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Institutional shareholder engagement with Japanese firms

Gordon L. Clark (Smith School of Enterprise and the Environment, University of Oxford, Oxford, UK)
Sarah McGill (Smith School of Enterprise and the Environment, University of Oxford, Oxford, UK)
Yukie Saito (Smith School of Enterprise and Environment, University of Oxford, Oxford, UK)
Michael Viehs (Smith School of Enterprise and the Environment, University of Oxford, Oxford, UK)

Annals in Social Responsibility

ISSN: 2056-3515

Article publication date: 8 June 2015




The purpose of this paper is to explore how shareholder engagement on environmental, social, and governance (ESG) issues is informally exercised by a large global institutional investor with locally embedded, geographically remote firms. This field is still a new area of research due to a scarcity of data, and because ordinarily, private engagement activities are conducted confidentially. Therefore, the paper aims to fill this gap in the literature by studying the private corporate engagement activities of a large UK-based institutional investor on ESG issues with Japanese investee firms in order to achieve a greater understanding of the under-researched area of corporate social responsibility.


The authors employ a multi-method approach to analyse engagement activities by the institutional investor. The authors have obtained a unique data set of the institutional investor’s engagement activities. The institutional investor is UK-based, has a long history of active engagement, and is considered one of the oldest and largest specialists in responsible investment. Further, the authors have conducted several in-depth interviews with a UK-based ESG service provider as well as one of the largest Japanese trust companies.


First, it is found that main target firms of engagement activities are large firms with global operations, and that corporate governance issues are the most important engagement topic in Japan. Second, in trying to effectively exercise voice across societies, engagement activities are conducted with geographically remote target firms on various ESG agendas in a self-enforcing, face-to-face, and sometimes collective manner. Finally, this study argues for the gap between the asset manager’s motivation to engage and local target firms’ readiness to respond due to corporate organisational and language issues.


The authors contribute to social responsibility literature by focusing on the role of global investors in Japan to diffuse global standards. This area has been largely neglected in this stream of literature, despite the increasing presence of foreign investors in Japan. This is one of the first attempts to analyse a global investor’s engagement strategies with one specific country outside of the USA and Europe. Further, within the literature on shareholder engagement, this is the first paper that focuses on the means of engagement activities and the responses by target firms.



JEL Classification — G15, G23, G34

The authors acknowledge the support and data provided by a global UK institutional investor which wishes to remain anonymous. The authors are grateful to Rob Bauer whose comments considerably improved this paper. The authors also wish to thank Stephen Cohen, Stephanie Hudson, Hiroshi Komori, Kazutaka Kuroda, and the participants at the PRI Academic Network Conference 2013, and the Regional Studies Association International Conference 2013 for helpful feedback and comments. The usual disclaimer applies. The views expressed in this paper are the ones of the authors.


Clark, G.L., McGill, S., Saito, Y. and Viehs, M. (2015), "Institutional shareholder engagement with Japanese firms", Annals in Social Responsibility, Vol. 1 No. 1, pp. 30-56.



Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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