November 29, 2022

Ecosystem Growth: Japanese ESG indices and passive investing blossom

ESG investing gains momentum in Japan

The Japanese sustainable market has bloomed in recent times, creating a demand to integrate Environmental, Social and Governance (ESG) criteria into the core benchmark construction and passive investment strategies. In addition, it is increasing its emphasis on disclosure standards, regulations and definitions.

Welcome to our new quarterly report, written in collaboration with SGX.

Each quarter, we will review the development of Japan's sustainability standards, the ESG performance of Japanese listed companies compared to the broad-market index and the growth of index-linked SGX FTSE Blossom Japan Index Futures.

Key highlights from this quarter's analysis:

  • The FTSE Blossom Japan Index and FTSE Blossom Japan Sector Relative Index demonstrated a consistent outperformance compared to the underlying FTSE Japan All Cap Index
  • The significant outperformance of the FTSE Blossom Japan Index Series came primarily from the stock selection effect, and not necessarily from industry allocation
  • SGX FTSE Blossom Japan Index Futures have experienced considerable growth in terms of Open Interest and Daily Average Volumes