Key Takeaways
- • Taiwan's Bureau of Labor Funds, the country's largest pension fund, is set to issue a $2.3 billion climate change-focused stock mandate that a top official described as Asia's first of its kind, according to Reuters.
- • The open-tender bidding process for asset managers will commence in the first quarter of 2022, per deputy director general Liu Liju.
- • The fund manages roughly Taiwanese $5.5 trillion ($199 billion), with about half invested offshore; BlackRock, Fidelity Investments and PIMCO currently manage portions of the assets.
- • Selected managers are expected to deliver an additional 0.5% annualised return above a climate index, with MSCI ACWI Climate Paris Aligned Index likely used as the benchmark.
- • All portfolio companies chosen by the managers must be index constituents.
Summary
Taiwan's Bureau of Labor Funds, the largest pension fund in the country, is preparing to issue a climate change-focused stock mandate worth $2.3 billion, which a senior official said would be the first of its kind in Asia, according to Reuters. Liu Liju, deputy director general of the fund, told Reuters in an interview that the open-tender process for asset managers will begin in the first quarter of 2022. The move comes amid mounting pressure on the global financial sector to support green investing.
The fund holds assets of Taiwanese $5.5 trillion ($199 billion), roughly half of which is invested in offshore markets. Global asset managers including BlackRock Inc, Fidelity Investments and PIMCO currently manage portions of those assets. Liu said selected managers under the new mandate are expected to deliver an additional 0.5% annualised return on top of the performance of a climate index, and that the fund will likely use the MSCI ACWI Climate Paris Aligned Index as its benchmark. All portfolio companies chosen by the managers must be index constituents.
Liu framed the initiative as a response to climate risk, stating, "Climate change is an ongoing process no-one can ignore," and adding, "We have seen many making commitments by words, we are putting money where our mouth is."
The mandate comes as other large pension investors pursue Paris Agreement alignment. Reuters noted that Japan's Government Pension Investment Fund allocated 1.2 trillion yen ($10 billion) in 2018 to companies covered by two S&P carbon-efficient indices, but has not yet used external managers for a climate mandate. Britain's BT Pension Scheme, with 55 billion pounds ($71 billion) in assets, announced in October 2021 that all investment mandates it awards would over time be aligned with the Paris goals.
The fund holds assets of Taiwanese $5.5 trillion ($199 billion), roughly half of which is invested in offshore markets. Global asset managers including BlackRock Inc, Fidelity Investments and PIMCO currently manage portions of those assets. Liu said selected managers under the new mandate are expected to deliver an additional 0.5% annualised return on top of the performance of a climate index, and that the fund will likely use the MSCI ACWI Climate Paris Aligned Index as its benchmark. All portfolio companies chosen by the managers must be index constituents.
Liu framed the initiative as a response to climate risk, stating, "Climate change is an ongoing process no-one can ignore," and adding, "We have seen many making commitments by words, we are putting money where our mouth is."
The mandate comes as other large pension investors pursue Paris Agreement alignment. Reuters noted that Japan's Government Pension Investment Fund allocated 1.2 trillion yen ($10 billion) in 2018 to companies covered by two S&P carbon-efficient indices, but has not yet used external managers for a climate mandate. Britain's BT Pension Scheme, with 55 billion pounds ($71 billion) in assets, announced in October 2021 that all investment mandates it awards would over time be aligned with the Paris goals.
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