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THE INVESTOR
May 13, 2021

Market Now

Shinhan Asset to shy away from domestic equities with low ESG scores

  • PUBLISHED :April 22, 2021 - 18:21
  • UPDATED :April 22, 2021 - 18:30
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A logo of Shinhan Asset Management (Shinhan Asset Management)

Seoul-based Shinhan Asset Management said on April 22 that it plans to implement an equity investing framework for its domestic large-cap equity funds that prioritizes environmental, social and governance factors.

Starting in May, 16 publicly pooled domestic equity funds managed by the fifth-largest asset management firm in South Korea must have at least 70 percent exposure to stocks with integrated ESG ratings of “BB” or above.

The same strategy has so far been exercised by one equity fund that is dedicated to socially responsible investing.

These selected large-cap funds are part of Shinhan Asset’s 30 active domestic equity funds that are sold through public fund distribution channels.

Shinhan Asset, which oversaw over 61 trillion won ($55 billion) worth of assets as of March, said in a statement that ESG was no longer a strategic option but a prerequisite for investment decisions.

“Market sentiment toward companies ignorant to climate risks will gradually turn sour, and this will incur higher capital costs for such companies,” said Ko Young-hoon, head of equity research at Shinhan Asset. “Companies without emissions goals and without green business portfolios are subject to lower valuation, and we are taking this into account in our investment decisions.”

Shinhan Asset said the latest news was in line with its actions for a sustainable future. It has implemented an internal ESG scoring system with its external partners since 2005. Also, in September Shinhan Asset announced the launch of an internal ESG committee and supported the Task Force on Climate-Related Financial Disclosures.

By Son Ji-hyoung (consnow@heraldcorp.com)

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