Public Enterprises Accelerate 'ESG Management' by Issuing Green Bonds Consecutively

K-Water Issues 50 Billion KRW Green Bonds
Plans Additional 300 Billion KRW This Year
To Be Used as Water Environment Funds

KORAIL to Issue 300 Billion KRW by Month-End
Investing in Eco-Friendly Projects

Incheon International Airport Corporation Also to Issue Bonds

[Sejong=Asia Economy Reporter Joo Sang-don] Public enterprises are actively advancing ESG (Environmental, Social, and Governance) management. Recently, Korea Water Resources Corporation (K-Water) successfully issued green bonds worth 50 billion KRW, designated for environmental investments under ESG bonds, and Korea Railroad Corporation (KORAIL) plans to issue green bonds worth 300 billion KRW by the end of this month. They are focusing their efforts on securing dedicated funds to promote related projects in response to strengthening ESG management. The government's recent decision to significantly expand social value disclosure items for public institutions has also accelerated the pace of public enterprises' initiatives.

K-Water announced on the 19th that it attracted 50 billion KRW in investment funds from Landesbank Baden-W?rttemberg (LBBW) through the recent issuance of ESG bonds.

ESG bonds restrict the use of raised funds to areas related to environment, society, and governance. They are categorized into green bonds, social bonds, and sustainability bonds depending on their purpose. The green bonds issued by K-Water this time have an interest rate 0.1 percentage points lower than the market rate, mature on March 12, 2024, and are underwritten by DB Financial Investment. K-Water plans to issue an additional approximately 300 billion KRW in green bonds throughout this year, starting with this issuance.

K-Water will utilize the raised funds as resources for improving the water environment, including upgrading aging water pipes and expanding water supply pipelines. It plans to establish a tracking and management system for investment funds to report on fund usage and environmental improvement effects in the future.

Power generation companies are also actively issuing ESG bonds. Korea Midland Power issued sustainability bonds worth 110 billion KRW last year and plans to issue ESG bonds exceeding 200 billion KRW in the second half of this year. Midland Power intends to invest these funds in renewable energy generation such as solar, wind, and fuel cells, as well as in social sectors including community contribution, job creation, and co-growth with small and medium enterprises. Korea Western Power also plans to issue green bonds worth 200 to 300 billion KRW within this year.

KORAIL plans to issue green bonds worth 300 billion KRW by the end of this month to invest in eco-friendly projects such as purchasing electric railway vehicles, renewable energy, and environmental cleanup projects. Incheon International Airport Corporation also plans to issue ESG bonds within the first half of the year.

The strengthening of ESG management by public enterprises is leading to various project initiatives. KOTRA has announced a bidding notice to review ‘International ESG Trends and Corporate Response Strategies.’ This research service will examine ESG policies and key items of various countries to explore whether related issues connected to Korea can be developed into major agendas for bilateral economic cooperation. Korea Industrial Complex Corporation is conducting a project planning service titled ‘Value-Accumulating Complex Plus Project for Fair Transition to ESG Industrial Complexes.’

The government has recently emphasized ESG management significantly for public institutions, considering its importance. To highlight public institutions' environmental protection efforts, new environmental items such as green product purchase performance and greenhouse gas reduction achievements have been added, along with innovation procurement and purchase performance of products made by persons with severe disabilities. This aims to support institutions' efforts for win-win cooperation with small and medium enterprises through innovative procurement. Additionally, volunteer service performance, currently disclosed voluntarily, will be established as an official disclosure item, and the term ‘donation’ will be changed to ‘contribution’ to integrate institutions' social contribution activities into disclosures.

This content was produced with the assistance of AI translation services.