Korea's major financial groups have launched zero-carbon initiatives, amid the public's rising awareness and demand for financial companies' sustainable environmental, social and corporate governance (ESG) investing strategies.
One of the most important criteria for financial companies' ESG-linked investing is their efforts to support and finance businesses that aim for zero-carbon emissions and have eco-friendly business models.
Shinhan Financial Group's board of directors decided recently to push forward an eco-friendly campaign titled "Zero Carbon Drive," through which the financial group plans to ambitiously pursue zero carbon emissions in every project and business the group is involved in.
"Shinhan Financial Group plans to first measure the amount of carbon emissions related to every asset the group currently holds, and then it plans to set a specific goal to cut the emissions," an official from the group explained. "The group also plans to expand investment loans to businesses of new renewable energy, ultimately aiming to take the total amount of carbon emissions down to zero," the official added.
Actually, KB Financial Group was the first financial group in Korea that officially announced it would halt investments and loans to businesses related to coal power.
In their "KB Green Way 2030 project," the group presented its long-term plan to cut its affiliates' carbon emissions by 2030 to around 75 percent of the carbon emissions recorded in 2017. The group also said it would expand ESG-linked products and loans to some 50 trillion won ($43 billion) by 2030, up from the current 20 trillion won.
Hana Financial Group and Woori Financial Group have also each launched eco-friendly internal committees focusing on sustainable development and coal-free power.
Yet some market insiders expressed a rather cynical view about the moves, given the financial groups' active involvement in lending to businesses related to coal-fired power plants.
"While eco-conscious ESG-related investing is nothing new in other advanced countries like in the U.S. and in Europe, local financial groups have very much focused on coal-related investments," a market insider said on condition of anonymity.
According to Financial Supervisory Service (FSS) statistics submitted to main opposition party lawmaker Kwon Eun-hee in mid-September, last year, five major banks in Korea ― KB Kookmin, Shinhan, Woori, Hana and NongHyup ― lent a total of 917 billion won to coal-related power plant projects for five years from 2015 to June 2020.
"The local financial firms' sudden switch in their positions regarding coal-free businesses and eco-friendly management seems to keep pace with the Moon administration's policy direction of stressing renewable energies, as clearly shown in the five-year Green New Deal initiative," the market insider said, adding that local banks are expected to continue to prioritize financing eco-friendly businesses for the time being.