Kumpulan Wang Persaraan (Diperbadankan) [KWAP], Malaysia’s second-biggest pension fund today became the first pension fund in Malaysia to be a signatory of the United Nations-supported Principles for Responsible Investment (PRI). With the signing of the PRI, KWAP formally joins the PRI’s independently operated, global network of policymakers that is working to build a sustainable and economically effective financial system on the foundation of responsible investment for long-term value creation.
As a PRI signatory, KWAP will remain committed to support and promote the use of environmental, social, and governance (ESG) investing programmes, incorporating measures to provide full transparency for investors, such as publicly reporting on investment activities in accordance with the PRI’s six (6) core principles.
KWAP holds the principle that integrating ESG practices can generate sustainable risk-adjusted returns and enable KWAP to perform its operations, pension’s administration, and pensions’ management in a responsible manner. This was demonstrated when KWAP became a signatory to the Malaysian Code for Institutional Investors in 2015, a voluntary code which sets out six (6) broad principles of effective stewardship by institutional investors. The Code provides guidance on effective exercise of stewardship responsibilities towards the delivery of sustainable long-term value to the institutional investors’ ultimate beneficiaries or clients.
“At KWAP, we believe our focus is directed towards adopting upright ESG practices, to not only improve long term social security to pensioners, but also our duty to future generations. Being the first pension fund in Malaysia to hold our pledge towards the PRI is in line with our effort in environmental, social, and governance (ESG) initiatives. It also further reiterates and demonstrates our commitment towards responsible investing,” said Dato’ Wan Kamaruzaman Wan Ahmad, the Chief Executive Officer of KWAP.
“KWAP is actively re-assessing our investment processes and how ESG can be further enhanced. This has translated to efforts in developing ESG products and implementing deeper investment stewardship activities. As part of our transformation efforts, we are proud to be the first Pension Fund in Malaysia, to establish a dedicated Responsible Investment Team in spearheading KWAP’ shareholders’ activism initiatives,” he added.
Also in attendance was the Managing Director of the Principles for Responsible Investment, Ms. Fiona Reynolds who commented, “We congratulate KWAP as an early adopter of responsible investing in the region, and as one of the first pension fund signatories in ASEAN. I am truly honoured to be able to be in Malaysia for the formal announcement. The commitment of KWAP to take a leading role in the region should be commended and our hope is that their leadership will inspire other pension funds to be proactive in incorporating sustainability factors in their investment process.”
At an investment level, KWAP has developed ESG focused guidelines – KWAP’s Investment Policy and Guidelines, and KWAP’s ESG Guidelines for Investment. This has been cascaded down to the application level where currently, KWAP has developed its first ESG Guidelines for Fixed Income Investment, while revising its ESG Guidelines for Equity Investment for the third time. The integration of ESG has been embedded in its investment and business operations through its Corporate Level ESG Guidelines, Guidelines for Investment, and the ESG-Based Research Methodology. This move towards progress in the ESG ecosystem is a testament of KWAP’s commitment towards the practice.
To further promote effective standards of corporate governance and investor stewardship in advancing efficient markets and sustainable economies worldwide, KWAP played host to the International Corporate Governance Network (ICGN) Annual Conference 2017, which focused on redefining capitalism for a sustainable global economy and explored governance priorities in major Asian markets. Continuing its efforts, KWAP will be organising an environment-themed conference in 2018, which will be held in conjunction with the planned sustainability and responsible business events happening in Kuala Lumpur, in July this year. This would be an avenue to create awareness and provide recommendations and solutions to be shared with the market.
About Kumpulan Wang Persaraan (Diperbadankan)
Kumpulan Wang Persaraan (Diperbadankan) [KWAP] or the Retirement Fund (Incorporated) was established on 1st March 2007 under the Retirement Fund Act 2007(Act 662) replacing the repealed Pensions Trust Fund Act 1991 (Act 454).
KWAP manages contributions from the federal government and relevant agencies to obtain optimum returns on its investments through sound management and investment of the Fund in equity, fixed income securities, money market instruments, and other forms of investments as permitted under the Retirement Fund Act 2007 (Act 662). The Fund shall be applied towards assisting the Federal Government in financing its pension duties. In 2015, KWAP was officially appointed as an agent of the Federal Government for the purpose of pension payment, gratuity or other benefits granted under any written law from the Consolidated Fund in such manner as may be agreed between the Federal Government and KWAP.