ESG bond is­suance jumps 11-fold in three years

The Korea Times - - FINANCE - By Kim Bo-eun [email protected]­re­atimes.co.kr

The is­suance of ESG bonds here has surged this year, as a grow­ing num­ber of en­ti­ties, rang­ing from state-run firms to banks, have joined the trend to in­vest in en­vi­ron­men­tal and so­cial ini­tia­tives.

ESG bonds re­fer to fixed in­come in­vest­ments aimed to fi­nance cor­po­rate ac­tiv­i­ties in the en­vi­ron­ment, so­cial re­spon­si­bil­ity and the im­prove­ment of gov­er­nance.

Data show that the is­suance of ESG bonds reached 12 tril­lion won as of Sept. 26, sharply up from the 5.04 tril­lion won in 2018 and 1.8 tril­lion won in 2016.

Green bonds were mainly is­sued, but the per­cent­age of so­cial bonds has also grown.

The is­suers have di­ver­si­fied, from gov­ern­ment en­ti­ties to the pri­vate sec­tor, in­clud­ing fi­nan­cial firms.

The Ex­port Im­port Bank of Korea be­came the first to is­sue a green bond in 2013.

In the past years, fi­nan­cial hold­ing com­pa­nies and banks were mainly in­volved in is­su­ing ESG bonds, but credit card com­pa­nies re­cently joined the ini­tia­tive.

Hyundai Card is­sued won-de­nom­i­nated green bonds worth 240 bil­lion won last month, to pro­vide fi­nan­cial ser­vices for en­vi­ron­men­tally friendly ve­hi­cles, in­clud­ing elec­tric cards and hy­dro­gen-pow­ered ve­hi­cles.

Shin­han Card re­cently is­sued ESG bonds worth 100 bil­lion won to more swiftly pro­vide smaller busi­ness part­ners with pay­ments it owed.

In April, Woori Card is­sued 100 bil­lion won worth of so­cial bonds.

The Na­tional Pen­sion Ser­vice is also draw­ing up a plan to boost in­vest­ments in such sec­tors.

The is­suance of won-de­nom­i­nated ESG bonds was boosted by the Korea De­vel­op­ment Bank is­su­ing the first such ones worth 300 bil­lion won last year.

“This year we are see­ing an in­crease in cur­ren­cies the bonds are is­sued in, as we see more won-de­nom­i­nated bonds be­ing is­sued, from mostly for­eign cur­rency de­nom­i­nated ones be­fore,” Han Gwang-yeol, an an­a­lyst at NH In­vest­ment &Se­cu­ri­ties, said in a re­port.

“Korea was late to join, but we see an in­creas­ing in­ter­est from both the gov­ern­ment and pri­vate sec­tor,” Yoon Jin-soo, a re­search as­so­ciate at the ESG busi­ness divi­sion of the Korea Cor­po­rate Gov­er­nance Ser­vice, said.

“We view this pos­i­tively, as this in­di­cates such values are start­ing to be in­cor­po­rated into in­vest­ment de­ci­sions.”

He noted how­ever, mea­sures such as the is­suer get­ting cer­ti­fi­ca­tion and track­ing of whether the funds are used for their stated pur­poses may be nec­es­sary.

Cur­rently it is not manda­tory for is­suers to get cer­ti­fi­ca­tion when is­su­ing ESG bonds.

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