Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Shinhan Asset Management aims to become ESG powerhouse
The cover image of Shinhan Asset Management's latest report titled “ESG Investment Blueprint” / Courtesy of Shinhan Asset Management
By Anna J. Park
First asset manager in the country to apply ESG elements in all work procedures
By Anna J. Park
Shinhan Asset Management vowed to place the utmost priority in keeping to its set of environmental, social and corporate governance (ESG) criteria, striving to be the country's top asset manager in terms of ESG-principled investments.
In its latest report titled “ESG Investment Blueprint,” Shinhan Asset Management clarified the firm's past and present endeavors and strategies as well as future strategies to be a leading powerhouse in implementing ESG strategies.
It is the first attempt by a Korea-headquartered asset manager to publish such a comprehensive strategic report solely focusing on the firm's detailed ESG principles and the procedures of the systemic application of ESG rules in its investment strategies. The company is also the first in Korea's asset management industry to send shareholders letters regularly, stating how ESG criteria are applied in its investments.
The report stressed that Shinhan Asset Management is not only the country's first asset manager to have launched a fund product on socially responsible investment (SRI) and ESG principles back in 2006, but as of this month the firm is also Korea's first asset manager to start applying ESG criteria to the majority of its active public equity funds. From this month, the firm's general public equity funds product is required to include at least 70 percent of shares that are rated over “BB” level in ESG valuation factors.
While other asset managers operate a few ESG-principled funds as exceptions to their investment portfolios, Shinhan has been widening the internal application of the sustainable investment principles to as many of its products as possible.
Currently, the company operates a total of 58 ESG funds worth 3.4 trillion won ($3.1 billion) fully dedicated to the themes, ranging from environmental sustainability, clean and renewable energy, social welfare integration and corporate governance.
The headquarters of Shinhan Asset Management located on Yeouido, Seoul / Courtesy of Shinhan Asset Management
ESG investment philosophy
Aiming to highlight the company's long-term vision of sustainable finance with impact investing, Shinhan Asset Management also streamlined its work procedures, specifically from the initial stage of screening the object of investment, deciding investment portfolios to proactively exercising stewardship ― or voting rights as shareholders to further induce invested firms' responses and changes in their corporate governance.
Shinhan Asset Management's leading position in the realm of ESG has accelerated from last year, after the firm set up its ESG committee last September. Upon organizing the ESG committee, the company also became the first comprehensive asset manager in Korea to give its endorsement to the Task Force on Climate-Related Financial Disclosures (TCFD).
As a follow-up measure, the firm sent a detailed questionnaire to its 242 companies it invests in exercising its shareholder's right to call for compliance with the TCFD and Carbon Disclosure Project (CDP), as well as disclosures under green taxonomy. The questionnaire also inquired into the firms' activities regarding greenhouse gas emissions and eco-friendly projects. As a result, 101 out of the 242 invested firms responded, and 82 out of 83 provided specific statistics on their greenhouse gas emissions, enabling Shinhan Asset Management to calculate the volume of carbon emissions that were created through its investments.
“The market will become increasingly skeptical towards companies that fail to cope with climate risks,” said Ko Young-hoon, head of equity research department at Shinhan Asset Management.
“Companies that emit greenhouse gases yet haven't come up with specific goals to reduce emissions or companies that do not expand green business will face lower corporate value in the future, and they could be excluded from the firm's future investment decision-making process.”
Ko also urged companies to change their awareness on sustainable environment and social responsibility elements.
Shinhan vowed to continue investing in companies that strive to lead the transition toward a cleaner environment and society through sustainable management strategies as an ESG powerhouse.
“We pledge stable returns to our customers through sustainable and responsible investing,” the firm's ESG blueprint report read, stating that it will attempt to reduce risk and achieve higher long-term returns by investing in sustainable companies, while exercising voting rights to align the company's investment portfolios in accordance with global standards.