Korean asset managers rush to ramp up green drive

South Korea’s asset management companies are beefing up their drive to take environmental, social and governance factors into account, by endorsing an international climate initiative and by creating an internal body to monitor the green investing process.

On Tuesday, three Seoul-based asset management firms -- KB Asset Management, Samsung Asset Management and its subsidiary Samsung Active Asset Management -- announced that they have joined a cohort of some 2,000 organizations from 78 countries that support the Task Force on Climate-related Financial Disclosures.

Created in 2015 by the Financial Stability Board, TCFD is a set of recommendations to promote more informed financial decisions in terms of exposure to climate-related risks.

The three companies trail Anda Asset Management, which joined the initiative in 2019, Shinhan Asset Management in September and Hanwha Asset Management in December.

Also in April, IMM Private Equity, the nation’s third-largest private equity firm with $5.4 billion of assets under management, became the first of its kind to support the initiative the previous week.

These are the latest of the 33 Korean entities -- banking groups, consulting firms, insurers, institutional investors, nonfinancial companies and the government -- to endorse the TCFD recommendations.

Seoul-based asset management firms said the moves set the stage for integration of their aim for a more sustainable environment into its investment decision when creating a new financial product.

Such ESG integration will “preemptively address risks associated with climate change,” said Chung Won-chung, ESG Team Leader at Samsung Asset, the largest asset management firm with over 286 trillion-won ($257 billion) in assets.

The actions come amid calls on financiers to draw up internal ESG policies for their respective investing activities to ensure that their target of investments must meet the ESG criteria and to ward off concerns about greenwashing -- a term used to describe misleading promotions of environmental friendliness.

KB Asset and Hanwha Asset were the latest to set up respective ESG committees in order to integrate climate-related factors with its investing policies. Samsung Asset said its action to establish such a committee is underway.

Meanwhile, climate actions among early-adopting asset management firms are increasingly crystalizing.

Shinhan Asset, formerly a joint venture with France-based BNP Paribas Asset Management, is working to exclude companies with an integrated ESG rating of “B” or lower from the portfolio when launching a new publicly-pooled equity funds without an exception, starting May. The company has set up an ESG-monitoring body in September.

By Son Ji-hyoung (consnow@heraldcorp.com)