PRI Speech
by Emi Onozuka
What is leadership? What is innovation? How is it relevant for this responsible investment community?
(Speech at PRI in Person, Tokyo 2023)
(Speech at PRI in Person, Tokyo 2023)
What is leadership?
What is innovation?
How is it relevant for this responsible investment community?
These are questions I am trying to answer today by sharing my personal story.
Leadership. Over 25 years of my experience in the financial industry including JP Morgan, Goldman Sach and Daiwa, I learned that leadership is a mindset, actions and ability to inspire others towards an important agenda. In doing so, there may be obstacles, risks, unknowns but there is a burning agenda inside the leader that asks for a change to get to a brighter future. So, I can say, a leader is an optimist, who choses to create a positive outcome not just for oneself but for others and prints such images and brings in those who have the power to change, to make them a part of the solution, not obstacles.
In Japan, the Stewardship Code was published in 2014. Three years later, the first revision took place which created a huge impact. WHY? Because the asset owners started asking for bespoke reports to ensure the effectiveness of stewardship activities by asset managers. At the time, I was leading a team for ESG/stewardship at Goldman Sachs Asset Management. I felt it makes sense for the whole industry to come up with a standardized report to base asset owner-asset manager dialogue. That way, asset managers can spend more time and effort on engagements with investee companies.
So, what did I do? I shared my ideas not only internally but also industry-wide. I had an aspiration. Efficiency was not my goal. My goal was to utilize this chance to advance the active ownership for an enhanced long term return for investment into Japanese companies. I felt the responsibility of being an institutional investor. We’ve got the power to change. We engage with companies to request a transformation of their business model. On the other hand, I felt that I belong to an industry, which has a long history, tradition, and needs a new way of thinking and doing. I thought this is a chance to lead by example. We can change and embrace the new world with equity governance in Japan.
Fast forward to 2019, over 40 major asset managers and asset owners started a volunteer group called Japan Stewardship Initiative because we believed collective efforts make sense to advance stewardship activities in Japan. One major task is to advocate this standardized report. By now, the standard report is used by more than 100 asset owner/asset manager communication. Currently, JSI is known as a national body for stewardship in Japan supported by FSA, Ministry of Welfare, Keidanren (Japanese corporate association) , ICGN who sit as observers and Japan Exchange Group as a secretariat.
So the second question, what is innovation? According to Joseph Schumpeter, a world famous economist,it is a new combination. For a long time, I thought innovation is a great new idea that suddenly appears from nothing, but it was in front of me.
Recently, I studied at Tokyo University of Science for a graduate degree in management of technology. After 20 years at Goldman Sachs and engaging with manufacturers, I felt that I needed to understand more about their ways of creating value. While studying, I felt a mixed feeling of confusion, unsettling, and frustration, in Japanese, MOYAMOYA. I realized that in Japan there are great universities and research centers that look deeply in science．It was no different, many great scientists and professors at MOT came to teach us to share their findings and contributions to systematization of knowledge in areas such AI, Hydrogen, Space engineering. On the other hand, I felt that those great findings are not leveraged to help solving social and environmental issues as much as they deserve. One issue that I realized was there is a huge gap between the science community and finance community. Many scientists in Japan think taking interest in money is a taboo, those from finance feel that there is a lack of visibility in outcome and timeframe so forget the investment.
Up to this point, I have been a part of Japan FSA's expert panel on sustainable finance. I realize that the effect of sustainable finance can be amplified by making money flow into technology and science that can help solve social and environmental issues. To say more, without new discoveries of science and ways to install technology into society, we will not progress towards a sustainable future. This cleared up my MOYAMOYA and now, I am moved to feel the WAKUWAKU. WAKUWAKU is a feeling of excitement and hope for a bright outcome.
So, what did I do? I told my WAKUWAKU story of bringing the science and finance community together. After 10 sessions of bringing in sustainable finance experts and scientists in one room to understand each other and discuss the gap, we all agreed that it is an idea worth spreading, like TED. So, we created an NPO called Future Design by Science and Finance, a community to gather and recognize the gap and collaborate to close that gap as well as to invest in human resources to help promote sustainable finance and investments.
This informal gathering turned into a 700 people resisted, 8 hour long , 40 speaker conference this July where finance people like asset owners, asset managers, VCs, banks and insurers, scientists as well as universities, government officials, start ups, corporations and even students came to the conference. This fall, we began a program to provide a scholarship for those who want to get involved in closing the gap and contribute to the promotion of sustainable finance.
Now, what is my latest WAKUWAKU? A feeling of excitement striving for a brighter future? Last year, I founded my own company to apply my background in finance and help companies transform corporate governance and management, because we still need work in this area in Japan. I advise leaders in organizations to embrace the integration of sustainability to create value for both shareholders and stakeholders. This summer, I had an opportunity to publish a book about this new concept of connecting corporate sustainability and sustainable finance and investments.
From my experience of creating communities, I realized that getting messages to supporters is important. One way is to do a conference like in the science and finance context. This time, the words need to be spread more widely and globally. My company is called Eminent Group, which by the way is a shortened name for eminent group of people, because what we are trying to solve is environmental and social issues that no one person or one company, not even one country can solve but needing an eminent group of people to come together and work together. So, what did I do? I created a company song, which essentially is a rally song for those who join the efforts of working towards a sustainable future.
The song is called Mosaic. Society is like mosaic art - different colors make up a great big picture. There is diversity of minds and a rainbow of souls. We may have a heartache to understand each other but we should feel the great mosaic art like society and strive on. Do you want to hear it? Here it is…
Thank you for having me today and thank you all for coming to Japan to discuss important topics for our bright future.