• Gustavo Bernal Torres

The World’s Largest Pension Fund Has Cooled on ESG. Should You?

If a pioneer investor in ESG is getting cold feet, should you?

  • In July 2017, Japan’s $1.6 trillion Government Pension Investment Fund — the world’s largest — blazed a trail by putting 1 trillion yen ($9.1 billion) into three indices that track Japanese stocks that put emphasis on environmental, social and corporate governance issues. GPIF then plowed 1.2 trillion yen into two carbon-efficient indices in 2018, and another 1.3 trillion yen into two ESG foreign equity indices last December.

  • At issue is poor performance. For instance, one of GPIF’s earliest ESG picks was a thematic social index, which invests in domestic companies that hire and promote women. The MSCI Japan Empowering Women Index, the so-called Win index, has fared poorly against the benchmark Topix Index. Performance is all-important to GPIF: the fund is required to pursue a real investment return of 1.7% to support an aging Japan.


Source: https://www.bloomberg.com/opinion/articles/2021-05-05/the-world-s-largest-pension-fund-has-cooled-on-esg-should-you

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