Human Rights Commission Recommends Strengthening 'Human Rights Indicators' in National Pension Responsible Investment

"Human Rights Are Key to Corporate Sustainability and Investment Performance"

The National Human Rights Commission of Korea has recommended that human rights considerations be significantly strengthened in the management of the National Pension Fund, which is valued at 1,400 trillion won. The commission called for improvements across the board, including ESG (Environmental, Social, and Governance) evaluation, the exercise of shareholder rights, and the overall decision-making structure.

On the 13th, the National Human Rights Commission announced that it had recommended to the Ministry of Health and Welfare to strengthen human rights elements throughout the responsible investment policy of the National Pension Service.

Seoul, Seodaemun-gu, National Pension Service Seoul Northern Regional Office. Yonhap News Agency

The commission determined that the current ESG integration strategy is overly focused on performance-based indicators and does not sufficiently reflect corporate systems for preventing and managing human rights risks. Therefore, it proposed the introduction of procedure-based indicators, such as the implementation of human rights due diligence, and an increase in the weighting of human rights criteria. In addition, the commission believes that ESG evaluations, which are currently applied only to domestic direct investments, should be expanded to include entrusted management and overseas investments.

The commission also stated that human rights standards should be clearly reflected in the exercise of shareholder rights and the investment restriction system. Companies with concerns about human rights violations should be included as targets for management and required to make improvements. Furthermore, if there is no change after the “engagement with companies” stage, the process should lead to investment exclusion. The commission also noted the need to supplement human rights expertise in the responsible investment decision-making process. It recommended amending relevant laws to include human rights and environmental experts on the National Pension Fund Management Committee, which is currently composed mainly of finance and economics experts.

A representative of the commission stated, “Human rights issues are a key factor that affects both corporate sustainability and investment performance,” and added, “As a long-term investor, it is necessary for the National Pension Service to systematically incorporate human rights standards in order to fulfill responsible investment.”

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