Korea Plans to Add Stewardship Code Compliance to National Pension Manager Reviews

South Korea's government and ruling party plan to make stewardship code compliance a key criterion in selecting external managers for the National Pension Service starting next year. Detailed evaluation standards are to be drawn up this month.

The Democratic Party's K Capital Market Special Committee held a meeting at the National Assembly on Aug. 6 with officials from the Financial Services Commission, the Financial Supervisory Service, the Ministry of Health and Welfare and the National Pension Service to review implementation of the stewardship code. About half of the pension fund's assets are outsourced to asset managers.

Participants shared concerns that large asset managers affiliated with financial holding companies have been passive, citing group-level pressure and the cost burden.

Kim Nam-kun, a Democratic Party lawmaker, said after the meeting that the evaluation standards should be strong enough to encourage asset managers to set up teams and engage in stewardship activities in earnest.

Some in the ruling party have raised concerns that the review may fall short of expectations because the Korea ESG Standards Institute, which currently handles the working-level task, has only two staff members. The Financial Services Commission proposed creating a Stewardship Code Development Committee.

Choi Haeryon, Hankyung reporter haeryon@hankyung.com