New Korean Stewardship Code

New Korean Stewardship Code

Institutional investors in the Republic of Korea have adopted a stewardship code to promote responsible investing. Adoption of the code is expected to strengthen shareholder activism and evaluation of financial firms’ actions that affect the environment, society, and governance.

In the Republic of Korea, the adoption of a stewardship code by the state-run National Pension Service and other institutional investors has created a more conducive environment for shareholders of financial firms to exercise their rights actively. Accordingly, evaluation of ESG (environmental, social, and governance) practices and shareholders’ engagement could grow stronger; there is a need for further efforts to establish ESG evaluation criteria suitable for financial firms and to strengthen their capacity to respond to and deal with investors’ active engagement.

The United Kingdom was the first to adopt a stewardship code to strengthen institutional investors’fiduciary duty, followed by Japan, Hong Kong, and other countries in Asia.  In the Republic of Korea, a voluntary stewardship code was established in 2016, and the following year, many institutional investors adopted it. More recently, so did the National Pension Fund, considered the world’s third largest pension fund with a huge investment portfolio. (See Tasks for Effective Application of Stewardship Code in Korea(link is external) from Korea Institute of Finance).

Read more at http://bit.ly/ROKESG.

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