Impact Policy Tracker Policy

Government Pension Investment Fund (GPIF) Sustainability Investment Policy



The Government Pension Investment Fund (GPIF) of Japan is the country’s largest public fund investor and the largest pension fund in the world, with over USD 1,7 trillion in assets under management. In 2025, the GPIF released a series of Sustainability Investment Policies, including on ESG and Impact Investment considerations and Stewardship Principles.

Highlights

  • Impact as a Core Part of Investors’ Duties: as part of its Sustainability Investment Policy, the GPIF recognises the importance of securing long-term returns for its beneficiaries by including investments that take into account non-financial factors such as social or environmental effects (impact), in addition to financial factors. In doing so, GPIF explicitly includes “impact” in its definition of sustainable investment.

  • Integrating Sustainability Considerations into Stewardship and Investment Processes: the GPIF requires its asset managers to integrate ESG and sustainability factors into both stewardship (engagement) and investment processesto enhance the long-term value of investee companies and markets. In that sense, asset managers are expected to carefully take ESG and sustainability considerations when exercising voting rights, ensuring votes contribute to long-term corporate and market sustainability.

Government’s Role:
Market Regulator


Country:
Japan

Policy Type:
Clarifying Investors’ Fiduciary Duties

Year: 2025

Responsible Institution:
Ministry of Health, Labour and Welfare

Clarifying Investors’ Fiduciary Duties

What Can Governments Do to Clarify Investors’ Duties to Integrate Sustainability Considerations?

Fiduciary duty refers to the obligation of investors to act in the best interests of their beneficiaries, traditionally understood through the principles of loyalty and prudence. In recent years, the interpretation of this duty has evolved to reflect the growing recognition that Environmental, Social, and Governance (ESG) factorscan pose material risks and opportunities to long-term value creation. As a result, integrating financially material ESG considerations into investment decision-making is increasingly seen not as optional, but as a core component of fiduciary responsibility.

Under this expanded interpretation, fiduciaries are expected to integrate financially material ESG considerations into their investment decisions, engage in active ownership by promoting high ESG standards in their investee entities, and bolster the financial system’s stability and resilience. They must also disclose their investment approach, detailing how they incorporate beneficiaries’ preferences and assess the associated risks and opportunities.

In this context, governments have a critical role to play, since the definition of investors’ duties has profound implications across the entire investment chain. Through regulatory frameworks, governments can clarify that fiduciary duty encompasses the consideration of climate and social-related risks, and establish mandatory disclosure requirements to ensure consistent and transparent ESG practices across the financial sector. While voluntary or 'comply or explain' approaches represent progress, systemic change requires moving towards legally binding obligations. This means not only enabling investors to pursue sustainability objectives without conflicting with their fiduciary responsibilities, but also actively requiring them to do so in order to support a more resilient and accountable financial system.

For more information on the modern concept of fiduciary duty -and how the integration of ESG factors has been clarified or mandated in different countries- visit A Legal Framework for Impact (2021) and PRI’s report Fiduciary Duty in the 21st Century (2019)