More Than Profits for Thailand’s Government Pension Fund: Thai Guideline to Maximise Returns and Remain True to Spirit of Responsibility

The role of secretary general to Thailand’s Government Pension Fund means Vitai Ratanakorn is entrusted with fiduciary responsibility to the pension’s members.

His role is to ensure that the fund maximise profits for all members. Ratanakorn, however, thinks he can do more. He is inspired by the idea that financial returns need not be sacrificed for social returns. It is possible, he believes, to do both. Fiduciary responsibility is imperative, but social responsibility is more than a secondary consideration.

To engage internal and external stakeholders in social responsibility, Ratanakorn has a vision to become the Thai leader of ESG investment and has initiated projects — an ESG-focused portfolio, ESG due-diligence based on OECD responsible investment guidelines, and ESG factor-integration — based on PRI’s integration framework.

A major achievement was the introduction of Collaborative Engagement and Negative List Guidelines for ESG Investing.

To stimulate institutional investors — key players in the Thai capital market — to move toward ESG investing, Ratanakorn has initiated a project called Collaborative Engagement: Negative List Guideline.

The project was developed on the belief that collaborative engagement can enhance investors’ influence and improve efficiency of the engagement process. After meetings and discussions with capital market policymakers and institutional investors, Ratanakorn came to the conclusion that a common and effective goal of all institutional investors was positive engagement and negative list guidelines for listed companies that breach Thailand’s securities legislation, or do not comply with ESG’s best practice.

His initiative was well-received.

As many as 32 institutional investors with over THB10.8tn ($1.8tn) in assets under management signed the Memorandum Of Understanding and became signatories to the guideline. Signatories agree to conduct joint-collaborative dialogue to influence a company that breaches Thailand’s securities legislation, or does not comply with ESG best-practice.

During the dialogue process, further buying of the stock in question will be depend on the outcome. After the dialogue, if the management of the company complies to best practices and yields a positive result, the signatories will resume the normal transaction. If not, the signatories will add the name of the stock in a negative list.

The introduction of Collaborative Engagement and Negative List Guidelines for ESG investing is marked as the first major achievement in pursuing ESG investment in Thailand. i

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