Shinhan Asset Management Focuses Solely on Growing 'ESG Funds'... Also Implements Investment Exclusions

[Asia Economy Reporter Hwang Junho] Shinhan Asset Management is the first in South Korea's asset management industry to apply ESG rating criteria to general public equity funds. They have decided to include companies with an ESG rating of BB or higher in more than 70% of the portfolio. Furthermore, they plan to take strong measures such as excluding companies without greenhouse gas reduction targets and those not expanding green businesses from investment targets.

Shinhan Asset Management announced on the 22nd that it will apply the standard of holding more than 70% of BB-rated ESG stocks, currently applied only to the Shinhan Beautiful SRI Green New Deal Fund, to all general public equity funds. This is the first time a domestic asset management company has applied ESG rating criteria to general public equity funds. Among 30 domestic active public equity funds, excluding some style funds such as group stocks and small-to-mid cap funds, 16 funds will be subject to this standard.

This decision is a follow-up measure after declaring support for the Task Force on Climate-related Financial Disclosures (TCFD). Since joining TCFD, Shinhan Asset Management has sent shareholder letters and questionnaires based on TCFD recommendations to a total of 242 companies, and has secured related data from 82 of the 83 companies managing greenhouse gas emissions.

Ko Young-hoon, head of the equity research team, said, "Companies that are heavy greenhouse gas emitters without reduction targets and not expanding green businesses may see a decline in corporate value in the future." He added, "We plan to reflect this in investment decisions by excluding such companies from investment targets."