March 4, 2024

The Government Pension Investment Fund (hereinafter, "GPIF") engages in investments, taking environment, society and governance (ESG) into consideration, based on our belief that the sustainable growth of our investee companies and the markets as a whole are critical for the expansion of long-term investment returns of the assets under management. Since GPIF began its first passive investment based on ESG indexes in 2017, efforts for the improvement of adopted ESG indexes have also been made repeatedly every year. Improvement measures to the MSCI Japan ESG Select Leaders Index (hereinafter, "the Former Index") which GPIF adopted in 2017, was also proposed by MSCI after many discussions. GPIF hereby announces that as a result of a verification, it was decided to change the benchmark from the Former Index to MSCI Nihonkabu ESG Select Leaders Index (hereinafter, "the New Index") as a measure for improvement, and that GPIF began to manage assets based on the New Index.

<Change from the Former Index>

• REIT, which is not included in TOPIX, GPIF's policy benchmark, is excluded.
• The constituent selection criteria was changed from selecting stocks with high ESG evaluations until the sum of their market capitalization reaches 50% in the same industry, to selecting stocks with high ESG evaluations until the number of such stocks reaches 50% of the same industry.
• As a result of the above-mentioned two changes, it is expected that the risks (tracking errors) against TOPIX, a policy benchmark, will be reduced.

<Comment from MIYAZONO Masataka, President of GPIF>

GPIF conducts passive investments based on ESG indexes from the viewpoint that the sustainable growth of our investee companies and the markets as a whole is critical for the expansion of long-term investment returns of the assets under management.
　GPIF's ESG investment is conducted on a long-term basis, and therefore, GPIF believes that it is not desirable that the investment performance significantly fluctuates due to factors other than ESG. The revision that we have announced today is also based on this perspective. In addition, since the constituent selection criteria for the relevant index was changed to include stocks with top ESG ratings until the number of such stocks reaches 50% in the same industry, we believe it is more simple and clearer to understand for investee companies compared to the former criteria.
　GPIF will continue to promote ESG investment from the perspective of securing the necessary reserves for the future beneficiaries.

• Review of an Index for ESG Passive Equity Investment［PDF:368KB］