EPF Strengthens Sustainable Investment With New Stewardship Policy
KWASA DAMANSARA, 17 July 2024: The Employees Provident Fund (EPF) has published the EPF Sustainable Investment Stewardship Policy, becoming the first institutional investor in Malaysia to publish a standalone stewardship policy for sustainable investment. The policy outlines the processes and guidelines the EPF follows to promote good sustainability practices among its investee companies and external fund managers.
The stewardship undertaking has strengthened the EPF’s commitment to help build a better retirement future for Malaysians by delivering long-term sustainable value. This aligns with the United Nations-supported Principles for Responsible Investment (PRI1), which define stewardship as institutional investors using their influence to maximise overall long-term value, encompassing economic, social, and environmental assets essential for returns and the interests of clients and beneficiaries.
EPF Chief Executive Officer, Encik Ahmad Zulqarnain Onn said, “We believe that sustainable investment is key to creating long-term value for Malaysia. As a responsible institutional investor, we are committed to advancing this principle by systematically promoting and instilling good business practices that incorporate Environmental, Social, and Governance (ESG2) factors into all investment decisions.
“This stewardship commitment accelerates the EPF’s progress towards achieving a fully ESG-compliant portfolio by 2030 and a climate-neutral portfolio by 2050. We aim to empower our investee companies and EFMs to generate positive societal and environmental impacts, keeping all stakeholders' best interests in mind, while maximising portfolio-level risk-adjusted returns.”
As the largest institutional investor in Malaysia, the EPF is taking a leadership role to influence the adoption of good sustainability practices within the Malaysian capital market, whether individually or collaboratively through platforms such as the Institutional Investors Council (IIC3).
The EPF Sustainable Investment Stewardship Policy covers approaches to key stewardship areas, such as monitoring, engagement and escalation options, in efforts to align companies with its sustainable investment policies and improve management of material ESG risks and opportunities. The EPF’s stewardship philosophy is centred on four key activities, namely proxy voting, monitoring, active engagement and collaborative initiatives.
Investment Stewardship Aligns with Global and Local Codes
The EPF's stewardship commitments are strengthened by its membership in several principles-based codes, which require the EPF to be an active owner and integrate sustainability considerations into its ownership policies and practices:
i. As a government-linked investment company in Malaysia, the EPF adheres to the Sustainable Investment Standards (SIS4), which was launched in May 2023;
ii. The EPF has been a signatory to the United Nations-backed Principles for Responsible Investment (PRI) since April 2019;
iii. The EPF has been a signatory to The Malaysian Code for Institutional Investors (MCII5) since January 2017.
Subsequently, the EPF Sustainable Investment Stewardship Policy development took into consideration the principles outlined in the local and global stewardship codes such as The Malaysian Code for Institutional Investors (MCII) and International Corporate Governance Network (ICGN6) Global Stewardship Principles. In addition, the Policy hinges on and is guided by EPF’s ESG policies and processes, specifically the EPF Corporate Governance Principles and Voting Guidelines and EPF Sustainable Investment Policies.
In 2010, the EPF became the first institutional investor in Malaysia to launch the Corporate Governance Principles and Voting Guidelines to inform the public, investors and companies on EPF's voting guidelines. In March 2022, the EPF launched the Sustainable Investment Policy, Priority Issues Policies, and Priority Sector Policies to guide the EPF in making better informed and holistic investment decisions by integrating ESG considerations in its investment management processes.
For more information, the EPF Sustainable Investment Stewardship Policy is available on the EPF website at www.kwsp.gov.my.
Issued by the EPF Media Desk
Corporate Affairs Department
17 July 2024
1 Principles for Responsible Investment (PRI)
2 Environmental, Social, and Governance
3 Institutional Investors Council (IIC)
4 Sustainable Investment Standards (SIS)
5 The Malaysian Code for Institutional Investors (MCII)
6 International Corporate Governance Network (ICGN)
About the Employees Provident Fund (EPF)
The Employees Provident Fund®(EPF®) is Malaysia’s premier retirement savings fund, helping its members achieve adequate savings for a comfortable retirement. This is in line with EPF’s vision to help members achieve a better future and its mission to safeguard members’ savings and deliver excellent services. The EPF has evolved significantly from a transaction-centric to a professional fund management organisation with a strong focus on retirement security. The EPF is guided by a robust and professional governance framework when making investment decisions. It continues to play a catalytic role in the nation’s economic growth and seeks to cultivate a savings and investment culture among its members to improve the country’s financial literacy level.