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| Korea Investment Corp. (KIC) Chairman and CEO Jin Seoung-ho delivers a keynote speech during the 2021 Korea Times Global ESG Forum at the Korea Chamber of Commerce and Industry (KCCI) building in Seoul, Friday. Korea Times photo by Shim Hyun-chul |
Sovereign wealth fund chief promises ESG investing will not end up losing returns
By Yi Whan-woo
Korea Investment Corp. (KIC) is committed to setting its countermeasures against investment risks caused by climate change as a global model for institutional investors, KIC Chairman and CEO Jin Seoung-ho said, Friday.
In his keynote speech during the 2021 Korea Times Global ESG Forum at the Korea Chamber of Commerce and Industry (KCCI) building in Seoul, Jin also said the KIC, Korea's sole sovereign wealth fund, will spare no efforts to show that observing environmental, social and corporate governance (ESG) principles will not end up hurting returns.
The commitment addressed by Jin comes as the KIC pushes to build up its leading role among domestic institutional investors in expanding ESG investing.
ESG investing is a form of investment based on the values of ESG, and it prioritizes financial returns alongside a company's impact on the environment, its stakeholders and the Earth.
ESG investing on one hand has prompted fear among investors that they will lose out in returns, partly due to lack of transparency and difficulty measuring and managing risks.
"We'll come up with a model that can successfully counter higher risks from climate change, implement it for all the KIC's investment portfolios and make it as an example for international institutional investors to follow," Jin said.
The two possible model cases that KIC is taking into account are California Public Employees' Retirement System (CalPERS) from the United States and Norges Bank Investment Management (NBIM) from Norway.
Operating under the wing of the Ministry of Finance and Economy, the KIC was quick to embrace ESG, noticeably an ESG stewardship code and ESG investing guidelines that are aimed at applying global standards to the fund's investment methods.
Since 2019, the KIC has been hosting ESG Day, an annual gathering of institutional investors in the public sector, including those from pension funds and mutual aid associations, to share thoughts on ESG investment strategies.
The KIC's ESG campaign has accelerated under Jin, who launched a responsible investment team shortly after taking office in May.
"The measure was intended to have the KIC to play a pivotal role and spearhead international efforts for responsible investment," he said, adding the corporation will ramp up its green campaign in the capital market and the financial industry.
To enhance transparency and expand global network, the KIC joined the One Planet Sovereign Wealth Fund (OPSWF), which was formed in 2017 in accordance with the 2015 Paris Climate Accords.
The OPSWF consists of several major countries including France, Italy, Spain and India.
The KIC is also Korea's first institutional investor to publicly advocate the Task Force on Climate-related Financial Disclosures (TCFD), which was formed in 2015 at the request of G20 finance ministers and central bank governors to increase reporting of climate-related financial data from global financial institutions.
"The KIC will work more closely with global investors to form substantial partnership to sharpen out strategies on transparency," he said.
He acknowledged the challenges that accompany ESG, especially regarding sentiment that investing sustainably would hurt performance.
But he underlined that this possibility makes it more important to raise investors' awareness that practicing ESG principles will not result in losses.
"ESG certainly has become a mainstream idea, but implementing the idea should go beyond discussion and involved parties should join hands by taking heavier social responsibility," he said.
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