13 Jul 2021 3 min read

What did we see during Japan’s 2021 AGM season?

By Aina Fukuda

In this blog, we share highlights from Japan’s latest AGM season, summarising some of our key long-term views and voting decisions.


Japan business district

In Japan, another busy annual general meeting (AGM) season has just come to a close.

More than 2,000 AGMs were held during the last two weeks of June; Tuesday 29 June was the busiest day, with 628 AGMs taking place across the country.[1]

Whilst the concentration of meetings has declined since its peak in 1995, when 96.2% of meetings were on a single day, we continue to advocate for a less condensed meetings season to help ensure AGMs function as an inclusive accountability measure that serves to benefit all market participants.

Shareholder proposals

Today, Japan is the second-largest market after the US in terms of activist campaigns.[2] Proposals in Japan have focused mainly on unlocking value trapped within large balance sheets by returning cash to shareholders. Common proposals call for the unwinding of cross shareholdings and increased dividends, but these usually do not pass.

One emerging theme in shareholder proposals is climate change. Last year, Mizuho Financial Group* was essentially the first Japanese company to receive a climate-related proposal. This year, environmental groups filed similar proposals calling for Sumitomo Corporation* and Mitsubishi UFJ Financial Group* to amend their articles of incorporation to adopt and disclose a plan to align their businesses with the goals of the Paris Agreement. While both companies have shown progress, including a commitment to achieve carbon neutrality by 2050, we chose to vote in favour of both proposals to signal our concerns around the pathway to deliver successfully on such long-term commitments. The proposals received 20% and 23% shareholder support respectively.

At Kansai Electric Power’s* AGM, 24 proposals – predominantly related to governance and environmental issues – were filed by 33 shareholders including Osaka City and Kyoto City. One of the proposals we supported requested that the company amend its articles to stop building new coal plants and to take measures to reduce emissions from coal generation.

Toyo Seikan Group Holdings* received a proposal from an activist fund to amend its articles to disclose a plan outlining the business strategy taking into account the Task Force on Climate-related Financial Disclosures (TCFD) framework.

Whilst none of these shareholder resolutions passed, we hope our support for the resolutions has helped signal the importance and urgency for companies to act on the climate emergency.

Board composition

In 2021, we tightened our board diversity policy to vote against companies in the TOPIX 500 with no women on their boards. This resulted in 51 votes against the chairman or most senior member of the board during the second quarter.[3] This compares with six in the same period last year, the first year we voted against any TOPIX 100 company with an all-male board. We are pleased to note that three out of those six companies have appointed highly qualified women directors to their boards this year.

More discussion on diversity in Japan and how we engage on the topic can be found in previous blogs.

We have also continued to vote against companies when independent directors account for less than one-third of the board. During the second quarter, we voted against 141 companies, down from 191 during the same period in 2020, due to board independence concerns.[4]

We welcome the growing diversity and independence of boards in Japan.

COVID-19 and virtual AGMs

In June, more than 300 Japanese companies held ‘hybrid AGMs’, allowing shareholders the option to either physically turn up for the meeting, or to ‘participate’ or ‘attend’ online.[5]

Additionally, we note that 10 companies[6] proposed amending their articles to allow AGMs held virtually with no in-room attendance.[7] We chose to support proposals by companies that specified the situations – such as during a pandemic or major natural disaster – in which a virtual-only AGM would be allowed without shareholder approval (e.g. Takeda Pharmaceutical Company*).

However, we voted against proposals that did not limit the conditions (e.g. Sumitomo Mitsui Financial Group*), as authorising companies to hold virtual-only meetings permanently could undermine the quality of exchange between shareholders and companies. This is particularly important to retail investors who do not have the same access to companies that institutional investors have outside the AGM.

To 2022

Driven by multiple factors such as demographic change and increasingly dangerous weather events, we are seeing increasing awareness around the urgency of systemic issues such as diversity and climate change[8], bringing discussions further into the boardroom. We will continue to use our engagements, votes, and assets to hold boards accountable on the management of important governance and other environmental and social issues which we believe are crucial to the sustainability of the earth and to our clients’ assets.


*For illustrative purposes only. Reference to a particular security is on a historical basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.


[1] Source: Japan Exchange Group (as of 14 June 2021).

[2] Source: CLSA based on Bloomberg data (as of 30 June 2021).

[3] Votes represent voting instructions for our main FTSE pooled index funds which include approximately 500 Japanese holdings.

[4] Ibid. Our voting policies on board independence in the market date back to 2010.

[5] Source: Sumitomo Mitsui Trust Bank (as of 1 July 2021). Note that in a hybrid AGM, a “participating” shareholder can view the meeting online but cannot vote during the meeting, while an “attending” shareholder can do both. Only a small number of companies have given shareholders the option to “attend” virtually.

[6] Source: Ibid.

[7] In Japan, a new law has come into effect, allowing companies to hold virtual-only meetings without the need to amend the articles for two years from 16 June 2021.

[8] On 26 May, the Act on Promotion of Global Warming Countermeasures was revised, putting the nation’s carbon neutrality commitment into law.


Aina Fukuda

Head of Japan Investment Stewardship

Based in Tokyo, Aina leads LGIM's stewardship efforts in Japan. Working with colleagues in London and Chicago, she engages directly with companies, regulators and other investors on a range of issues, including climate change, biodiversity, board governance, and diversity. Prior to joining LGIM in 2019, she was a sustainability consultant at PwC Japan where she helped build the firm’s corporate sustainability advisory practice. Aina serves as the Deputy Chair of the Asian Corporate Governance Association (ACGA) Japan Working Group, which comprises 29 members with a combined global AUM of more than US$20 trillion. She also sits on the SASB Standards Advisory Group and represents LGIM at a number of organisations, such as the 30% Club Japan Investor Group and Japan Climate Leaders’ Partnership (JCLP). She is a licensed Certified Public Accountant (CPA) in the USA. Outside work, she enjoys spending time in nature and at the Aikido dojo.

Aina Fukuda