Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund with assets totalling US$1.7 trillion (approximately ¥275 trillion or RM7.2 trillion), is strengthening its commitment to environmental, social and governance (ESG) investments. This move comes as many global asset managers reduce their exposure to sustainability-focused strategies.
At the end of March, the GPIF reported ¥18.2 trillion (US$126 billion or RM532.6 billion) in assets tracking ESG indices, accounting for 14.7% of its equity portfolio. This marks an increase
from ¥17.8 trillion in ESG-linked assets recorded a year earlier, according to documents released on Friday. Despite broad market challenges, including a weakening dollar and declines in domestic asset valuations that contributed to a quarterly loss, the fund reaffirmed its ESG strategy.
Global ESG funds have faced significant outflows amid mounting investor scepticism, underwhelming performance, increasing regulatory complexity, and political pushback, particularly from the administration of former US President Donald Trump. In contrast, the GPIF—alongside Norway’s US$1.9 trillion sovereign wealth fund—remains one of the few institutional investors actively maintaining and growing its ESG positions.
The outlook for ESG investing in Japan remains positive. Bloomberg Intelligence notes that the GPIF’s sustained interest in sustainability-linked assets, combined with the Tokyo Stock Exchange’s ongoing corporate governance reforms, are expected to support ESG momentum throughout the remainder of the year.
-Bloomberg
