Korea's Central Bank and Tannokwi Confer... Lee Chang-yong: "We Will Seek Ways to Revitalize Green Finance"

The Bank of Korea and Tannokwi's '1st Green Finance International Conference'
Georgieva, IMF Managing Director, "Strong Policies Needed"

Lee Chang-yong, Governor of the Bank of Korea, is delivering a welcome speech at the 'Green Finance International Conference' held on the 20th at the Bank of Korea in Jung-gu, Seoul. Photo by Dongju Yoon doso7@

Lee Chang-yong, Governor of the Bank of Korea, emphasized that the transition to a low-carbon economy is urgent amid the rapid introduction of environmental regulations worldwide, and stated that financial authorities will seek measures to promote green finance in the future.

Governor Lee made these remarks in his welcoming address at the '1st International Green Finance Conference' held on the 20th at the Bank of Korea headquarters in Jung-gu, Seoul. This conference, jointly hosted by the Bank of Korea and the 2050 Carbon Neutral Green Growth Committee, was organized to explore ways to revitalize green finance in accordance with the first Carbon Neutral Green Growth Basic Plan established in April.

According to the Bank of Korea, South Korea's dependence on fossil fuels was relatively high at 64% as of 2021, while the share of renewable energy was only 7%, which is significantly lower compared to countries like the United States, Germany, and Japan, where the average ranges from 20% to 40%.

In particular, South Korea has a large manufacturing sector accounting for 28% of the total industry, and the share of four carbon-intensive industries?refining, chemicals, cement, and steel?is 5.3%, about twice as high as major advanced countries (United States 2.5%, Germany 2.8%, France 1.7%).

Governor Lee pointed out, "Due to this energy and industrial structure, it is true that the transition to a low-carbon economy is a burden for export companies, but considering the reality that global environmental regulations are being rapidly introduced, the change in management paradigms cannot be delayed any longer."

In fact, environmental regulations are becoming increasingly stringent worldwide, including the European Union’s Carbon Border Adjustment Mechanism (CBAM), the United States’ Inflation Reduction Act (IRA), global companies like Apple and Microsoft’s RE100 campaign, and BlackRock’s exclusion of environmentally harmful companies from investment targets.

Prime Minister Han Duck-soo attended the full meeting of the 2050 Carbon Neutral Green Growth Committee held on the afternoon of April 10 at the Government Seoul Office Annex in Jongno-gu, Seoul, and spoke about the government's carbon reduction policies. [Image source=Yonhap News]

The Glasgow Financial Alliance for Net Zero (GFANZ), a coalition of 500 financial institutions including banks, insurance companies, and asset management firms from 50 countries worldwide, is also increasing pressure on export and financial companies by urging financial institutions to demonstrate performance consistent with their publicly announced net-zero targets.

South Korea has pledged to reduce greenhouse gas emissions to 40% of 2018 levels by 2030 and to increase official development assistance (ODA) related to green projects. The Bank of Korea explained, "As 2030 approaches, global environmental regulations and pressure to achieve targets related to eco-friendliness will intensify even further."

Especially for small and medium-sized enterprises (SMEs), if they fail to transition their processes to eco-friendly ones in a timely manner, large companies connected to export supply chains may face global environmental regulations, making green finance support for SMEs an important policy task. SMEs have low credit ratings, making it difficult for them to issue green bonds and benefit directly from green finance.

Governor Lee said, "We need to explore various ways for SMEs to indirectly benefit from green finance by pooling bank loans to SMEs, securitizing them, and issuing bonds that meet international green finance standards in the process," adding, "Going forward, we will discuss with financial authorities market creation measures to revitalize green finance as well as policy tools to alleviate the transition burden on SMEs."

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said in a video message, "Strong climate change mitigation policies and structural reforms are necessary for the global economy to achieve net zero," and added, "The role of green finance is important not only in building profitable projects but also in overcoming various obstacles such as mismatches in financing and project durations, and disparities in the business environment."

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