NPS chief vows to lead Korea’s ESG innovation

The chief of the National Pension Service, the country’s largest public pension fund, pledged Friday to take the lead in environmental, social and corporate governance investing, calling the fast-spreading global trend a must and not an option.

“The NPS is fatefully engaged with the national economy. We now carry a more tremendous responsibility than ever. We have to play the role of a guide for Korea’s ESG, dubbed ‘K-ESG,’” Kim Yong-jin, the pension fund’s chairman and CEO, said at ESG forum in Seoul hosted by the NPS.

“The ESG trend is changing the social paradigm. The revolutionary change is also on the way. ... ESG investing is no longer an option but rather mandatory even for the NPS,” he said.

The chairman suggested three ways the NPS could be more effective as an ESG leader. One was making the NPS’ ESG policies more predictable so that local firms could prepare in advance, he said.

Frequent disclosure of the pension fund’s ESG information, including its targets, principles, strategies, standards and procedures, could also be a solution, the chief added.

He then stressed the importance of reflecting the voices of people from all segments of society -- the business community, the financial industry, experts and ordinary citizens -- to further improve the NPS’ ESG system and methods.

Since the NPS is the country’s representative player in the global financial market, the public pension fund also has to become a platform for K-ESG innovation and actively share the experience and know-how it has gained, Kim said.

As of end-December last year, the NPS’ assets under management came to around 834 trillion won ($740 billion). Its investments in local equities marked 177 trillion won, nearly 7.4 percent of the total market capitalization of locally listed stocks. About 304 trillion won was invested in overseas assets, which is 54 percent of the country’s net external assets and more than 62 percent of its foreign exchange reserves, the chairman explained.

In February the NPS vowed to strengthen its ESG strategies while unveiling plans for active responsible investment. Accordingly, the country’s largest public pension fund has decided to increase responsible investments to over 50 percent of its assets by 2022.

It will also integrate ESG factors into its financial analysis of stocks and bonds both at home and abroad. The local firms managing those assets under consignment contracts will be required to submit responsible investment reports as well.

The ESG Plus Forum was held to celebrate the publication of the public pension fund’s guidebook, “ESG’s New Path With the National Pension Service.” It explains the basic concepts of ESG -- its meaning, history and recent trends -- and also delves into the NPS’ ESG investment strategies and various cases, the officials said.

Participants in the forum included CEOs and other executives representing financial companies, private firms and state-owned companies such as Mirae Asset Global Investments, Hana Bank, Hanwha Life Insurance, S-Oil, Pulmuone, Incheon International Airport Corp. and the Korea Water Resources Corp.

By Jie Ye-eun (yeeun@heraldcorp.com)