SMEs Setting ESG Management Goals... Receive 1% Interest Rate Discount
KCCI-IBK Industrial Bank Business Agreement
ESG Success Support Loan... No Cost Burden
[Asia Economy Reporter Oh Hyung-gil] Small and medium-sized enterprises (SMEs) can receive an interest rate discount of up to 1 percentage point if they set ESG (Environmental, Social, and Governance) management goals.
The Korea Chamber of Commerce and Industry announced on the 16th that it has signed a business agreement with IBK Industrial Bank of Korea to launch a sustainability-linked loan cooperation project aimed at expanding ESG management among SMEs.
This project is the first attempt in Korea to apply the government’s 'K-ESG Guidelines' to a sustainability-linked loan model.
The sustainability-linked loan model, participated in by global banks such as BNP Paribas and ABN AMRO, allows companies to select necessary areas from various ESG categories, set their own goals and evaluation criteria, and receive financial support such as interest rate reductions upon implementation.
The ESG Success Support Loan offers interest rate reduction benefits within 1 percentage point depending on the target level, even to SMEs whose current ESG management level is not high but have the willingness to improve and set ESG management goals. A distinctive feature is that interest rate reduction benefits are provided preferentially upon passing the initial screening when applying for the loan.
SMEs wishing to apply for the loan must set their own ESG goals, obtain a confirmation certificate from the Korea Chamber of Commerce and Industry, and then separately apply for the loan at IBK Industrial Bank of Korea, undergoing the usual loan screening process. Anyone can apply without any additional cost burden.
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Cho Young-jun, Director of the Sustainability Management Institute at the Korea Chamber of Commerce and Industry, said, "While there have been cases of offering preferential interest rates to companies with excellent ESG evaluations, this is the first loan in Korea that provides interest rate reductions to companies aiming to improve their ESG management level. We expect this to greatly help the expansion of ESG management among SMEs by providing direct financial incentives for interest and efforts toward ESG management."
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