Press Releases

Korea’s KRW 3 Quadrillion in Public Fund Assets
Lack Common ESG Principles

SEOUL, September 9, 2026 — The Korea Sustainability Investing Forum (KoSIF) has called for sustainability to be explicitly established as a common principle governing the management and operation of public funds under the National Finance Act, rather than leaving decisions on whether to consider environmental, social and governance (ESG) factors entirely to individual funds.

The proposal does not seek to impose uniform ESG investment standards on all public funds. Instead, it calls for establishing a minimum statutory requirement to consider ESG factors, while allowing each fund to determine the specific scope and methods of implementation according to its purpose and characteristics. KoSIF outlined these recommendations in its issue brief, “Policy Directions for Institutionalizing ESG Considerations in Public Fund Management,” released on September 9.

South Korea has 67 public funds governed by the National Finance Act, with combined assets totaling approximately KRW 3.048 quadrillion as of the end of 2024. However, only six of these funds have explicit statutory provisions requiring ESG consideration. By contrast, at least 30 funds have incorporated ESG-related provisions into their own Investment Policy Statements (IPSs). This indicates that ESG considerations are becoming more widespread in actual fund management practices, while a common statutory foundation applicable across public funds remains insufficient, exposing critical blind spots in ESG governance.

The issue brief identifies the fund-by-fund legislative approach as a key reason for these gaps. During the 21st and 22nd National Assemblies, bills seeking to introduce ESG considerations were proposed for 22 funds, excluding the National Pension Fund. However, only four legislative amendments were enacted, involving the Framework Act on Broadcasting Communications Development, the Information and Communications Technology Industry Promotion Act, the Framework Act on Science and Technology, and the Nuclear Energy Promotion Act.

To address these limitations, KoSIF recommends moving beyond the approach of amending individual fund-specific laws and instead establishing sustainability as a common principle applicable to all public funds under the National Finance Act.

Another limitation identified in the brief is that ESG considerations have largely been concentrated on financial asset investments. As public funds also allocate resources through lending, guarantees, contributions and various programs, the brief argues that sustainability principles should extend beyond specific investment activities to encompass the broader management of fund assets and operations. Rather than applying identical requirements to all funds, the scope and level of ESG consideration should reflect each fund’s statutory purpose and principal methods of operation.

KoSIF also emphasizes the need for government-wide guidance and an implementation framework to translate these principles into actual fund management practices. It proposes developing common guidelines, such as “ESG Guidelines for Public Funds” or “Sustainability Guidelines for Public Fund Management,” that take into account the characteristics and operational structures of individual funds. The brief further recommends incorporating sustainability considerations into evaluations of fund management to assess actual implementation. Such evaluations should distinguish between common minimum requirements and additional assessment criteria tailored to individual funds, rather than applying uniform indicators across the board.

Internationally, overarching laws and regulations are also used to establish common principles for responsible investment and sustainability, while individual funds translate these principles into their own investment policies. Drawing on examples from Sweden, Norway, the United Kingdom and the European Union, the brief suggests that South Korea should similarly establish common principles at a higher legislative level, while leaving the details of implementation to individual funds.

Hanjin Yu, Policy Team Lead at the Korea Sustainability Investing Forum (KoSIF), said:

“As all public funds manage assets on behalf of the public, there is a need to establish sustainability as a common principle governing their operations. In particular, sustainability considerations must extend beyond financial asset investments to encompass lending, guarantees, contributions and other fund operations. This broader approach is essential to strengthening the long-term sustainability of public funds.”