KB Asset Management's ESG: "45% Oppose Stock Options Without Performance"

[Asia Economy Reporter Hwang Junho] KB Asset Management has strengthened its ESG (Environmental, Social Responsibility, Governance) activities last year.

KB Asset Management announced on the 14th that as of the end of last year, its ESG-related assets under management totaled 3.7 trillion KRW, an increase of about 1.3 trillion KRW over one year. By sector, alternative investments were the largest at 2.2 trillion KRW, followed by domestic equity at 960 billion KRW, overseas equity at 190 billion KRW, and bonds at 270 billion KRW.

In the Environmental (E) sector, the scale of infrastructure funds related to environment and renewable energy exceeded 2 trillion KRW. In particular, solar power funds have grown to over 1 trillion KRW, with 800 billion KRW domestically and 300 billion KRW overseas. In securities, KB launched Korea's first hydrogen-related funds, 'KBSTAR Fn Hydrogen Economy Theme ETF' and 'KB Global Hydrogen Economy Fund.' The 'KBSTAR Fn Hydrogen Economy Theme ETF' is the largest hydrogen-related product in Korea with a scale of 300 billion KRW. On the 15th, the 'KBSTAR Global Hydrogen Economy Indxx ETF,' which invests in the global market, will also be listed.

In the Social Responsibility (S) sector, the 'KBSTAR ESG Social Responsibility Investment ETF' holds the largest scale among equity funds. The 'KB Leaders ESG Specialized Private Equity Fund' is also the largest among bond funds.

In the Governance (G) sector, shareholder engagement activities are actively conducted. They propose shareholder returns through dividend expansion policies and actively demand governance improvements. According to last year's Stewardship Activity Report, among various shareholder meeting agenda items, the highest opposition rate of 45.5% was against stock option grants not linked to business performance. High opposition rates were also shown for changes in executive retirement pay regulations (23.1%) and amendments to the articles of incorporation (13.5%). This proactive approach contrasts with many asset managers who have been criticized for passive voting rights exercises, often acting as mere rubber stamps.

KB Asset Management’s Head Kang Chanhee explained, "Although companies holding more than 5% of total assets or over 10 billion KRW in a single fund are subject to mandatory disclosure of voting rights, our company actively exercises voting rights by expanding the scope of shareholder rights when deemed necessary for investor interests."

This month, KB Asset Management established new ESG-related management regulations and formulated the 'ESG Management Principles.' They enacted the 'Responsible Investment Principles,' which consider ESG factors in investment decision-making, and the 'Stewardship Activity Guidelines' to fulfill stewardship responsibilities.

This content was produced with the assistance of AI translation services.