Taiwan’s largest pension fund, the Bureau of Labor Funds (BLF), will launch a global climate change-related stock mandate program in 2022, as reported by Reuters on January 5. The mandate with a value of USD2.3bn will refer to Paris Aligned climate-aligned indexes for the benchmark indexes. The BLF also declares that this program will be the first climate change-focused mandate in Asian pension funds. The fund will publicly invite bids for the mandate in the first quarter of 2022 and carry out selection procedures in the second quarter. As of October 2021, BLF operates assets amounting to NTD5500bn (USD199bn) with a 7.47% return last year.

The BLF’s portfolio now comprises around NTD472bn (USD17.3bn) of ESG-related investments, including NTD48bn (USD1.74bn) of overseas mandates. The recent stock mandate came as BLF considers climate change-related investment as a mainstay of asset allocation in the future, citing deputy director-general of the fund, Liu Liju. A report from Morningstar also indicated that, in 2020, the total ESG funds offered in Taiwan hit USD2.9bn, surging 336% from the 2019 level. Nevertheless, ESG mutual fund and exchange-traded fund (ETF) assets only took up 2% of the asset under management (AUM) of Taiwan as of 3Q20. To support the ESG investment in the island, the Taiwan Depository & Clearing Corporation (TDCC) launched a service that provides quick access to ESG asset rating information to market participants in 2020.

Sources:

https://www.reuters.com/markets/europe/taiwan-fund-issue-23-bln-climate-change-pension-mandate-asias-first-official-2022-01-05/

https://www.blf.gov.tw/8821/8905/8863/78596/

https://www.chinatimes.com/cn/realtimenews/20211224003350-263301?chdtv

https://fundselectorasia.com/taiwans-managers-to-launch-more-esg-funds/