The launch marks EPF’s evolution to be fully ESG compliant by 2030 and climate neutral by 2050 

by AUFA MARDHIAH / pic by TMR FILE

THE Employees Provident Fund (EPF) has launched the Sustainable Investment Policies for better informed and holistic investment decisions by integrating environmental, social and governance (ESG) considerations. 

It was officiated by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz yesterday, witnessed by EPF chairman Tan Sri Ahmad Badri Mohd Zahir and CEO Datuk Seri Amir Hamzah Azizan. 

The launch marked EPF’s evolution to being a sustainable investor in its quest to be fully ESG compliant by 2030 and climate neutral by 2050. 

The fund believed that ESG issues are increasingly critical in business practices as they reflect business risks and opportunities, as well as positive and negative impacts which are more widespread to society. 

According to Amir Hamzah, it is imperative for institutional investors to play an effective stewardship role in driving and raising the standards of the ESG agenda in Malaysia’s capital market. 

“As the largest fund in Malaysia, our aim is to bring along companies on our sustainability journey and to support the development of the country as a whole. 

“To provide a comprehensive guideline to our investee companies and fund managers in integrating ESG into their processes, EPF has developed its very own Sustainable Investment Policy, supplemented by the Climate Change and Workers’ Well-being Issue Policies, as well as six Priority Sector Policies, covering palm oil, oil and gas, mining, power generation, banking and construction,” he said at the event. 

He also mentioned that over the past few months, EPF has been part of industry-wide collaborative initiatives to further the sustainability agenda in the capital market through Institutional Investors Council, Perkukuh, Joint Committee on Climate Change and CEO Action Network. 

Tengku Zafrul noted it is critical for Malaysia’s economic recovery to be anchored on ESG factors that underpin the 12th Malaysia Plan’s goal of revitalising Malaysia’s socio-economic development, with long-term sustainability and prosperity serving as the foundation for improving the people’s wellbeing. 

“As we are racing against time to mitigate the effects of climate change or other future shocks, institutional investors can and must assist the government in mainstreaming the sustainability agenda across as many sectors and industries as soon as possible. 

“Therefore, we fully support the EPF for completely embracing sustainable investing and reinforcing its commitment to ESG. The government believes that by institutionalising ESG policies in EPF’s investments, the benefits will cascade down the value chain of Malaysia’s capital markets, ultimately benefitting the people,” he said. 

Meanwhile, Ahmad Badri said given the EPF’s position as the country’s retirement fund, it is crucial that it incorporates ESG factors in the evaluation of investee companies’ performance and business practices. 

“By considering risks and opportunities beyond financial performance, the EPF will be well-positioned to make better holistic investment decisions, thus safeguarding our members’ long-term returns and contributing to a wider sustainability ecosystem,” he added. 

EPF’s portfolio managers will be communicating the ESG expectations to its investee companies and EFMs. 

The EPF’s Sustainable Investment framework will provide the basis for ongoing and future engagements to discuss, assess, and manage ESG risks as well as capitalise on value creation opportunities. 

Ahmad Badri said EPF would continue to engage its investee companies and EFMs to upgrade their ESG practices and ensure that they are aligned with the EPF’s expectations. 

The EPF Sustainable Investment Policy is grounded on four key guiding principles to ensure consistency, predictability, and transparency. 

Integrating ESG in EPF’s investment decision-making process, providing a robust and comprehensive investment process that assesses an investment opportunity not only by the fund’s financial upside potential, but also its performance on key ESG factors. 

To accelerate these efforts, the EPF’s Sustainable Investment Centre is tasked to develop, implement, monitor, and report the EPF’s annual progress toward its committed sustainability goals. 

The EPF will also conduct training and awareness programmes, develop internal sustainability advisory capabilities, and establish a change management office to instil a sustainability-charged top-to-bottom culture within the fund.