By LYDIA NATHAN / Pic By MUHD AMIN NAHARUL
The Employees Provident Fund (EPF) has inked the Principles for Responsible Investment (PRI) supported by the United Nations (UN), in line with the pension fund’s commitment towards responsible investing and environment, social and governance (ESG) best practices.
The PRI is also in the long-term interests of EPF’s members, the fund’s CEO Tunku Alizakri Alias (picture) said in a statement yesterday.
“As the EPF progresses towards becoming a trillion ringgit fund, we recognise that aligning our investment activities with the broader interests of society will bode well with our objectives as a retirement savings fund driven by long-term, sustainable value creation for our stakeholders.
“We believe that the upholding of ESG best practices can affect the performance of investment portfolios to varying degrees across companies, sectors and regions,” he said.
Tunku Alizakri added that EPF has been a socially conscious investor in excluding companies that are seen as unethical such as alcohol, tobacco, gambling, weaponry and nuclear power.
“This signing will ensure EPF is laying the foundations for a stronger environmentally friendly and socially conscious practice, on top of a sound corporate governance among its investee companies,” he said.
The EPF is committed to six principles for responsible investment, and the fund hopes to incorporate ESG factors into its investment due diligence and decision-making process, given its potential to enhance return while reinforcing existing risk management framework.
According to him, this will balance financial returns with a measurable impact on society and the environment.
“While financial considerations remain paramount, we need to account for the larger ramifications of our activities on society, emphasising what is good and right, while minimising the negatives,” he said.
The UN-backed PRI has been recognised as the leader in responsible investment with more than 2,000 signatories to date representing total fund size of over RM288 trillion.
The initiative aims to understand the investment implications of ESG factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.
Signatories are required to implement the six principles, which include embedding ESG considerations into investment analysis and decision-making processes, and seeking appropriate ESG disclosures from investee companies.