世界银行-泰国政府养老基金的ESG整合ESG Integration at the Government Pension Fund of Thailand

PublicDisclosureAuthorizedPublicDisclosureAuthorizedPublicDisclosureAuthorizedPublicDisclosureAuthorized

FINANCE

FINANCE

EQUITABLEGROWTH,FINANCE&INSTITUTIONSINSIGHT

ESGIntegrationatthe

GovernmentPensionFund

ofThailand

September2023

©2023TheWorldBank

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Internet:

Somerightsreserved.

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Contents

ExecutiveSummary

2

1.SeniorLeadershipStatement

5

2.AboutthisReport

7

3.GovernmentPensionFundofThailand(GPF)

9

GPF’sInvestmentPhilosophy

10

GovernanceofResponsibleInvestment

10

OverviewofESGIntegrationApproach

12

4.GPF-ESGWeightandScore:AssetValuationMethodology©

15

5.AssetClassApplication:ListedEquities

19

6.AssetClassApplication:FixedIncome

23

7.

AssetC

lassApplication:ExternalManagers

27

8.LookingForward

31

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND1

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ExecutiveSummary

Withassetsundermanagementofover1.2trillionbaht,theGovernmentPensionFundofThailand(GPF)aimstobetheleaderinESGinvestingandinitiativesinthecountryandglobally.Asauniversalowner,andsignatorytotheUNPrinciplesofResponsibleInvestment,wehaveawiderresponsibilitytosupportglobalactiononsustainabledevelopment,andtoensurethatenvironmental,social,andgovernance(ESG)issuesareproperlyintegratedintoallofourinvestmentdecisions.

FIGURE1:GPF’sPortfolioComposition(asatSeptember2022)

1%1%

22%

29%

13%

5%

4%

2%

1%

ThaicorporateESGbonds

Thaicorporatebonds

Foreigncorporatebonds

Thaiequity(internal)

Thaiequity(external)

Foreignequity

Commodities

GovernmentESGbonds

Safetyassets

PrivateequityInfrastructure

Realestate

4%

9%

9%

2ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND

ThisreportpresentsourpracticalexperiencesofintegratingESGconsiderationsintotheinvestmentprocess.

ThecoreofourapproachistheGPF-ESGWeightandScore:AssetValuationMethodology©.Forpassiveequityinvestments,afour-stepprocessisappliedtocustomizeMSCIESGdatausinglocaldatasourcesandknowledgetobetterreflectthelocalcontext.Inparticular,webelievethatweneedtoplacegreateremphasisoncorporategovernancefactorsthaninMSCI’sglobalapproach).Foractivelymanagedequities,weapplynegativescreensandweusethetheGPF-ESGWeightandScore:AssetValuationMethodology©toadjusttheweightedaveragecostofcapitalandtherebystocktargetprices.

ESGfactorsarealsoincludedinourdecisionsoninitialpublicofferings(IPOs)andinourexternalmanagerselection,appointmentandmonitoringprocesses.

Infixedincome,inordertoselecthigh-qualitycompaniesandreducetheriskofdefault,GPFconductsacomprehensivecreditanalysisofdebtissueswithESGfactorsforminganintegralpartoftheassessment.TheGPFCreditScoreisa

combinationofaCoreCreditScore(65%)andModifiers(35%).Ourcreditresearchanalystsdetermineacompany’sCreditScorebasedonseveralfactors,includingESGperformance.WhileGPFdoesnotcurrentlyanalyseESGissuesforitssovereignbondholdings,wedoinvestinSovereignGreen,Social,andSustainability(GSS)bondswhichcontributetoESGoutcomes.

Weareproudofwhatwehaveachievedtodatebutthereismorethatweneedtodointermsofourprocesses,ourreportingandourperformance.WerecognisethatthelandscapeofresponsibleinvestmentischangingBuildingonourworktodate,areasforfurtheractioncouldinclude:

zImprovedreporting–includingonclimate-relatedexposures.

zFullincorporationofESGfactorsintoacrossallassetclasses.

zDevelopingandimplementinganetzerostrategy.

zContinuingtoworkwithourindustrypeerstodrivehigherstandardsofresponsibleinvestmentinThailand,andacrosstheAsianmarkets.

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND3

1.

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SeniorLeadershipStatement

Withassetsundermanagementofover1.2trillionbaht(approximatelyUSD34billion)investedacrosstheglobe,theGovernmentPensionFundofThailand(GPF)isfullyawareofitsroleasauniversalowner.Ourdutiesarenotdefinednarrowlyintermsofmaximizinginvestmentreturnsandpreservingthevalueofpensionassets.Wehaveawiderresponsibilitytosupportglobalactiononsustainabledevelopment,andtoensurethatenvironmental,social,andgovernance(ESG)issuesareproperlyintegratedintoallofourinvestmentdecisionsandintothedecisionsofthecompaniesandotherentitiesthatweinvestin.ItisourbeliefthatgoodmanagementofESGissuesgoeshandinhandwithourfiduciaryduty.IfourinvesteecompaniesmanageESGissueseffectively,theirfinancialperformanceisalsolikelytoimprove.

In2018,wesetourvisiontobecometheleaderinESGinvestingandinitiativesinThailand.

Sincethen,wehaveadoptedtheESGintegrationframeworkoftheUNPrinciplesofResponsibleInvestment(PRI),OECD’sduediligenceguidanceforresponsiblebusinessconduct,andtheUnitedNationsGuidingPrinciples(UNGPs)onBusinessandHumanRights.ESGfactorshavebeenfullyintegratedintoGPF’sinvestmentprocessfromresearchtodecision-making,withtheGPFESGscore,whichwefirstdescribedina

report

withtheWorldBankin2020,servingasthecornerstoneofourintegrationprocess.

DrSrikanyaYathip

SecretaryGeneral

ThisreportpresentsourpracticalexperiencesofintegratingESGconsiderationsintoourinvestmentprocesses.ItextendsthepreviousreportbyprovidinggreaterdetailonhowweaddressESGissuesinfixedincomeandonhowweworkwithourinvestmentmanagersonESGissues.Asweseethisasadynamicandevolvingjourney,wehavenotedareasforfurtherresearchandpotentialincorporationintoourprocessesinfuture.AsaPRISignatory,Ihopethatthereportwillhelppromotewideracceptanceofresponsibleinvestingwithintheindustry,andinspireotherinvestorstojoinusonthejourneytocreatingamoresustainablefuture.

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND5

2.

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AboutthisReport

ThisreportdescribestheESGintegrationpracticesatGPFasapracticalexampleofhowapensionfundcanintegrateESGconsiderationsintoitsinvestmentpracticesandprocesses.ThereportfocusesontheincorporationofESGissuesintoourinvestmentanalysisanddecision-makingprocess.OtherelementsofresponsibleinvestingsuchasactiveownershipandESGdisclosurepracticeswhilstalsokeytoGPF’soverallapproach,arenotdiscussedingreatdetailinthisreport.Thereportisaproductoftechnicalco-operationbetweenteamsfromGPFandtheWorldBank.1

ThereportstartsbyprovidingsomebackgroundinformationonGPF,includingitsinvestmentphilosophyandanoverviewofESGinvestmentphilosophybeforedetailingtheGPFESGScoremethodology.ItthendescribeshowtheGPFESGScoremethodologyisappliedtoequityandfixed-incomeinvestments,followedbyanoverviewofhowGPFensuresthatESGconsiderationsareintegratedintotheselection,appointmentandmonitoringofexternalmanagers.ItconcludeswithsomereflectionsonthelandscapeofresponsibleinvestmentandidentifiesareaswhereGPFexpectstoimproveitsinvestmentprocessinthecomingyears.

1TheWorldBankinputwascoordinatedwithandprovidedbyCronosSustainabilityconsultants.

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND7

3.

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GovernmentPensionFund

ofThailand(GPF)

GovernmentPensionFundAct1996forgovernmentemployees(themembers)withtheobjectivesofpromotingmembers’savingsandofprovidingwelfareandotherbenefitstomembersuponretirement.TheFundhelpsitsmembersgrowtheirsavingsforretirementbyinvestingcapitalforreturnsundertheacceptablerisklevel.Currently,ithas1.2millionmembersand1.2trillionbaht(approximatelyUSD34billion)inassetsundermanagement.

FIGURE2:GPF’sAssetUnderManagementandnumberofmembersbetween2018and2022

2018

2019

2020

2021

2022

NumberofMembers

1,056,825

1,084,772

1,147,656

1,158,825

1,192,093

AssetUnderManagement(millionbaht)

881,022

952,128

1,036,939

1,132,074

1,193,360

1,200,000

1,000,000

600,000

800,000

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND9

GOVERNMENTPENSIONFUND

Vision:Tobecomea‘ThaiPensionFundwithWorld-ClassStandard’

Mission:

zToprovideassurancetogovernmentemployeesregardingpaymentofgratuityandpensionuponterminationoftheirofficialservice.

zToencourageregularsavingsamongmembers.

zToprovidewelfareprogramsandotherbenefitstomembers.

GPF’SINVESTMENTPHILOSOPHY

TheFundmanagesmembers’savingswithprudenceanddiligenceasprescribedbythe

lawsandpolicies

ofThailand.Itprioritisesdiversificationtomaintaintheoptimalbalancebetweenpreservationofcapitalandgrowthofreturnwithinacceptableriskparameters.

Asamajorlong-terminstitutionalinvestor,GPFrecognizestheimportanceofsustainability.Webelieveinsustainableinvestmentandaimtobecomeasustainablepensionfundbringingboth‘sustainableyetstablefinancialreturns’tomembersand‘socialreturns’tosocietyandtotheglobalcommunity.

GOVERNANCEOFRESPONSIBLEINVESTMENT

Inlate2021,theGPFBoardappointedanESG/SDGsSubcommittee.TheSubcommitteehasanoversightroleontheimplementationofGPF’sESGintegrationpracticesandensuringthatthesepracticesarealignedwiththeFund’sambition.TheSubcommitteeisalsoresponsiblefordefiningESGstrategy,settinggoalsandtargets,andrevisionofpoliciesandregulations.

TheESG/SDGsSubcommittee’srolescomplementthoseoftheCorporateGovernanceSubcommitteewhichprovidesoversightofGPF’scorporategovernance.ThesetwoSubcommittee’salongwiththeRiskManagementandAuditSubcommittees,provideGPF’slinesofdefenceagainstESG-relatedrisks.

TheGPFSustainableInvestingDevelopmentDepartment

isresponsibleforformulatingandexecutingESGstrategiesandinitiativescommensuratewithGPF’saspirationtobealeaderinESGinvesting.

GPF’sactionsareguidedbyitslegalobligationsundertheGovernmentPensionFundAct1996andbytheexternalcommitmentsithasmade,inparticulartothePrinciplesforResponsibleInvestmentandtotheSEC’sInvestmentGovernancePrinciples(ICode).

10ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND

AsaSignatorytothePrinciplesforResponsibleInvestment(PRI),GPFcommitstothefollowingsixkeyprinciples.

Principle1:IncorporateESGissuesintoinvestmentanalysisanddecision-makingprocesses.

Principle2:BeactiveownersandincorporateESGissuesintoourownershippoliciesandpractices.

Principle3:SeekappropriatedisclosureonESGissuesbytheentitiesinwhichweinvest.

Principle4:PromoteacceptanceandimplementationofthePrincipleswithintheinvestmentindustry.

Principle5:WorktogethertoenhanceoureffectivenessinimplementingthePrinciples.

Principle6:ReportonouractivitiesandprogresstowardimplementingthePrinciples.

UndertheICode,subjecttotheneedtomeetitsfiduciaryresponsibilities,GPF’srolesanddutiesareasfollows.

Code1:Provideaclearwritteninvestmentgovernancepolicy.

Code2:Ensureadequatepreventionofconflictsofinterestinthecustomers’bestinterests.

Code3:Createisaprocessformakingdecisionsandfollowingupcloselyandactivelywiththecompaniesinvested,withissuesofstrategy,goodcorporategovernance,andsocialandenvironmentalresponsibilityaspartofthedecision-makingandfollow-up.

Code4:IncreasethelevelofmonitoringofthecompaniesinvestedwhereCode3provesinsufficient.

Code5:Providedisclosureofvotingpolicyandvotingresultstocustomers.

Code6:CollaboratewithotherinvestorsasappropriatetoensureeffectiveimplementationofCode1.

Code7:Discloseinvestmentgovernancepolicyandcompliancewithinvestmentgovernanceprinciples.

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND11

OVERVIEWOFESGINTEGRATIONAPPROACH

GPFbelievesinsustainabilityandaimstobecomeasustainablepensionfund,bringingboth‘sustainableyetstablefinancialreturns’tomembersand‘socialreturns’tosocietyandtotheglobalcommunity.Aspartofthisprocess,GPFhasestablishedaninvestmentframeworkthatenablesit,inlinewithitsfiduciarydutiesanditssocialresponsibilities,toinvestwithinanESGframeworkthathasahighpotentialtodeliverbothsocialandinvestmentreturns,withoutcompromisingeitheroftheseobjectives.

ESGintegrationinGPFinvestmentsoccursthroughacombinationofapproachesasillustratedinFigure1below,whichshowsourportfoliocompositionbyassetclassandbyESGapproach.Overall,abouttwo-thirdsofourholdingsarefullyESG-integrated.Therest,comprisingprimarilyofsafetyassets(themajorityofwhichareThaigovernmentandBankofThailandbondsandbills),servesthefund’smainobjectiveofcapitalpreservation.

FIGURE3:GPF’sPortfolioComposition(asatSeptember2022)

1%1%

22%

29%

13%

5%

4%

2%

1%

ThaicorporateESGbonds

Thaicorporatebonds

Foreigncorporatebonds

Thaiequity(internal)

Thaiequity(external)

Foreignequity

Commodities

GovernmentESGbonds

Safetyassets

PrivateequityInfrastructure

Realestate

4%

9%

9%

12ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND13

Fordomesticequity,bonds,andotherholdingsthatwemanagein-house,ESGfactorsaretakenintoconsiderationwhenanalysingandmakinginvestmentdecisions,primarilyutilisingthemethodologydescribedinSection4butalsothroughactiveownershipwhichplaysakeyroleinGPF’sESGinvestmentstrategyforinternallyandexternallymanagedassets;anoverviewofourapproachtoactiveownershipisprovidedinSection5belowandamoredetailedaccountispresentedinour

ESGReport.

Inaddition,wehaveanegativescreeningprocesswhichscreensoutcompaniesthatfailtomeetourscreeningcriteriaorthecriteriasetoutinour

NegativeListGuidelines

(theseprohibitGPFfromfurtherinvestingincompaniesthatviolateSecuritiesandExchangeActand/orcauseseriousnegativeESGimpact).

Forexternallymanagedassets,weincorporateESGintoourexternalmanagerselection,appointment,andmonitoringprocesses.AnESGclauserequiresexternalfundmanagerstoincorporateESGintothemandatesofourstandardcontract.GPFregularlyengagesinadialoguewithexternalfundmanagerstoemphasizetheimportanceofresponsibleinvestmentandtobeinformedofthemanagers’operationalapproachestoESG.TheseprocessesaredescribedinmoredetailinSection7below.

4.

>>>

GPF-ESGWeightandScore:

AssetValuationMethodology©

Thescoringmethodology,aswellasthecorrespondingapplicationinassetvaluation,hasbeenshapedbyconsultationswiththeOECDandwithmajorpensionfundssuchasPGGM,andrefinedbasedonthediscussionswithWorldBankteamwhenwepublishedourfirst

report

describingthemethodologyin2020

GPF’sGPF-ESGWeightandScore:AssetValuationMethodology©hasbeeninplacesince2018.ThemethodologyisacustomizedmethodologythatusesMSCIESGdataasastartingpointfordevelopingGPF-specificindustryESGweightingsandcompanyESGscores(whichwerefertoastheGPF-ESGWeightandScore).WhileMSCIdataofferstheadvantageofallowingglobalcomparisonsbetweencompanies,itsuffersfromthreelimitationsintheThaicontext.First,MSCI’sESGdataarecalculatedonaglobalbasis,andifwearetorelysolelyonMSCI’sweightsandscores,wewouldfindthatfewThaicompanieswouldhaveESGscorescomparabletotheirglobalpeers.Second,MSCI’sdatadonotaccountforthedatathatareavailablefromlocalsources.Third,forGPFandfortheThaimarketasawhole,governancefactorsareofhigherconcern,andwewanttoassignagreaterweighttothesefactorsinourinvestmentprocess.

Wehavethereforedevelopedafour-stepprocesstomodifyMSCI’sESGdataandscoringprocesstointegrateThai-specificdatasources,andtoreflecttheconcernsofThaiinvestors.

STEP1:MULTIPLYMSCI’SG-WEIGHTBY1.3

ThisconversionfactorisappliedforgovernancefactorstoensurethattheG-Weightwillnotbelessthan35%(around1/3ofthetotalESG-Weight).Wealsoapplyacapof65%toensurethattheG-WeightdoesnotovershadowthatofE&Sissues.TheresultisthatthefinalG-Weightforallcompaniesisinthe35-65%range,toreflectthesignificanceofgovernanceinThaimarket,yetleavingenoughroomforE&Sissues.

STEP2:ADJUSTTHEE-WEIGHTANDTHES-WEIGHT

TheE-WeightandS-Weighttakeaccountof:(a)thetotalremainingweightafterdeductingthenewlycalculatedG-Weight,and(b)theoriginalMSCIE-WeightsandS-Weightsforthecompanyinquestion.ThefinaldecisiononE-andS-WeightsismadebyGPF’sInvestmentteamandSustainableInvestmentteam,takingaccountofthenewG-weights,theoriginalE-andS-weightsandtheirownviewsofandexperiencewiththesectorinquestion.

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND15

SScore

SScore

10.00

8.00

6.00

4.00

2.00

00

STEP3:E-SCOREANDS-SCORE

CALCULATIONS

GPFalsodevelopsproprietaryESGscoresforThaicompanies,whichbuildonMSCIdatabutalsoaccountfortheavailable,standardizedThailocalratingdataandforGPF’sexpertviewsontheESGperformanceofThaicompanies.

IncalculatingE-ScoresandS-ScoresforThaicompanies,GPF’sviewisthatMSCI’srawE-andS-Scorescannotbeuseddirectlyasthesearecalculatedsothatcompaniescanbecomparedwithaglobaluniverse.ToadjustthesescoresfortheThaiuniverse,GPFfirstre-framesMSCI’s0.0-10.0scaleto4.0-10.0(i.e.,noThaicompanywillhaveanE-oranS-Scoreoflessthan4sincethenewminimumscorestartsfrom4.0).

ToassigntheE-andS-scoresforallThaicompanies,GPFthensearchesfortheThaicompanythatachievesthelowestE-ScoreandtheThaicompanythatachievesthelowestS-Score.ThesetwocompaniesarerespectivelyassignedanE-Scoreof4.0andanS-Scoreof4.0.TheremainingcompaniesthenreceiveupdatedE-andS-Scores,usingtheMSCIE-andS-Scoresinlinewiththefollowingformula:

[(MSCIE-score–MSCIoldminimum)/OldRange/NewRange]+NewMinimum

Figure2presentsafullcomparisonbetweenMSCIandGPF’sEandS-Scores.Aswouldbeexpectedtheeffect,inbothcasesistomovethescoresupandtotheright.Whiletheeffectistocompress(orreduce)thedifferenceinscoresbetweendifferentcompanies,therelativeperformanceofindividualcompaniesisunchanged(i.e.theThaileadersremainleadersandpoorerperformersremainpoorerperformers).

FIGURE4:ComparingMSCIandGPF’sE-ScoresandS-Scores

MSCI’sEScoresandSScores

10.00

8.00

6.00

4.00

2.00

00

002.004.006.008.0010.00

EScore

GPF’sEScoresandSScores

002.004.006.008.0010.00

EScore

16ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND

STEP4:G-SCORECALCULATION

IncalculatingG-ScoreforThaicompanies,GPFincorporates:

zTheStarRatingfromThaiIOD’sCorporateGovernanceRating(CGRating)wherethemaximum5starsinthisratingsystemisassignedamaximumscoreof10and1-4starsarecalculatedrespectivelyand

zGPF’sowninternalanalysisongovernance-relatedissuessuchasESGinformationdisclosure,qualitativeresponsestoGPF’sengagement,boardstructure,independencyofexternalboardetc.

Theweightproportionoftheadditionaltwofactorsare10%and30%respectively,leaving60%fortheoriginalMSCI’sG-scores.

STEP5:RESULTSDISPLAY

ResearchanalystsandportfoliomanagersalikehaveaccesstoGPFESGscore.TheexampleinFigure3showstheGPFESGscoreforacompanyofinterestinconjunctionwiththesectoraveragesforpeercomparison.

FIGURE5:GPFESGScoreOutput

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND17

5.

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AssetClassApplication:ListedEquities

Forequityinvesting,GPFfocusesoncompanieswithstrongfundamentals.Tothatend,GPFintegratesESGcriteriaintoitsstockanalysisanddecision-makingprocesses.

Figure4providesanoverviewofGPF’sframeworkforstockanalysis,highlightingwhereESGimpactassessmentisintegratedintotheinvestmentprocesstoformthefinalrecommendation(‘thetargetprice’).Insummary,GPF’sstockresearchanalystsconduct‘fundamentalanalysis’ontheoutlookfortheinvesteecompanyitself,alongwiththeoutlookforeconomyasawholeandforthespecificindustrysectorinquestion.TheGPFESGscoreisanintegralpartofthe‘ESGimpactassessment’whichaimstodetermineimpacttotheoperatingperformanceaswellasthefairvalueofthestock.Thiscalculationoffairvalueisusedtoinformtheanalyst’s‘targetprice’recommendationwhichisthencommunicatedtoportfoliomanagers.

FIGURE6:GPF’sFrameworkforStockAnalysis&Valuation

ESGScore

ESGImpactAssessment

Impactto

Performance

FinalTargetPrice

&

ImpacttoValuation

Marcro

EconomicAnalysis

FundamentalAnalysis

CompanyAnalysis

IndustryAnalysis

ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND19

TheGPFESGscoreisintegratedintothetargetpriceby

modifyingthediscountrateinlinewiththerulessetoutin

Table1below.

TABLE1:RulesforIncorporatingESGScoresintoAssetValuations

EXECUTION

ApplyaLOWERdiscountrateof25bpsLESS

Rule2<6Moderate–HighESGRiskApplyaHIGHERdiscountrateof25bpsMORE

AcceptableESGRisk

GPFESGSCORE

>8

DEFINITION

LowESGRisk

>6but<8

Noaction

Rule3

Rule1

Usingtheserules,theweightedaveragecostofcapitalmaybeloweredby25basispoints,resultingina4%highertargetprice.ThehigherrecommendedpricereflectsourbeliefthatacompanywithexcellentESGperformancehasasignificantlygreaterupsidepotential.Sincewehaveimplementedthismethodology6companiesintheinvestibleuniverse(outofatotalofcirca160companies)havemetthecriterionforthe25bpsdiscountrate.

GPF’sequityresearchanalystsalsoproduceanESGreportforeachinvesteecompanybasedondatafromvarioussources.ThereportcomprisestheGPFESGscorealongwithinformationonotherexternalratingsandonmaterialrisksandopportunitiesforthecompany.Theanalystscanalsoprovidetheirviewsonmaterialissuesthatmightposearisktothecompany’sperformance.AnexampleofthesereportsisshowninFigure5.

FIGURE7:ASampleESGReportforCompanyX

20ESGINTEGRATIONATTHEGOVERNMENTPENSIONFUNDOFTHAILAND

IPOS

ESGconsiderationsareincludedininitialpublicofferings(IPOs)investmentdecisionmaking.However,thedatathatareavailableatthetimeofIPOsaregenerallymuchmorelimitedthanwhenacompanyhaslistedandisbeingresearchedbyMSCIandotherdataproviders.

Forcompaniesthatarecomingtomarketforthefirsttime,ourprocessbeginswithaproposaltotheInvestmentSteeringGroup(ISG)toaddanewstocktotheinvestibleuniverse.Ourequityresearchanalystspresenttheirassessmentofthecompany,coveringbothfundamentalfactorsaswellas

theirassessmentofmaterialESGfactorsand,totheextentpossible,thecompany’smanagementofESGissues.TheESGImpactAssessmentanalysisisoftenmorequalitativeratherthanquantitative,duetotheabsenceofESGscoreandratingdata.UponISG’sapprovalportfoliomanagerscanparticipateintheIPO.

Onceastockisincludedintheinvestibleuniverseandhasbeenlisted,theinvestmentprocessfollowsthatoflistedequity,andaformalESGreportwillbeproducedbyresearchanalystswithinareasonabletimeperiod.

ACTIVEOWNERSHIP

ApartfromintegratingESGintoourinvestmentprocess,GPFbelievesthatactiveownershipisapowerfulwaytoprotectlong-termshareholdervalueandtoencouragebeneficialoutcomestocompanies,investors,andthesocietyatlarge.WeperformourrolesbyattendingAnnualGeneralMeetings,votingonourholdings,an