Kim So-young, vice chair of the Financial Services Commission, said, "Our country should also begin discussions to expand the scope of trustee responsibilities and target assets of the stewardship code, reflecting sustainability factors, considering cases of major countries."
Vice Chair Kim attended the "Stewardship Code Development Direction Seminar" held at the Bank Hall in Jung-gu, Seoul, on the 5th and stated, "It is necessary to consider whether the current stewardship code, which has maintained its form since its establishment in 2016, is suitable for the changed capital market reality."
The stewardship code refers to the "guidelines for action" that encourage institutional investors to actively participate in the management activities of the corporations they invest in, like a steward managing the owner's assets. Since the establishment of the Korean version of the stewardship code, the "Principles for the Trustee Responsibilities of Institutional Investors," in December 2016, 239 institutional investors, including the four major pension funds (National Pension Service, Government Employees Pension Service, Private School Teachers Pension, Korea Post) and 133 asset management companies, have joined.
Vice Chair Kim noted that it is time for institutional investors to not only join the stewardship code but also to regularly check and announce compliance. Major countries such as the United Kingdom and Japan are implementing or promoting measures to evaluate compliance with institutional investors' stewardship codes and to make the results public.
Vice Chair Kim said that to ensure the smooth establishment of compliance checks, it would be advisable to start with participating institutions that are ready and to gradually expand the scope by discovering best practices.
Vice Chair Kim also urged for active participation from institutional investors so that the stewardship code could lead to improvements in the capital market's structure. He stated, "Last year, the stewardship code guidelines were revised to provide a basis for institutional investors to assess the long-term corporate value strategies of the companies they invest in," adding, "It is expected that by facilitating communication with the companies and evaluating and investing more closely in their corporate value, a culture of corporate value enhancement will spread."
At the seminar, hosted by the Korea ESG Standards Institute and sponsored by the Financial Services Commission, the current status of stewardship code revisions in major countries and measures to enhance compliance with the stewardship code in Korea were shared.
During the subsequent panel discussion, opinions emerged that participation in the stewardship code by other public pension funds besides the four major pension funds is necessary. There were also suggestions that a professional independent committee should operate transparently based on specific criteria to check compliance with the stewardship code.
The Financial Services Commission and the Korea ESG Standards Institute decided to form a working consultation body in relation to the opinions expressed at the seminar and to gather feedback through surveys, with plans to establish a development plan for the stewardship code within this year.