Korea to Weigh Stewardship Record in National Pension Manager Reviews

South Korea’s government and ruling party are pushing to make stewardship code compliance a key evaluation criterion in the selection of external managers for the National Pension Service starting next year. Detailed assessment standards are to be drawn up this month.

The Democratic Party’s special committee on capital markets held a meeting at the National Assembly on August 6 with officials from the Financial Services Commission, the Financial Supervisory Service, the Ministry of Health and Welfare and the National Pension Service to review implementation of the stewardship code. About half of the pension fund’s assets are outsourced to asset managers. Participants shared concerns that large asset managers affiliated with financial holding companies have been passive, citing group-level pressure and cost burdens.

Rep. Kim Nam-geun of the Democratic Party said after the meeting that authorities need evaluation standards strong enough to induce asset managers to set up teams and begin full-fledged stewardship activities.

Some in the ruling party have raised concerns that the current assessment may fall short of expectations because the Korea ESG Standards Institute, which handles the working-level review, has only two staff members. The Financial Services Commission proposed creating a Stewardship Code Development Committee.

Choi Haeryon, Hankyung reporter, haeryon@hankyung.com