“As the EPF progresses towards becoming a trillion ringgit fund, we recognise that aligning our investment activities with the broader interests of society would 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 in a statement today.
He said it hoped to meaningfully incorporate ESG factors into its investment due diligence and decision-making process, given the potential to enhance return while reinforcing its existing risk management framework.
The EPF has traditionally been a socially-conscious investor in excluding companies that are seen as unethical such as those involved with alcohol, tobacco, gambling, weaponry and nuclear power.
Tunku Alizakri said today’s announcement would see the EPF reinforcing its commitment towards ESG and sustainable investing principles, laying the foundations for stronger environmentally-friendly and socially conscious practice, on top of sound corporate governance among its investee companies.
This would improve the fund’s ability to balance financial returns with measurable impact towards society and the environment for the benefit of future generations.
“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 added.