KIC intensifies ESG efforts, focuses on climate change

Korea Investment Corporation (KIC) has directly used its voting rights in invested companies for the first time, in a move aimed at strengthening its stewardship activities

Companies in which the sovereign wealth fund directly exercised voting rights included Facebook parent company Meta Platforms Inc., ExxonMobil Corp., Thermo Fisher Scientific Inc. Inc., TotalEnergies SE and Glencore Plc.

A spokesperson for KIC said the general focus had been on ESG (environment, social and governance) factors and initiatives combatting climate change.

“In general, we voted to support shareholder proposals that aim to advance climate change-related business practices such as climate report disclosure reliability and aligning emission targets with the Paris Climate Agreement,” the spokesperson told AsianInvestor.

KIC plans to disclose the primary agendas of its direct voting later this year, the spokesperson said. KIC also plans to directly participate in the shareholder meetings of Google parent Alphabet Inc. and FLEETCOR Technologies Inc. in June.

KIC aims to target more than 10 companies for direct shareholder voting this year. To further strengthen its responsible investment, KIC plans to expand the number of target companies where it will exercise voting rights to 150 companies by 2025.

As of end-2022, KIC’s assets under management (AUM) totalled $169.3 billion, according to a statement by Korea's Ministry of Economy and Finance at the National Assembly on February 21.

EARLY EFFORTS

Dr. Louis Cheng,

Hang Seng University

It is in the listed companies' own interest to listen to the concerns of large shareholders such as asset owners, according to Dr. Louis Cheng, professor of banking and finance and director of the research centre for ESG and the research institute for business at Hang Seng University of Hong Kong.

If the companies pay attention to ESG viewpoints, it can also mitigate how to react to future issues, Cheng argued on stage at AsianInvestor’s Asia Investment Summit in Hong Kong on May 18. 

“Companies need to listen to stakeholders to do well on ESG and engage in technology to capture ESG intelligence so that they understand what stakeholders really want,” Cheng told delegates.

“When something happens, then the companies will already know and make a better, informed decision to perform on the E, S and G factors in combination with each other.”

USES ASSET OWNER NETWORK

In October 2022, KIC announced that the fund was aiming to become a signatory of the UN-supported framework Principles for Responsible Investment (PRI) in a bid to expand its sustainable investing agenda both internally and through global partnerships.

Also read: KIC to ramp up ESG efforts by signing UN-supported framework

Other PRI signatories among Asia Pacific asset owners include Nippon Life and several other Japanese life insurers and Australian superannuation funds, New Zealand Super, Japan’s Government Pension Investment Fund, Korea’s National Pension Service as well as Malaysia’s Khazanah Nasional Berhad and KWAP.

Jin Seoung-ho, KIC

KIC established its own stewardship principles in 2018 and has been fully ESG integrated since 2020, meaning that ESG considerations are applied across all asset classes.

“Active ownership and shareholder engagement is an important part of sovereign wealth fund’s investment. KIC’s shareholder voting on its own direction is a meaningful step forward towards fulfilling stewardship responsibilities,” KIC CEO Jin Seoung-ho said in a statement on June 1.

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