Minister Kwon Deok-cheol: "National Pension Service to Implement Concrete Measures for 'Coal Phase-Out Declaration'"

[Asia Economy Reporter Park So-yeon] On the 3rd, Kwon Deok-cheol, Minister of Health and Welfare, stated, "Since the National Pension Fund's coal divestment declaration resolution, we are conducting a research project on specific implementation plans such as the scope and criteria of the coal mining and power generation industry," and added, "We will receive reports and discuss the situation."

Minister Kwon Deok-cheol conveyed this during his opening remarks at the 9th meeting of the National Pension Fund Management Committee (Fund Committee) held at the Plaza Hotel in Jung-gu, Seoul, in the afternoon.

At the Fund Committee meeting, agenda items such as the progress of the research project to establish the scope and criteria for the coal mining and power generation industry, a report on improving the National Pension Fund asset allocation system, and amendments to this year's National Pension Fund operation plan were deliberated.

The National Pension Service announced a "coal divestment declaration" in May, introducing an investment restriction strategy on coal companies and deciding not to participate in project investments for new coal power plant construction. Subsequently, it planned to commission a research project in the second half of the year to establish investment restrictions.

The investment restriction strategy (Negative Screening) is an investment policy that limits industries and companies negatively evaluated from an ESG (Environmental, Social, and Governance) perspective from the investable universe and investment portfolios.

Minister Kwon said, "We will approve the amendment to the National Pension Fund operation plan to cover the shortfall in performance bonuses for fund managers," and added, "In addition, regarding the concerns raised about the appropriateness of the current risk limit settings and portfolio expected return calculation methods during the establishment of the 2022-2026 mid-term asset allocation in May this year, we will report improvement plans."

Minister Kwon mentioned, "Recently, due to inflation and concerns about changes in the U.S. Federal Reserve's monetary policy, government bond yields have risen, and foreign exchange volatility has increased, creating market uncertainty," and noted, "Although confirmed in our country, the emergence of new variant viruses has acted as an additional factor expanding financial market volatility."

He forecasted, "Uncertainty will continue with coexisting risk factors such as the operating environment, real economy recovery, changes in major countries' monetary policy stances, and the possibility of additional infectious disease variant spread."

He added, "As of the end of September, the National Pension Fund stood at approximately KRW 918.7 trillion based on market value, an increase of KRW 85 trillion compared to the end of last year," emphasizing, "It is an important situation where thorough fund management is required through continuous monitoring of macroeconomic and financial market changes and agile responses."