When Hiro Mizuno ’95 was appointed chief investment officer of Japan’s Government Pension Investment Fund in 2015, he did not know what to expect, but it felt like a role where he could do something to help people in his own country.
At the time he was a partner at a global private equity firm in London and had been very successful in his financial career. But he had long been wondering if his professional expertise was really contributing to society.
“I felt like I was given a very unique opportunity to contribute to my fellow Japanese people by making better financial returns on their precious pension savings,” he says.
As steward of the $1.2 trillion fund, Mizuno soon realized that he was tasked with doing the impossible.
“In asset management, for you to be seen as successful, you need to beat or outperform the market,” he explains. But, with investments in more than 8,000 companies as well as in sovereign bonds from all major governments, GPIF was, in effect, the market. “Beating the market was like beating myself."
With this in mind, Mizuno, whose finance career had spanned commercial banking and venture capital as well as private equity, set out to determine how to fulfill GPIF’s mission of sustainable returns for its investors.
If GPIF was the market, “to make its portfolio more sustainable, we needed to focus on how to make the whole market more sustainable. And for the market to be sustainable, I felt that society needed to be sustainable. And for society to be sustainable, the environment had to be sustainable,” he says. “I continued to do the daily portfolio management because that’s what people expected of me, but my focus totally shifted to how to make the whole capital market more sustainable.”
Mizuno knew that the concept of ESG — incorporating environmental, social and governance factors into investment decisions — was becoming widely known at the time. So, he folded his idea under that umbrella and began requiring GPIF to use an ESG lens in all decision-making. For example, GPIF hired leading index vendors to create ESG weighted indices, including the Gender Diversity Index and Carbon Efficient Index. He went even further by promoting the ESG agenda beyond portfolio management. GPIF joined the UK’s 30% Club campaign and the U.S.’s Thirty Percent Coalition, both of which promote gender diversity in boardrooms.
Implementing this philosophical shift was no easy task. He got a lot of pushback, both from inside the GPIF and from the public, who complained that he was not fulfilling his fiduciary duties and had instead become an environmental or social activist.
This made it all the more crucial for him to effectively communicate his plans and goals.
“Coming up with a concept in my own mind doesn’t change the world,” he says, “unless I’m able to communicate and persuade people.”
This is a skill he credits to his time at Kellogg. For example, class discussions helped him gain confidence in conveying his opinions, he says. And group projects helped him understand how to work collaboratively. On one memorable team project, he and a classmate had worked hours together in a cramped study room preparing for a case. Mizuno thought they were doing pretty well, but at about 2 a.m., his classmate suggested they start from scratch.
“Even after spending five hours together in a small room, don’t assume that everyone is on the same page,” he says of the lesson he learned that late night and still relies on today.
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Mizuno left the GPIF in 2020, at which point, he says, “I was convinced that promoting sustainability, or ESG, was probably going to be my life’s work. But I wanted to approach it from different angles.”
Among those new angles is academia. Mizuno has accepted visiting fellowships at Kellogg, as well as other universities including Harvard, Oxford and Cambridge. His goal is to help integrate ESG investment concepts into MBA curricula. He is also investigating the corporate management angle, having accepted a position on the boards of Tesla and Danone.
He has also been working as an advisor to the Japanese government on sustainable finance. And in late 2020, he was appointed as Special Envoy of U.N. Secretary General on Innovative Finance and Sustainable Investments. There, he is tasked with helping to implement the U.N.’s 2030 Sustainable Development Goals.
“I’ll be working with many different U.N. bodies and member states to promote that agenda,” he says. “I’ll be responsible for bridging the gap between the finance and investing communities and the global policy community and ultimately global societies.”
It is an exciting position with a very big stage for Mizuno, who earlier in his career had worried that he was not doing enough good in the world. “I want to feel that what I’m doing is directly benefiting society,” he says. “I’ve found a way to connect what people respect me for professionally with something that I feel is contributing to make the world more sustainable.”
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