Supporting investee companies’ transitions through strategic engagement

Dai-ichi Life is a large life insurance company in Japan, and the core entity of Dai-ichi Life Group, a global life insurance group. Dai-ichi Life’s basic Transition Finance strategy is to finance real-economy companies in high-emitting sectors and to engage with them to support their net-zero transition. To do so, it tracks its investees’ engagement performance through metrics and targets established in its net-zero transition plan. Dai-ichi Life also developed its “Policy on Transition Finance” (TF Policy), to support their investee companies to change their business models to drive decarbonisation: ● Prioritising the realisation of long-term decarbonisation in investment by providing transition finance to high-emitting companies may temporarily increase finance emissions and thus have a negative impact on Dai-ichi Life’s mid-term targets but is required for long-term positive impact. ● Assessing not only whether investee companies qualify under global and domestic transition finance guidelines, but also the validity and feasibility of investee companies’ transition strategies and investment returns. ● Continuously reviewing decision criteria used in examining companies’ transition strategies in light of the external environments surrounding the transition, technological innovations, and other regional and political considerations. ● Facilitating improvements in investee companies’ transition strategies and more effective initiatives through strategic engagement by focusing on engagement with the top 50 highest GHG emitting investees to contribute to decarbonisation effectively and efficiently. In 2020, 80% of its 50 highest GHG emitting investee companies had not implemented any form of TCFD disclosures and over 50% had not set any form of GHG reduction targets. In 2023, only 1 remaining investee company out of these same 50 had not yet implemented TCFC disclosure nor set emission reduction targets.