Japan’s $1.36 trillion Government Pension Investment Fund (GPIF) is a leader in rewarding companies that provide good disclosure by buying more of their shares.

In a FT article on Environmental, Social and Governance (ESG) investing, Hiromichi Mizuno, the Chief Investment Officer of GPIF explained how he overweights investments in companies with good ESG disclosure and underweights investments in companies with bad ESG disclosure.

This gives companies an incentive to improve their ESG disclosures.

Regular readers know the Transparency Label Initiative uses exactly this principle.  It encourages investors to overweight investments where they can know what they own and to underweight investments that are blind bets.

In determining if an investment qualifies for a label, ESG disclosures are factored in.