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South Korea’s National Pension Service to increase SRI to almost $10bn by 2016

World’s fourth largest pension scheme leads country’s ESG push.

SRI assets in South Korea are growing significantly, not least because of a major announcement by the National Pension Service (NPS) – the world’s fourth largest pension fund – that it will increase the size of its SRI funds exposure to 11 trillion Korean Won ($9.7bn) by 2016. The strategy will more than triple the fund’s allocation to SRI. NPS has a total of 350 trillion Won ($311bn) in assets, of which approximately 3.1 trillion Won ($2.7bn) is currently invested in SRI funds, equaling 4.8% of its total equity exposure.
Gwang-Woo Jeon, NPS Executive Chairman, told a recent meeting of Korea’s Human Development Management Research Society: “As a universal owner, NPS will strive to achieve more publicity for the national pension fund. As a responsive action, NPS has recently built an ESG team within the management division of NPS. We plan to actively incorporate ESG principles into investment and integrate SRI practice into the wider Korean investment marketplace.” In December 2011, NPS’ in-house research institute held a well-attended seminar on SRI investment gathering fund managers, SRI academics, research experts and consulting firms.Attendees discussed the steps being taken by NPS to scale up its activities and support responsible investment practices in Korea.
Presentations included a look at “SRI trends at the global and local level” by Corporate Governance Service, the research institution that introduced the first SRI index to Korea. Notably, NPS talked about its own SRI portfolio performance analysis at the seminar. Moving away from its traditional approach of financial evaluation, NPS showed how Environmental, Social and Governance (ESG) considerations are now being employed in corporate performance evaluation and fund investment portfolios. NPSESG activities are expected to contribute to a significant boost for SRI in Korea, which has been growing since the country hosted the 2008 UNPRI in Person conference. SRI is rapidly shifting from tributary to mainstream investment strategy in Korea and catching up with the SRI market in further developed economies.
Esther Ji-Hyun Kim is a Senior Research Analyst at Sustinvest in Korea Link