K-Capital Market Committee: "Large Asset Managers Have Little Incentive for Stewardship Code"

"Mandate Adjustment Needed Based on National Pension Service Assessments"

The Democratic Party of Korea and the government have discussed a system in which the scale of entrusted funds for asset management companies would be increased or reduced based on their performance in voluntary stewardship code (guidelines for institutional investor voting rights) activities. Currently, nearly half of the National Pension Service's funds under management are entrusted to commercial asset management companies.

On August 6, the Democratic Party’s K-Capital Market Special Committee, the Financial Services Commission, the Ministry of Health and Welfare, and the National Pension Service held the “National Pension Stewardship Code Implementation Review Meeting” at the National Assembly Members’ Office Building.

Democratic Party of Korea's Oh Ki-hyung, Chairman of the K-Capital Market Special Committee, and Assemblyman Kim Nam-geun in conversation. Photo by Yonhap News Agency

After the meeting, Democratic Party lawmaker Kim Namgeun, a member of the Special Committee, told reporters, “So-called large asset management companies like Samsung Asset Management and Hanwha Asset Management have little incentive to implement ESG (Environmental, Social, and Governance) practices.”

Assemblyman Kim explained that if returns and activities sharply decline, “these large asset managers would have no choice but to implement the stewardship code and could raise the issue with other group companies.” He added, “It is important to clearly demonstrate a resolve to reflect the National Pension Service’s stewardship code implementation evaluations in next year’s entrusted fund allocation.”

The National Pension Service has stated that qualitative factors will also be included in its stewardship code implementation evaluations of asset management companies. Assemblyman Kim said, “Rather than taking a slapdash approach, the NPS intends to systematically examine which topics management companies engage with and how they implement stewardship, assessing the suitability of their frameworks.” He further explained that, “There will be a more thorough assessment of whether they carry out reviews such as the companies’ dividend policies, executive compensation, and potential allegations of embezzlement or breach of trust related to improvements in governance structure.”

The ruling party and government plan to hold a policy forum featuring more detailed proposals by the end of this month to officially begin public discussions on the matter.

This content was produced with the assistance of AI translation services.