By Ross Kerber and Makiko Yamazaki
BOSTON / TOKYO (Reuters) – Hiromichi Mizuno’s connections, spanning from the Japanese government to Harvard University, made him a guiding voice among climate-focused investors around the world.
Now those ties have put their own conduct under scrutiny after an independent report focused on Mizuno’s role in the alleged collusion between Toshiba’s (OTC 🙂 Corp management and Japan’s Ministry of Commerce to prevent foreign investors from gaining influence. on the board of directors of the conglomerate.
The revelations helped lead to the removal of Toshiba’s chairman last month.
Mizuno said in a recent interview that he did not pressure Harvard and only volunteered to help the foundation understand how things worked in Japan. He and government officials have challenged the report’s findings, saying it does not reflect Mizuno’s account. [nL2N2O503S]
The dispute highlights the tension between the two sides of Mizuno’s career, the champion of sustainable investment and the insider on the government, at a time when foreign shareholders are trying to judge Japan’s receptiveness to foreign investment.
Abby Adlerman, a corporate board adviser and CEO of Boardspan, a provider of corporate governance software, said it would have been better if Mizuno had pulled out of the talks at Harvard. “All this recognition and access to information means that you are being pushed in different directions in terms of your loyalty and you have responsibilities to many parties,” he said.
The current situation, he said, is that “the shuttle diplomacy went wrong.”
Mizuno said he only volunteered to help university officials as part of the Harvard community, where he was about to start an academic scholarship.
“I did what I could to help both Harvard and the Japanese government” make informed decisions, he said.
The report’s description of a powerful member of the government putting his weight stands in contrast to the civic personality Mizuno cultivated as an investment director of the $ 1.6 trillion Japan Government Pension Investment Fund (GPIF) and honed as Director of Tesla (NASDAQ 🙂 Inc.
Mizuno earned an MBA from Northwestern University (NASDAQ 🙂 and joined GPIF in 2015 from London-based private equity firm Coller Capital.
The publication provided you with a platform to become a leading voice that drives the consideration of environmental, social and governance (ESG) issues in investment decisions.
But his approach caused friction with people concerned that GPIF would actively engage with the Japanese stock market or go beyond its enabling legislation, according to a Harvard Business School case study of its efforts.
Mizuno left the GPIF last year, but maintained his connection to the government as a special adviser in Japan’s Ministry of Economy, Trade and Industry (METI), holding the position until he was appointed as a United Nations special envoy on sustainable investment in December.
“He has a style that is not traditional, and that sometimes makes people uncomfortable. But the international public perceives him as an important champion of ESG practices, and that makes him a hero outside of Japan,” said Alicia Ogawa, who runs a center focused on Japanese corporate governance at Columbia University.
‘SOMEONE WITH CONNECTIONS’
Mizuno’s academic fellowship was at Harvard Business School, distinct from Harvard Management Co., or HMC, which manages the university’s $ 41 billion endowment. HMC had a 4% stake in Toshiba, one of the largest stock parts, which caught Toshiba’s attention when it tried to pressure investors against outside director candidates last summer.
The company also sought intervention from METI, which could use new foreign investment rules to block nominees. [L4N2CP1E5]
When that didn’t work and HMC refused to meet with Toshiba, METI named the company Mizuno as “someone with connections to HMC,” according to shareholder-commissioned research conducted by three attorneys.
However, Mizuno would be an unlikely messenger to tell a shareholder to back off, having spent years emphasizing governance issues.
He once warned on Twitter against Japan’s foreign investment rules, worried they would give foreign investors “impressions of a setback in corporate governance or anti-shareholder activism.”
He told Reuters that no one asked him to message HMC, and that he told METI that Harvard was not an activist but rather “a very sophisticated long-term investor. I volunteered to speak with Harvard to prove my point. METI didn’t stop me.. “
Mizuno said HMC leaders appreciated his comments. HMC officials declined to comment.
Masayoshi Arai, CEO of METI’s Trade and Information Policy Office, said that although a METI official gave Toshiba the Mizuno name, “he simply told Toshiba that HMC was asking Mizuno to give advice. ; never said Toshiba should ask Mizuno or METI would ask Mizuno. “
The report found that after talks with Mizuno, HMC did not vote, a useful result for Toshiba.
Some analysts say it is unclear how METI will apply the new law to foreign investors, and the director of the Tokyo Stock Exchange has asked Toshiba for more details.
Arai said Japan is open to foreign investment, although national security concerns should be given top priority.
METI may have been happy to let Mizuno speak to Harvard, said Ulrike Schaede, a University of California professor who follows Japanese business, but it is not yet clear how open officials want Japan’s economy to become.
“The Toshiba case is bringing to light the burning issue of where on this spectrum Japan wants to fall,” Schaede said.
Mizuno declined to comment on his views on the new business rules. But, he said, he is known as someone who receives “instructions from no one.”