Financial Authorities Join Green Finance Council Following Climate Risk Forum

Ahead of the P4G Seoul Summit on the 30th-31st, Active Implementation and Response to Green Finance

Eun Seong-su, Chairman of the Financial Services Commission (right), and Kim Geun-ik, Senior Deputy Governor of the Financial Supervisory Service (left), are signing the application letter for joining the Network for Greening the Financial System (NGFS).

[Asia Economy Reporter Park Sun-mi] Following the hosting of a climate risk forum to raise awareness and enhance response capabilities related to climate risk, financial authorities are actively engaging in green finance practices and responses by applying to join the Network for Greening the Financial System (NGFS).

The Financial Services Commission and the Financial Supervisory Service have applied to join NGFS, a global network of central banks and supervisory authorities for green finance, coinciding with the P4G Seoul Summit held on the 30th and 31st of this month. Membership will be confirmed within one month upon approval by member institutions.

NGFS was established in 2017 with the purpose of managing climate and environmental financial risks and supporting the transition to a sustainable economy. As of May, 90 institutions from 70 countries including France, the Netherlands, the United Kingdom, and Germany, as well as 14 international organizations, are participating.

The Financial Services Commission and the Financial Supervisory Service plan to actively participate in international discussions on green finance through NGFS activities and enhance the global consistency of domestic green finance policies. Additionally, considering the increased domestic and international interest in Korea's green finance efforts spurred by the P4G Seoul Summit, they intend to actively promote the domestic financial sector's green finance initiatives through NGFS.

Previously, financial authorities established a climate risk forum to raise awareness and improve response capabilities related to climate risk within the domestic financial sector, and held a virtual plenary meeting of the climate risk forum with participation from 28 financial companies. This was the first case where a comprehensive discussion platform for climate risk response was created within the financial sector. Banks, financial investment firms, life insurance, non-life insurance, card companies, and capital companies all participated.

The climate risk forum is based on the fundamental recognition that effective climate risk response is impossible through supervisory authorities' efforts alone and requires cooperation across the entire financial sector.

▲ Decline in collateral asset value due to flooding, fires, and other events caused by abnormal weather ▲ Decline in government bond prices due to deterioration of the national economic base caused by frequent abnormal weather events ▲ Impact on business continuity such as suspension of headquarters and branch operations due to extreme climate phenomena ▲ Increase in default and loss rates due to deterioration of debt repayment ability of high-carbon companies ▲ Sharp decline in the value of stocks and bonds issued by fossil fuel production companies ▲ Reputation of financial companies among customers and other stakeholders related to climate change response are included in climate risks.

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