Investment of future will be green, says FSC head
Climate change was the biggest issue raised by Financial Services Commission Chairman Eun Sung-soo during the Korea Economic Forum held Thursday.
The FSC chairman said the Korean government has pledge to no longer invest in fresh projects building coal-powered generators -- even as a way of helping developing countries abroad.
He said the government will soon announce a so-called “K-taxonomy” that will help investors distinguish between truly green investments and those that merely claim to be.
“[The Korean government] recently announced that we will stop all new programs for coal-powered generation, even if it is an ODA [official development assistant],” Eun said during the forum held at the Lotte Hotel in Seoul.
“It means if you’re already committed and the project is under construction, we cannot stop the financing,” Eun said. “That’s why I am emphasizing the word 'new.'”
The FSC chairman stressed that the Korean government is already committed to climate change in its pledge for net-zero carbon emission by 2050 and that no new coal-powered projects have been financed locally in recent years.
He added that heads of Korean commercial banks are already reluctant to support coal-fired power plants.
Eun said the government is open to any idea that would help expand green finance.
The FSC chairman said while there have been no additional incentives planned, the disadvantages that companies could face when failing to commit to an environment, social and governance (ESG) plan are in themselves an incentive.
However, he said the FSC will look into helping financial companies that faces obstacles when issuing ESG-related bonds.
To protect investors against so-called greenwashing -- companies that insincerely claim to be environmentally friendly -- Eun said the government led by the Environment Ministry will announce the so-called K-taxonomy guidelines later this month.
K-taxonomy is supposed to describe which activities and assets can be defined as green. Ambiguity over such definitions has long acted as a barrier to scaling up green finance.
During the forum, Eun also hinted that a recent global shift to reining in excess liquidity may not be all bad for the Korean financial market, especially considering the rapid increase in household debt.
“Overall, household debt is increasing and it may exceed 100 percent of the GDP,” Eun said. “This can be a risk to the Korean economy.”
The FSC chairman noted the complicated situation he is in: with some asking him to encourage financial companies to expand loans to support small businesses, and others asking him to tighten lending to deflate a bubble in real estate values.
Eun said any tightening by the U.S. Fed or Korea’s own central bank could have a positive effect in slowing down the growth of household debt.
While a hike in interest rates will have a negative impact on the equity markets, the FSC chairman said it could help loan seekers think more carefully about whether they can afford to pay them back.
In the second session of Thurday's forum, Korean Vice Environment Minister Hong Jeong-kee spoke about the government’s climate change policy, which drew huge interest from the foreign community, including Korea’s plan to expand its renewable energy capacity.
This year, which celebrates the 15th anniversary of the forum, fewer than 100 people attended the event to comply with the government’s social distancing regulations.
The attendee included dignitaries from foreign embassies in Seoul, heads of foreign and local businesses and representatives of leading Korean financial companies.
The attendee included Kim Gwang-soo, head of Korea Federation of Banks, Hur Yin, KB Kookmin Bank CEO, Jin Ok-dong, Shinhan Bank CEO, Park Sung-ho, Hana Bank CEO, Kwon Kwang-seok, Woori Bank CEO as well as Jung Eun-young, HSBC CEO.
Diplomats attending included Joanne Doornewaard, Dutch ambassador, Frode Solberg, Norwegian ambassador, and Julien Cats, the French embassy's Deputy Head of Mission.
BY LEE HO-JEONG [firstname.lastname@example.org]