FSC Korea Highlights Increasing ESG Focus in Korean Financial Sector
FSC Korea notified that the Green Finance Task Force held its meeting in August 2020. The task force discussed that it will work to establish a monitoring system for financial risks emanating from climate change, boost investment in green industries, and consider the possibility of joining international networks on green finance. The Vice Chairman of FSC Korea, Sohn Byungdoo, presided over the meeting and shared his remarks on climate change risks and green investment.
Mr. Sohn Byungdoo mentioned that climate change can threaten the stability of the financial system in many different ways and the government will strengthen its efforts to monitor and identify climate change risks to maintain stability in the financial system. He suggested that financial institutions should consider taking into account the environmental, social, and governance factors, alongside the traditional risk factors such as credit or liquidity risks for their asset management. In this regard, the government will work to lay foundations to encourage investors to consider environmental risks when making investment decisions.
Building a sustainable future amid climate change requires efforts of both adaptation and mitigation. Mr. Byungdoo highlighted that the government will lead the public-private joint efforts to boost investment in green industries. The "green new deal" is a part of the Korean new deal initiative introduced on July 14 aimed at laying foundations for a sustainable growth. Finance will play a significant role in this respect. The government will also work to prevent greenwashing and minimize market confusions by specifying the scope of green industries, while providing new investment opportunities through enhanced liquidity in the market. To strengthen international cooperation, the government will review the possibility of joining international networks, such as the Network for Greening the Financial System (NGFS) and the FSB Task Force on Climate-related Financial Disclosures (TCFD).
Related Link: Press Release (PDF)
Keywords: Asia Pacific, Korea, Banking, Securities, Climate Change Risk, ESG, Sustainable Finance, NGFS, FSC
Featured Experts

Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.

James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Related Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.