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Korea’s NPS targets 50% of assets in ESG by end-2022, report says

NPS
By Hui Ching-hoo   
May 14, 2021

South Korea’s National Pension Service (NPS) plans to allocate as much as half of its assets to environmental, social and governance investments by the end of 2022, Kim Yong-jin, chairman and chief executive officer of the pension giant, says in an interview with The Korean Times.

The fund is also reviewing its screening policy to decide whether to exclude coal miners and electricity producers, he says in the interview published on May 12.

The ESG target is more than four times the approximately 12% of assets, or 87 trillion won (US$78.3 billion), that the NPS allocated in 2019. The fund has not published the latest share.

NPS, the world’s third largest pension fund, had 833.7 trillion won of total assets as of December 2020.

Kim says most of the ESG investments are currently under its domestic stock mandates, and the fund is taking steps to introduce the strategy into other asset classes. He says the key advantage of ESG investing is its risk control ability.

“Starting this year, we will take into account ESG, when investing in foreign stocks, and will broaden the range of responsible investments to domestic and foreign bonds,” he says. “It will also make responsible investments account for 50% of its entire AUM by the end of next year.”

In addition, “the fund’s management committee is also reviewing its negative screening policy to decide whether to exclude coal mining and electricity firms from its investment portfolio”.

Kim also says the NPS plans to introduce shareholder guidelines to engage with foreign companies on ESG issues.

A spokesperson for the NPS did not immediately respond to questions from Asia Asset Management.