KWAP aims to raise ESG portfolio to 70%

KUALA LUMPUR: Kumpulan Wang Persaraan (Diperbadankan) (KWAP), which has signed on to the Principles for Responsible Investment (PRI), aims to grow its environmental, social and governance (ESG) portfolio to 70% from 50%-60% currently as it strengthens its capabilities in responsible investments.
Currently, the country’s second-largest retirement fund has total assets under management (AUM) of RM125 billion, including RM2 billion of ESG-related assets.
“Being the first pension fund in Malaysia to hold our pledge towards the PRI is in line with our effort in ESG initiatives. It also demonstrates our commitment towards responsible investing,” KWAP CEO Datuk Wan Kamaruzaman Wan Ahmad said at a press conference today.
“We have a target to reach 70% (of ESG portfolio) but it depends on the liquidity of the investments, and liquidity always depend on the ecosystem,” he added, without elaborating on the timeline.
Nevertheless, Wan Kamaruzaman highlighted that there is a need to have a clear definition between shariah-compliant and ESG-themed (ESG) investments as both principles share a lot of similar traits.
Going forward, he hopes that more companies and institutions across the country will embrace ESG principles as part of their overall investment approach, noting last year the pension fund had visited 27 local companies to encourage them to incorporate such practices.
As a PRI signatory, Wan Kamaruzaman said KWAP will remain committed to supporting and promoting the use of ESG investing programmes, incorporating measures to provide full transparency for investors, such as publicly reporting on investment activities in accordance with the PRI’s six core principles.
The PRI’s six core principles require institutional investors to incorporate ESG issues into investment analysis and decision-making processes; be active owners and incorporate ESG issues into ownership policies and practices and seek appropriate disclosure on ESG issues by the entities in which they invest.
It also require investors to promote acceptance and implementation of the principles within the investment industry; work together to enhance their effectiveness in implementing the principles and report on their activities and progress towards implementing the principles.
Partnering with more than 1,800 signatories in countries across the world, the PRI, which is supported by the United Nations, seeks to understand the implications of ESG issues on investment decisions and outcomes.
It also encourages investors to use responsible investment to enhance returns and better manage risks and works to support its international network of investor signatories in incorporating ESG factors into their investment and ownership decisions.