NPS looks to expand scope of ESG criteria to step up responsible investment
Jung-hwan Hwang
Sep 08, 2020 (Gmt+09:00)
The National Pension Service (NPS) is seeking to incorporate environmental, social and governance (ESG) criteria into domestic equity and bond investments worth 450 trillion won ($378.7 billion) in a move to boost responsible investments and enhance long-term gains.
The South Korean pension fund has recently mandated an agency to introduce a system to evaluate the non-financial factors of domestic investments, according to the financial investment industry on Sept. 8.
“ESG stocks are exceptionally resilient against downward pressure. Institutional investors, including the NPS, should consider ESG factors to improve risk-management and boost long-term profitability,” said Ahn Hyo-joon, the chief investment officer of NPS at a forum in June.
The pension fund's domestic investments make up almost 59.2% of its 752.2 trillion won of assets under management. Responsible investments account for only about 4%, but are expected to steadily rise through the application of ESG criteria to domestic and overseas investments.
The NPS also expects to carry out negative screening and active exercise of shareholder rights based on the ESG evaluation, which will enhance long-term gains.