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Public officials' pension to apply ESG values to all local investments

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The headquarters of the Government Employees Pension Service (GEPS) located in Jeju City, Jeju Island / Courtesy of GEPS

By Anna J. Park

The Government Employees Pension Service (GEPS), a public institution offering retirement pensions for public official retirees and accident compensation benefits for active government employees, announced that it will apply ESG principles to its entire Korean stock investment portfolio from July.

According to the GEPS, the application of the environmental, social and corporate governance criteria to all investments is part of the agency’s ESG management strategy, announced earlier this year. With the strategic plan put into practice from next month, the public official pension service will evaluate its local equity investments according to ESG principles. All local equity investments, except for exchange-traded funds (ETF), will now be made and judged according to ESG values.

In detail, the pension service plans to conduct ESG evaluations on its local equity investments every quarter. The agency also aims to heighten its efforts to raise its voice as a key shareholder by urging companies to improve their ESG management practices.

“Despite the difficult investment environment, the GEPS has achieved an average of returns in the 10-percent range during the past three years, while it also received an ‘excellent status’ rating in the government’s evaluations last year,” Hwang Seo-chong, the chairman and CEO of the pension service, said.

“Through the increase in responsible investments in terms of ESG factors, the GEPS hopes to continue leading the public pension services’ ESG-based local equity investments,” the pension service chief added.

As of the end of the last year, the government employee’s pension fund manages 8.1 trillion won in assets, among which 7.3 trillion won is invested. Around 40 percent of the investments are made in bonds, followed by equities and alternative investments.