Korea Investment Corporation (KIC) has mapped out a plan to increase its stewardship activities after the sovereign wealth fund started actively using its shareholder voting rights with regards to portfolio companies in 2023.
“As a long-term investor, KIC prioritises enhancing the long-term value of portfolio companies for the primary objective and success of strengthening our stewardship activities,” a KIC spokesperson told AsianInvestor.
This year marked the internal launch of a three-year roadmap for expanding direct voting and implementation of engagement activities, as described in KIC’s 2023 sustainability report, published in October. One major focus area will be to boost and promote climate efforts throughout the investment portfolio.
“KIC is committed to enhancing sustainability in global business, thus creating long-term value of ESG investments. To do so, KIC is collaborating with global institutional investors to raise collective voices to encourage better ESG practices and contribute to effective net-zero transition,” the spokesperson said, referring to environmental, social and corporate governance standards.
As of August 31, 2023, KIC’s total assets were valued at $181.4 billion.
This year is the first in which KIC has been directly enhancing corporate value through shareholder rights for major investment companies. The targets for KIC's direct exercising of voting rights are selected based on a comprehensive review of the holding size, its proportion within the portfolio, and the need for improvement in ESG practices.
The KIC spokesperson said the general focus had been on ESG factors and initiatives to combat climate change.
Some of the first companies in which the sovereign wealth fund took action included Facebook parent company Meta Platforms Inc., ExxonMobil Corp., Thermo Fisher Scientific Inc., TotalEnergies SE and Glencore Plc.
In total, KIC exercised its voting rights at 3,648 shareholder meetings held from July 2022 to June 2023. Its opposition rate to management proposals was 16.54%, and its supporting rate for shareholder proposals was 66.6%, according to the sustainability report.
In February 2023, KIC selected a new stewardship provider to reflect recent developments in the shareholder rights-exercise environment. For indirect investments, KIC exercises voting rights through an external manager.
The spokesperson declined to comment on the names of the external hires. However, the expanding stewardship plan is likely to mean the need for additional capabilities.
“As to staffing plan, KIC has been effectively working with external stewardship providers and a new hire can be considered but nothing has been determined at present,” the spokesperson said.
KIC has been employing a global stewardship provider since December 2019 to enhance its expertise in voting rights for its direct investment portfolio and to align with international best practices.