Kim Min et al. v. Kim Tae-Hyun et al.

On February 22, 2024, 35 pension holders of the National Pension Service ("NPS") filed a civil claim against the CEO Kim Tae Hyun, Director Seo Won-Joo, and Auditor Ryu Ji-Young, for violating their fiduciary duty as directors and auditor of the NPS. The plaintiffs argued that the defendants have failed to address the climate-related risks in the management of pension funds, particularly by failing to implement "coal phase out" policy NPS announced in 2021. The plaintiffs claimed 20,500,000 KRW as damages for their financial loss and health impact caused by such failure. On June 20, 2025, the Seoul Central District Court dismissed all claims brought against the defendants. The court found that NPS’s 2021 “coal phaseout declaration” did not create specific legal obligations for its executives, characterizing the declaration as a non-binding policy statement. It held that neither the Carbon Neutrality Act nor the Act on the Management of Public Institutions imposed enforceable duties to immediately restrict investments in fossil fuel companies. The court further determined that the executives retained broad discretion in managing the fund and that their continued investment in KEPCO was consistent with the principles of stability and profitability. The plaintiffs also failed to substantiate actual financial or health-related damages linked to NPS’s investment decisions. Despite dismissing the claims, the judgment provides meaningful insights into the legal framework governing fiduciary duties of the public fund regarding ESG. The court affirmed that, under the NPS Fund Management Guidelines and the Stewardship Code, NPS executives have an institutional duty to pursue responsible investment that considers ESG factors. Notably, the court indicated that if the executives’ investment decisions had effectively nullified the purpose of the coal phaseout declaration, or if decisions were made despite foreseeable losses to the fund—such that the investments could be considered in violation of the fund management principles under the NPS Fund Management Guidelines—such conduct could constitute a breach of fiduciary duty.