Korea's National Pension Service’s (NPS) leadership is threatened as the world's third largest fund by doing the opposite of other leading funds 

March 26, 2025 (SEOUL) — South Korea’s National Pension Service (NPS), the world’s third largest pension fund with over $800 billion (KRW 1,185 trillion) in assets under management, has critical gaps in addressing climate change. While NPS designated climate change as a focus area in 2023 and introduced an engagement framework, a new report by Solutions for Our Climate (SFOC) argues that its efforts remain symbolic, lacking binding targets or concrete measures to reduce financed emissions, falling behind other leading global funds. 

NPS is a major shareholder in some of the country’s largest greenhouse gas (GHG) emitters, including Korea Electric Power Corporation (KEPCO), POSCO Holdings, and Hyundai Steel. These companies face increasing climate and financial risks due to their continued reliance on coal and carbon-intensive operations. According to the Korea Sustainability Investing Forum (KoSIF) and Who’s Good, an AI-based ESG research institute, the financed emissions from 312 companies in NPS’s portfolio—out of 1,168 domestic common stock investees that disclosed their GHG emissions—accounted for approximately 4% of the nation’s total emissions as of 2021. 

By contrast, Norway’s Government Pension Fund Global (GPFG) and the Netherlands’ Algemeen Burgerlijk Pensioenfonds (ABP), two of the world’s other leading pension funds, are actively pushing for climate action. GPFG requires all portfolio companies to set net-zero targets by 2040 and develop credible transition plans. It engages with hundreds of focus list targets in structured dialogues, escalating actions such as divestment, shareholder proposals, or board-level interventions when companies fail to comply. GPFG also transparently monitors and publishes details of its climate-related engagements. Similarly, ABP prioritizes decarbonizing high-emission industries and conducted over 230 climate-related engagements in 2023. ABP has also taken a more assertive stance by pressuring international firms, including South Korean companies such as KEPCO and Samsung Electronics, to reduce carbon emissions—demonstrating a far more proactive approach to climate risk management than NPS. 

Despite some initial steps, NPS remains significantly behind GPFG and ABP in climate engagement. It has yet to designate a single company for climate-related engagement. Under its current policy, the scope of closed-door engagement is restricted to just around three companies, significantly narrowing the reach of its stewardship efforts. Furthermore, despite the growing share of overseas assets in its portfolio, NPS’s engagement with foreign companies has been nonexistent—further limiting its ability to drive meaningful, portfolio-wide climate action. 

The report outlines key actions that NPS can take to improve its sustainability efforts. These include expanding the number of companies under climate engagement, particularly high-emitting domestic and foreign firms, strengthening transparency by publicly disclosing engagement outcomes, and aligning investment decisions with climate goals by prioritizing companies that demonstrate real progress in emissions reductions. 

Eunyoung Hwangbo, researcher from SFOC said: 

“As one of the world's three largest pension funds, NPS plays a crucial role as both a social safety net for citizens' retirement income and a major market influencer. It must not only encourage companies to strengthen their response to the climate crisis and drive sustainable growth but also enhance its own long-term profitability. It has both a responsibility and an opportunity to drive market-wide change while safeguarding long-term returns for its beneficiaries.”  

ENDS.    

Solutions for Our Climate (SFOC) is an independent nonprofit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.     

For media inquiries, please reach out to Yi Hyun Kim, Communications Officer, at yihyun.kim@forourclimate.org.