Taiwan Pension Fund Assigns HSBC, Morgan Stanley to Manage Asia’s First Paris-Aligned Pension Fund

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Taiwan Pension Fund Assigns HSBC, Morgan Stanley to Manage Asia’s First Paris-Aligned Pension Fund

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Taiwan’s largest pension manager, the Bureau of Labor Funds (BLF), has commissioned the fund management arms of HSBC [HSBC:US] and Morgan Stanley [MS:US] to participate in running the first pension fund in Asia that is benchmarked with Paris Agreement-aligned climate indexes, as reported by Reuters on June 24. Other fund managers, namely Legal & General Investment Management, Schroder Investment Management, and Wellington Management, also received a mandate from the BLF to manage the USD2.3bn pension fund. Each of the five fund managers will take charge of USD460m worth of assets. Fund managers are expected to undergo quarterly and annual reviews by consultants to ensure that investments are allocated to fight climate risks, according to Liu Liju, deputy director general of the BLF.

The BLF sees climate-related investments as a mainstay of asset allocation in the future. Among NTD5500bn (USD199bn) of BLF’s assets under management (AUM), investments related to environmental, social, and governance (ESG) issues have amounted to about NTD472bn (USD17.3bn), accounting for 8.7% of BLF’s total AUM. In comparison, the world’s largest pension fund, Japan’s Government Pension Investment Fund (GPIF), has allocated JPY10.9tr (USD80bn) to seven ESG indexes tracking domestic and international stocks by the end of the FY20, accounting for around 11.5% of its JPY95tr (USD698.1bn) equity allocations or 5.5% of its overall AUM of JPY199.3tr (USD1464.6bn).