The world’s largest pension fund said late last week that corporate governance and environmental/social responsibility would play a role in its stock-picking strategy, according to a Reuters report.
Japan’s Government Pension Investment Fund (GPIF) is in the midst of a portfolio overhaul that has the fund doubling its allocation to stocks.
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In a mid-term plan announced on Thursday, GPIF said it would consider taking account of “environmental, social and governance” (ESG) factors in equity-investment decisions, while pursuing profits.
GPIF’s announcement helped buoy sentiment and push Tokyo shares up 1.5 percent on Thursday, but investors were skeptical whether the potential change would boost returns.
The plan offered no specifics about how this might affect its portfolio. Fund spokesman Shinichiro Mori said GPIF’s Investment Committee will discuss this issue.
“If you say you’re prioritizing the environment and such things and then your returns worsen, then it all comes to nothing,” said Masaru Hamasaki, head of market and investment information at asset management firm Amundi Japan.
“ESG and socially responsible investing aren’t directly linked to a company’s financials, so it’s not related to the stock price,” he said. “Paying attention to ESG won’t necessarily lead to outperformance.”
GPIF manages $1.1 trillion in assets, and is the world’s largest pension fund.
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