EPF adopts UN-supported principles for responsible investment

This article first appeared in The Edge Financial Daily, on April 9, 2019.
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KUALA LUMPUR: The Employees Provident Fund (EPF) announced yesterday it had signed the UN-supported Principles for Responsible Investment, under which it had pledged its commitment towards environment, social and governance (ESG) best practices and sustainable investing principles.

Signatories are required to implement the six Principles for Responsible Investment, including embedding ESG considerations into investment analysis and decision-making processes, and seeking appropriate ESG disclosures from investee companies.

“As the EPF progresses towards becoming a trillion ringgit fund, we recognise that aligning our investment activities with the broader interests of society would bode well for our objectives as a retirement savings fund,” EPF chief executive officer Tunku Alizakri Alias said in a statement.

He said the fund believes the upholding of ESG best practices can affect the performance of investment portfolios to varying degrees across companies, sectors and regions. “We hope to meaningfully incorporate ESG factors into our investment due diligence and decision-making process, given its potential to enhance returns while reinforcing our existing risk management framework,” Alizakri added, saying this would improve the EPF’s ability to balance financial returns with a measurable impact on society and the environment for the benefit of future generations.

“While financial considerations remain paramount, we need to account for the larger ramifications of our activities for society, emphasising what is good and right,” he added. “Today’s (yesterday) announcement will see the EPF reinforcing its commitment towards ESG and sustainable investing principles, laying the foundations for stronger environmentally-friendly and socially-conscious practice on top of sound corporate governance among its investee companies,” the fund added.