Assessment of the Current Status

① Limitations of the ESG integration strategy

The NPS declares 100% responsible investment in its equity portfolio. However, an ESG integration strategy based solely on ESG ratings does not produce an investment portfolio meaningfully distinguishable from market-capitalization rankings.

② Formalistic engagement and inadequate climate response

The average number of dialogues per company is only 1.88, and over the nine years since the Stewardship Code was adopted, there have been only 8 public engagements and 2 shareholder proposals. Climaterelated engagement is declining in both the number of target companies and the number of dialogues, and active measures such as public engagement or shareholder proposals on climate issues are entirely absent.

③ Responsible-investment gap in bonds and alternatives

In bonds, responsible investment has not been properly implemented, while alternative investments are effectively excluded from the scope of responsible investment under the law, resulting in a substantial gap covering roughly 15% of total fund assets.

Key Developments at the 2026 Regular AGMs

① Positive steps

The threshold for advanced disclosure of voting decisions widened from 10% to 5% shareholding ratio. Among the 268 companies that tabled treasury-stock holding/disposal plans, the NPS cast against votes at a substantial number of companies—including SK Hynix, Hyundai Motor, and KT—whose stated acquisition purpose was inconsistent with the plan. The NPS also took the unusual, pre-emptive step of publicly announcing, through an official press release, its opposition to charter amendments aimed at weakening board independence

② A limitation — opposition to LG Chem’s advisory shareholder proposal right

The NPS voted against the creation of an advisory shareholder proposal right at LG Chem—proposed by a foreign institutional investor—citing a "possible restriction on board authority." This stands in contrast to the 65 of the 66 institutional investors that disclosed their votes—all except the NPS—voting in favor, including 8 major global pension funds such as NBIM, CalPERS, and CalSTRS. Because an advisory proposal does not bind the board even if it passes, this cannot be regarded as a valid ground for opposition, and the case illustrates that the NPS remains passive in ESG engagement.

Four Recommendations for an Effective Climate Stewardship Code

① Apply responsible-investment strategies tailored to each asset type

For equities, active engagement focused on sector-specific climate risk should be central; for bonds and alternative investments, exclusion strategies targeting high-emitting businesses should be applied intensively. The current coal phase-out strategy (a 50%-of-revenue threshold, with domestic assets covered only from 2030) is excessively lax relative to international standards and requires review. The NPS should also establish a dedicated climate action plan and undertake impact investment, as CalPERS and NBIM have done.

② Strengthen the execution of engagement

Each engagement stage should be limited to at most six months, and the Guidelines should provide a basis for the Special Committee on Responsible Investment & Governance to decide directly on public engagement or shareholder proposals according to the urgency of the issue. The introduction of advisory shareholder proposal rights and “Say on Climate” should be pursued as a core campaign aimed at climateexposed companies, and stewardship-code implementation should be made a key criterion in selecting external managers.

③ Strengthen climate disclosure and stewardship reporting

The NPS sustainability report currently contains none of the core climate information—such as TCFDbased financed emissions and reduction targets. Drawing on the examples of CalPERS and CalSTRS, the NPS should regularly compile and disclose climate information on its managed assets, and should make its stewardship report more substantive by including the improvements made by companies released from priority management and the engagement records of external managers.

④ Improve governance and strengthen the Committee’s authority

The current structure, in which the Minister of Health and Welfare chairs the National Pension Fund Management Committee, makes it difficult to remain free from the influence of the incumbent government. The Special Committee on Responsible Investment & Governance should be empowered to decide not only the selection of engagement targets but also whether and how engagement is conducted, and the supporting staff and organization of the Stewardship Office should be strengthened.