KUALA LUMPUR: Incorporating environmental, social, and governance (ESG) factors into Employees Provident Fund’s (EPF) investment due diligence and decision-making process has the potential to enhance return, its chairman Tan Sri Ahmad Badri Mohd Zahir said today.
Traditionally, the EPF has always been a socially-conscious investor, applying screening criteria to filter through securities and excluding those that are categorised as unethical or socially irresponsible such as alcohol, tobacco, gambling and weaponry, he said.
EPF’s commitment to responsible investing and promoting effective corporate governance as well as investor stewardship goes far beyond supporting the advancement of efficient markets and sustainable economies, he said at the launch of EPF’s Sustainable Investment Policy, Priority Issues Policies, and Priority Sector Policies to guide the EPF in making better informed decisions by integrating ESG.
“It is slowly becoming the foundation to improving long-term outcomes for EPF members,” he said.
“Going forward, we intend to strengthen these practices by advocating sound corporate governance to investee companies, based on our conviction that strong governance is a pre-requisite to protecting shareholders’ interests, and to lay the foundation for stronger environmentally and socially-conscious practices.”
He also explained that the initiative is aligned with EPF commitments to two overarching sustainable investment ambitions that will guide its overall pursuit of sustainability, which are to achieve a fully ESG compliant portfolio by 2030 and a climate neutral portfolio by 2050, in line with the 12th Malaysia Plan’s aspirations for a carbon-neutral Malaysia.
Hence the three policies would provide a high-level approach to sustainable investment and the integration of ESG into investment processes, define EPF’s stance on climate change and workers’ wellbeing; and look into pertinent sub-issues across sectors with directional ESG expectations for EPF’s investee companies in the oil and gas, palm oil, mining, power generation, construction and banking.
Ahmad Badri also emphasised that EPF is the first organisation in Malaysia to have established and issued the Priority Issues Policies that define EPF’s stance on climate change and workers’ wellbeing.
“Given the EPF’s position as the country’s premier retirement fund, it is crucial that it incorporates ESG factors in the evaluation of investee companies’ performance and business practices.
“By considering risks and opportunities beyond financial performance, the EPF will be well positioned to make better holistic investment decisions, thus safeguarding our members’ long-term returns and contribute to a wider sustainability ecosystem,” he added. - Bernama
