Sustainable Investment Policies
Sustainable Investment Policy
The Sustainable Investment (SI) Policy explains EPF’s overall approach to sustainable investing and integration of ESG factors into EPF’s investment processes and stakeholder engagement. The SI policy forms part of EPF’s overarching investment strategy that has been reviewed, approved and endorsed by the Investment Panel.
Priority Issue Policy: Climate Change
Our view on Climate Change as a critical issue to address is in line with global priorities. This is evidenced by detailed reports and findings from the 2021 Intergovernmental Panel on Climate Change (IPCC), Swiss Re Institute’s “The Economics of Climate Change”, and the 2021 United Nations Climate Change Conference (COP 26). On the local front, Climate Change has similarly been placed at the forefront of national priorities as Malaysia recently established the commitment to achieve carbon neutrality as early as 2050.
Aside from aligning to national and global priorities, we believe Climate Change has the potential to significantly impact business performance and our overall portfolio returns. According to the World Economic Forum (“WEF”), 4 out of the top 5 global risks are environmental-related. If not managed well, Climate Change can dramatically affect the future of our members. And hence, we recognise the urgency and are committed to play a part in addressing the Climate Change issue.
Priority Issue Policy: Workers’ Wellbeing
Our view on Workers’ Wellbeing as a critical issue to address is in line with global priorities. This is evidenced by detailed reports and findings from the United Nations Children's Fund (“UNICEF”)’s Child Labour: “Global Estimates 2020” and ILO’s Global Wage Report 2020-2021. Locally, we also see increasing controversies surrounding labor rights issues amongst businesses, resulting in international coverage and heightened scrutiny by various stakeholders. We believe Workers’ Wellbeing has the potential to significantly impact business reputation, performance and ultimately overall portfolio returns. As such, we recognise the urgency and are committed to play a part in addressing Workers’ Wellbeing issues.
Priority Sector Policies
The Priority Sector Policies consisting of ESG expectations on six sectors namely 1) Palm Oil, 2) Oil & Gas, 3) Mining, 4) Power Generation, 5) Construction and 6) Banking. These sectors are chosen based on EPF’s exposure as well as the ESG risks imminent in the sectors. The Priority Sector Policies aim to address material ESG issues specific to the sector, beyond the scope of the Climate Change and Workers’ Wellbeing Policies. As such, companies that are part of EPF’s priority sectors should refer to the sector policy in tandem and strive to meet the expectations listed in both the issue and sector policies.
