Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
INTERVIEW CPPIB shuns divestments based on ESG factors alone
Canada Pension Plan Investment Board Asia Pacific head Suyi Kim delivers a lecture at the Lotte Hotel Seoul in this January 2019 file photo. Courtesy of Institute for Global Economics
By Park Jae-hyuk
Canadian pension fund's APAC head welcomes Korea's efforts
By Park Jae-hyuk
The Canada Pension Plan Investment Board (CPPIB), operating as CPP Investments, is widely known among market insiders who regard it as one of the world's most exemplary pension fund managers, serving as one of the largest investors in private equity firms (PEFs) including MBK Partners.
Amid the growing popularity of investments taking into account environmental, social and corporate governance (ESG) factors, the CPPIB has also been recognized for having been focused on ESG for more than a decade and having a robust sustainable investment strategy supported by a formal governance structure and a dedicated sustainable investment team.
Considering that the Canadian institution has been opposed to just divesting certain sectors or companies based on ESG checklists, however, its approach may come as a surprise to those who have urged domestic asset managers to immediately adopt “negative screening,” which refers to the intentional exclusion of controversial firms from investment portfolios.
“Given our legislated investment-only mandate, we consider and integrate both ESG risks and opportunities into our investment analysis, rather than eliminating investments based on ESG factors alone,” CPPIB Asia Pacific head Suyi Kim told The Korea Times.
She emphasized that the shift in mindset from simply “ticking the box” to fully integrating ESG into business models and strategic planning is critical.
Such a stance has been interpreted by some market observers here as a skeptical view about the National Pension Service's recent decision to stop funding new coal-fired power plant construction projects after adopting negative screening.
Kim, however, noted that every fund is different, and welcomed the Korean government's various efforts to enhance sustainability.
“We are pleased to see that the Korean government has announced a series of measures to improve corporate disclosure rules to promote ESG and responsible investing, in addition to looking at further changes to the Korea Stewardship Code?to strengthen fiduciary duties, especially related to ESG,” she said.
The Financial Services Commission (FSC) was particularly recognized for its continuous work on climate change and making progress in sustainable development of finance markets.
“The FSC convened the first meeting of its?Green Finance Task Force in August last year, which works to develop the green finance regulatory environment in Korea by establishing a monitoring system for climate-related financial risks, promoting the integration of environmental risks into investment decisions, and combatting greenwashing,” Kim said.
“In recent weeks, we were encouraged to see the FSC officially declare its support for the Taskforce on Climate-related Financial Disclosures (TCFD). Support for the TCFD will help strengthen Korea's financial sector response to climate change risks going forward.”
Gender diversity was still mentioned as a challenge for Korean corporations, but Kim regarded new regulations requiring this to be increased on the boards of large Korean corporations as a positive step forward that will improve the gender balance.
“Businesses must also take into account rapidly evolving stakeholder expectations,” she said.
As an expert in private equity investment with work experience at the Carlyle Group and McKinsey & Company, she also advised PEFs to manage ESG factors effectively, saying the CPPIB believes such organizations are more likely to create sustainable value over the long term.
Kim was initially supposed to take part as one of the panelists in The Korea Times Global ESG Forum, Thursday, but she had to cancel her participation in several events here this month due to unexpected scheduling conflicts.
For the paper's readers and the audience of the forum, she decided to share her insights through an interview instead, as she said that more reporting by The Korea Times and other media ― and getting this important conversation going ― were “very encouraging signs.”