for our investments and we expect all our investment managers to integrate ESG in their investment decision making,” he said. “For asset managers to be selected and to receive business from us, they have to tell us how their integrate ESG into their investment decisions. We don't' dictate how, but we just need to understand the process.”

Mizuno also noted that he's annoyed by the buzz words to describe the ESG movement, such as 'impact investing', 'responsible investing', 'social inclusiveness' and others. “I'm trying to use all those words intentionally interchangeable so that people in the end finally agree that they're talking about the same values,” he said.