Korea Rail Network Authority Issues 70 Billion KRW Green Bonds, Pledges ESG Management

The Korea Rail Network Authority announced on August 18 that it has issued green bonds worth 70 billion KRW to finance eco-friendly railway construction and promote the activation of green finance.

The entire proceeds from these green bonds will be allocated to the second phase of the Honam High-Speed Railway construction project. The Authority is also considering expanding the scale of green bond issuance in the future if its own investment in high-speed rail construction increases.

Exterior view of the headquarters of the Korea Rail Network Authority and Korea Railroad Corporation (KORAIL) located in Dong-gu, Daejeon. Provided by Korea Rail Network Authority

Green bonds are bonds issued for the purpose of raising funds for green projects. Green projects are initiatives pursued to improve the environment, such as responding to climate change and developing renewable energy.

Prior to issuing the green bonds, the Authority established a management system in accordance with the "Korean Green Bond Guidelines" jointly developed by the Ministry of Environment and the Financial Services Commission, and received a "suitable" rating in the ESG bond certification assessment conducted by Korea Ratings Corporation.

These guidelines serve as the official criteria for determining whether a specific economic activity qualifies as an eco-friendly project.

Railways are regarded as an environmentally friendly mode of transportation, with carbon emissions significantly lower than other means of transport. In particular, high-speed rail construction is considered a representative green economic activity under the Korean green taxonomy, falling under "the establishment and operation of zero-emission transport infrastructure."

The Authority first issued green bonds in 2023, investing 30 billion KRW in the first phase of the Honam High-Speed Railway and other projects. Last year, it raised 50 billion KRW through green bonds to fund the construction of high-speed railways in the Seoul metropolitan area.

Lee Seonghae, President of the Korea Rail Network Authority, stated, "This year's green bond issuance is 20 billion KRW larger than last year's," adding, "As a public institution representing the railway sector, the Authority will put eco-friendly values into practice through ESG management and establish itself as a trusted institution for the public."

Meanwhile, in March, the Authority signed a business agreement with the Ministry of Environment and the Korea Environmental Industry and Technology Institute for the "Korean Green Bond Issuance Interest Subsidy Project."

This project is a system in which the government covers part of the interest incurred when issuing green bonds. Through this, the Authority will receive annual interest support of 0.2% from the Ministry of Environment, enabling it to reduce its financial costs.

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