APG urges Samsung, other Korean carbon emitters to take action

Europe’s largest pension fund manager APG has urged Samsung Electronics Co. and nine other major South Korean companies to drastically cut their carbon emissions and join a global initiative to combat climate change.

In a letter sent to the Korean companies, in which the Dutch fund manager invested, APG Asset Management said transforming those companies into low carbon businesses is critical to the goal of climate crisis mitigation.

“Despite being large carbon emitters, none of these companies is in the scope of Climate Action 100+. This investor-led initiative aims to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change,” APG said in the letter on Wednesday.

APG sent the letter to 10 companies, which are Samsung, Hyundai Steel Co., SK Inc., SK Hynix Inc., LG Chem Ltd., LG Display Co., Lotte Chemical Corp., POSCO Chemical Co., LG Uplus Corp. and SK Telecom Co.

The pension fund manager is known to have made a combined 3 trillion won ($2.5 billion) in equity investment in the ten Korean companies.

On behalf of its pension fund clients, APG said it is urging the companies to work out ambitious climate and carbon reduction strategies and commitments.

The asset manager said the ten companies should evaluate their existing climate change strategies and carbon reduction targets and make sure these are “sufficiently ambitious.”

“Climate change is the single biggest challenge the world is facing,” said Park Yoo-kyung, head of Responsible Investment & Governance Asia Pacific at APG.

With about 850 trillion won in assets under management, APG is one of the world’s three largest pension management companies.

URGED TO FULLY COMMIT TO ESG STANDARDS

Samsung Electronics, with its ratio of carbon emissions to revenue at 8.7% as of 2020, is one of the largest carbon emitters in the IT industry, according to APG. The ratio compares with Apple Inc.’s 0.3%.

SK Hynix’s carbon emissions-to-revenue ratio is about three times that of Samsung, APG said.

Meanwhile, SK Group has promised to achieve carbon neutrality by 2050, but hasn’t provided any detailed plans yet, it said.

The Korean companies that received the letter from APG said they’re making strenuous efforts to cut carbon emissions and will soon reply to the Dutch investor.

Major global pension funds have been urging companies, in which they invested, to incorporate environmental, social and governance (ESG) standards into their management and address global climate challenges.

Korea's National Pension Service, the world's third-largest pension fund, said in May last year that it will exclude from its portfolio new coal-fired power development projects both at home and abroad, introducing a negative screening system for investment.

Negative screening is a practice in responsible investing to exclude or curtail investments in industries or companies with low ESG standards ratings.

APG’s largest client ABP announced in October 2021 that it will stop investing in fossil fuel producers. ABP, the Dutch civil service pension fund, hopes to focus its engagement efforts on bulk users of fossil fuels, such as utility companies and car manufacturers.

APG said its engagement with the ten large Korean companies is in line with this approach.

Write to Jun-Ho Cha at chacha@hankyung.com
In-Soo Nam edited this article.