Health ministry says pension ESG rules will extend to alternative assets

The health ministry said Thursday that the National Assembly approved a bill revising the National Pension Act to extend responsible-investment principles to alternative assets.

Responsible investment considers environmental, social and governance factors alongside financial factors when assets are selected and managed to pursue long-term, stable returns, the ministry said.

"The revision is significant because it enables the national pension fund to apply responsible-investment principles across all asset classes," Health Minister Jeong Eun-kyeong said.

The fund currently applies responsible-investment strategies tailored to asset class and management method only to shares and bonds. For directly managed shares and bonds, it incorporates environmental, social and governance factors into financial analysis and considers responsible-investment criteria in selecting and monitoring outside managers.

The amendment adds alternative investments, including private equity, real estate and infrastructure, to asset classes where ESG factors may be considered in pension-fund management. It calls for management guidelines to set out the criteria and methods for weighing those factors. External managers handle about 99 percent of the pension fund's alternative investments.

The law is scheduled to take effect six months after its promulgation. The ministry said it will consider revising fund-management guidelines and ways to consider ESG factors when selecting and monitoring external alternative-investment managers, with measures to be discussed by the pension fund management committee.