Prestigious ESG investor in Korea

Shinhan AMC’s differentiated sustainable finance (ESG) goes beyond the mere scope of investment to spread the good influence of finance which ensures all stakeholders’ sustainability.

Sustainable finance (ESG)

Shinhan AMC practices sustainable finance to make the world a better place through
our foundational business, finance.

E
Korea’s first and largest
Launch of the Eco-friendly Transportation Public Infrastructure Citizen Fund (2003)
Launch of the Eco-friendly Transportation Fund (2019)
S
Korea’s first
Commencement of the management of SRI and ESG funds (2006)
G
Korea’s first
Delivery of the TCFD-related letter to shareholders (2020)

Our ESG Milestone

Shinhan AMC is proactively practicing socially responsible business management in line with the global trend of corporate environmental, social, and governance (ESG) activities.
For Your Children Fund (2005)
Support for education business
for children &
teenagers after creating funds
with part of the fee
Tops Beautiful SRI Fund (2006)
First in Korea to commence
the management of SRI Fund
Seoul Subway Line No.
9 Public Fund (2013)
Launch of the first
Eco-friendly Transportation
Public Infrastructure
Fund in Korea
Launch of
the Corporate
Governance Fund (2014)
Investment in companies
where the corporate
governance is expected
to improve
Introduction of
the Stewardship
Code (2017)
Introduction of
the Stewardship Code on
December 20, 2017
SGrail Fund (2019)
Launch of the largest
Eco-friendly Transportation
(GTX-A) Fund in Korea
Delivery of
the Shareholder Letter
which declared
support for TCFD (2020)
First AMC in Korea
to deliver the Shareholders
Letter related to TCFD
Joining of the NZAMI
(2021)
First AMC to join
the Net Zero Asset
Managers Initiative
(NZAMI) in Korea

Our company-wide ESG Integration System

Sustainable Finance
ESG Investment Strategy
Company-wide Investment System
ESG Professional
Proactive Engagement

ESG Investment Philosophy

Our Investment Philosophy
  1. 1. Attain higher return rates in the long-term while reducing risks by investing in sustainable companies
  2. 2. Induce companies to practice corporate social responsibility (CSR) via responsible investing
  3. 3. Fulfill the role as an investor by proactively exercising the voting rights and develop by considering the global standards
Building ESG Competitiveness
Respond preemptively with portfolios regarding companies with the possibility of improvement or deterioration in ESG
  • Expand the exposure to companies with the possibility of improvement in environmental, social, and governance (ESG) factors
  • Build portfolios which can have long-term competitive edges by proactively reflecting the analyses of ESG capabilities into the investment decision-making process
ESG Engagement
Materialize Compassionate Finance by inducing internalization of ESG into business management
  • Induce the trend of stakeholder-friendly business management by proactively exercising voting rights
  • Contribute to the spread of the corporate cultures of eco-friendliness, social contribution and transparent business management via proactive engagement with investable companies

ESG Investment Process

Public equity funds: apply at least 70% exposure to BB or higher grades for general equity funds (funds with the KOSPI as the benchmark) Plan to expand to other types following the rise in the companies applying the ESG rating
1st stepInvestment Universe
  • Negative screening of quantitative/qualitative factors
  • Two regular updates a year and ad-hoc updates when necessary
2nd stepESG Screening
  • Screening of qualitative factors
  • Utilize external advisors’ analyses
  • Strengthen feedback regarding the investable companies
3rd stepESG Evaluation per Security
  • Bottom-up research
  • Evaluate individual factors of each security
  • Zero Carbon Orientation
4th stepModel Portfolio
  • Create the MP
  • Frequently include/exclude by considering each company’s ESG response strategy
  • Expand the weight of securities with chances of ESG improvement
GoalCreation of the Actual Portfolio
  • Create the AP
  • Reflect the weight of changes in sustainable factors in a timely manner
  • Respond to changes in ESG rating and events at the right time
Monitoring & Rebalancing
Negative Screening → Build up the ESG momentum
  • Engagement : Discuss matters requiring improvement in the ESG evaluation factors by communicating with the invested companies, etc.
  • Incubating ESG Rising Star : Provide the examples of leading companies and improvement plans which are applicable

Cooperation with SFG

Shinhan Financial Group is implementing the three strategic directions of “Eco-friendliness,” “Win-win relationship,” and “Trust,” along with the five impact tasks so as to attain the Zero, Ten and Hundred Goals.
Cooperation with SFG
Strategic direction Impact task Goal
01 Eco-friendliness
01 Zero Carbon Drive
Expand eco-friendly financial support/investment
Establish the management system for carbon emissions in the asset portfolios
Select eco-friendly initiatives in an ongoing manner
 0 Carbon
02 Win-win relationship
02 Triple-K (Innovative Finance)
Realize the specialized innovative ecosystem
Increase support for overseas expansion
Support the fostering of K-unicorns
 10 Unicorns
03 Hope Together SFG (Hope Society)
Foster sound companies utilizing finance
Stabilize the finances of financially vulnerable population
Resolve the issues of local communities
03 Trust
04 Pursue social diversity
Nurture female leaders & expand the pool of talents
Consolidate the family-friendly organizational culture
Expand support for persons with disability & multi-cultural families
 100% Satisfaction
05 Protect financial consumers
Facilitate comprehensive financial education for all generations
Strengthen monitoring for protection of assets
Sophisticate internal control & consumer protection

ESG Scoring

Environmental
  • Manage greenhouse gases & introduce renewable energy
  • Manage waste
  • Eco-friendly manufacturing, distribution and services
Social
  • Employment equality and stability
  • Labor productivity and brand value
  • Fair transaction and win-win cooperation
Governance
  • Shareholder-friendly policy
  • Guarantee the shareholders’ rights
  • Independence of the Board of Directors and supervisory organizations
ESG Theme
  • Green Newdeal
  • Social Networking
  • Engagement

TCFD

First comprehensive AMC to declare support for TCFD
First Korean AMC to deliver the TCFD-related letter to shareholders

  1. 1. First Korean AMC to deliver the TCFD-related letter to shareholders (October 14, 2020)
  2. 2. Delivered a questionnaire on response to climate change (e.g. greenhouse gas emissions)
  3. 3. Sent to a total of 242 businesses in 22 sectors
  4. 4. Responded by a total of 101 businesses in 20 sectors

Principle of the Stewardship Code

Introduction of the Stewardship Code (December 20, 2017)

  1. 1. Disclose a clear policy for faithful implementation of fiduciary duty and resolution of related conflicts of interests
  2. 2. Prepare an internal guideline on the timing, process and method for periodic inspection on investable companies and implementation of fiduciary responsibility
  3. 3. Disclose the guideline, process and detailed standards for exercising of voting rights, and periodically report on the specific details and reasons of exercising the voting rights to the beneficiaries
  4. 4. Enhance capabilities and expertise required for proactive and effective implementation of the fiduciary duty

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