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Thailand pension fund to integrate ESG criteria into equity investments in 2020

By Asia Asset Management  
Nov 5, 2019

Thailand's Government Pension Fund (GPF) plans to incorporate sustainable investing criteria into all its investments in domestic equity classes by March 2020, according to Secretary-general Vitai Ratanakorn.

The planned move to include environmental, social and governance (ESG) standards comes after the pension fund for civil servants in October 2018 unveiled a 1 billion baht (US$33.17 million) portfolio investing in 33 companies on the Stock Exchange of Thailand’s sustainability investment list.

Mr. Vitai says GPF will complete an ESG scoring tool by the end of this year, which will be used to evaluate investment opportunities in Thai stocks and bonds.

“By the first quarter of 2020, GPF targets to use an ESG lens for all of our investments in the Thai market across equity classes including real estate, private equity and infrastructure,” he says in a statement on November 1. “This means GPF will not invest in a company if we have material concerns on its ESG track record.”

According to Stock Exchange of Thailand Governor Seree Nonthasoot, GPF's ESG-focused portfolio posted a ten-month return of 4.6%, outperforming its main equity fund by 50 basis points.

“While the benefits of ESG investing are clear, the execution varies by country and region,” Mr. Seree, who is also a GPF board member, says in the statement, adding that “understanding and applying international best practices will support our ESG journey”.

He says GPF has been working closely with partners such as the United Nations-supported Principles for Responsible Investment and the Organisation for Economic Cooperation and Development to develop due diligence guidelines for its investment process and ESG integration framework.

A poll of over 140 large investors, asset owners and asset managers in Thailand who participated in an investment forum organised by GPF and Bloomberg LP on October 30 found that 51% plan to raise their sustainable investments over the next 12 months.

And some 89% said ESG-integrated investment portfolios are likely perform as well, or better than, non ESG-integrated portfolios.

GPF, which was established in 1997, had 382.12 billion baht of assets under management at the end of 2018.