[Philippe van Hoof’s Market Now] For the betterment of green finance in Korea
10 July 2024
Reading time: 3 min
In a byline for JoongAng Ilbo, Philippe van Hoof, country manager for ING Korea, underscores Korea’s chance to lead in green finance post-COP28. With KRW 420 trillion pledged for green investment, he calls for stronger public-private collaboration to accelerate the low-carbon transition and position Korea as a regional finance hub.
The 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) was held in Dubai in December last year, where an agreement was reached to triple global renewable energy capacity by 2030. This presents a significant opportunity for the Korean economy, which plays a vital role in the global supply chain. If Korean companies continue to pursue sustainability, they can further strengthen their leadership in the global market.
Korea has already embarked on a determined path towards sustainability. The Measures to Expand Financial Support to Respond to the Climate Crisis (Financial Services Commission) and the Measures to Expand Green Investment to Accelerate the Transition to a Low-Carbon System (Ministry of Environment), announced on 19 March, reflect the government’s strong commitment to green initiatives. According to the announcement, a total of KRW 420 trillion in policy finance will be allocated to green funds by 2030.
While Korea’s current energy mix remains heavily reliant on fossil fuels, this challenge also presents an opportunity for substantial economic growth. Accelerating the transition to a low-carbon economy and fostering a robust green finance ecosystem can not only create green jobs but also stimulate emerging industries.
To build a healthy green finance ecosystem, active cooperation from private financial institutions is more important than ever. Globally, the private sector leads approximately 78% of cumulative green bond issuances, with financial firms accounting for 46%. To encourage private investment, the government should introduce a broader range of tax incentives. Additionally, benchmarking the frameworks and experiences of global green finance leaders—such as the Netherlands and France—can help Korean companies strengthen their green management practices, including the development of a comprehensive climate disclosure system.
The advancement of green finance directly enhances corporate sustainability. Private financial institutions can support companies in their sustainable transformation by offering innovative financial solutions aligned with the Korean Green Taxonomy. These include green finance for renewable energy projects, loans for energy efficiency, and sustainability-linked loans (SLLs), which offer incentives based on improvements in a company’s environmental, social, and governance (ESG) performance.
Global efforts to build a sustainable society are already driving significant change. This momentum will serve as a tailwind for Korea to emerge as a leading player on the international stage. By combining Korea’s technological innovation with strong public-private collaboration, the country is well-positioned to become a regional hub for green finance.
Originally published in JoongAng Ilbo: Opens in a new tabhttps://n.news.naver.com/mnews/article/025/0003372338?sid=110