Analyzing ESG Follow-Through of Pension Funds: Evidence from Korea's National Pension Service

초록

We examine a unique dataset of portfolio holdings and voting records from Korea's National Pension Service (NPS), one of the largest pension funds in the world, to assess whether and how it incorporates environmental, social, and governance (ESG) considerations. We find that firms with higher NPS ownership exhibit greater improvements in ESG scores, with stronger effects when NPS votes against management at shareholder meetings. These improvements first manifest in governance, followed by the social and environmental dimensions. Overall, our results suggest that NPS's actions catalyze meaningful improvements in the ESG characteristics of portfolio firms.

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