Japan’s Government Pension Investment Fund, the world’s largest pension fund, has adopted a sustainability investment policy aimed at mitigating long-term market risks and securing stable returns, according to a policy statement released on Monday.

Long-Term Stability Through ESG Investments

GPIF, which manages approximately $1.5 trillion in assets, said it views sustainability-related risks—such as environmental and social challenges—as potential threats to capital markets.

The fund will integrate ESG factors and impact considerations into its investment strategy to enhance long-term portfolio performance.

“As a universal owner with investments spanning global markets, GPIF must ensure that sustainability-related issues do not erode the long-term stability of its portfolio,” the fund said.

It emphasized that companies addressing sustainability challenges could create long-term value, benefiting both the economy and investment returns.

Diverse Investment Approaches

GPIF’s sustainability investment approach includes ESG integration, engagement with investee companies, voting rights exercises, ESG-focused index and active fund investments, and impact-oriented allocations.

The fund also committed to periodic evaluations of its sustainability investment outcomes, using key performance indicators and causal analysis of corporate value improvements.

While GPIF reaffirmed its fiduciary duty to secure pension reserves at minimal risk, it stated that sustainability investment is essential for maintaining market resilience.

The fund pledged to enhance data management and human resource capacity to better assess sustainability factors.

Governance and Transparency at the Core

Governance and transparency will be central to the initiative. The fund will report sustainability investment progress to its Board of Governors and disclose information to stakeholders, including pension beneficiaries and market participants.

GPIF’s move aligns with a broader shift among global institutional investors, who are prioritizing ESG considerations amid growing concerns about climate change, social inequality and corporate governance risks.

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