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Korea Exim News

Korea Eximbank Set to Raise KRW 200 billion ESG Fund

Date 2021.02.22 View 11269

The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Bang, Moon-Kyu, "Korea Eximbank") announced February 22 that it plans to set up a global Environmental, Social and Governance (ESG) fund worth at least KRW 200 billion (USD 180 million) to support Korean firms, especially companies related to Green New Deal and Digital New Deal initiatives, seeking to expand businesses overseas.

 

Korea Eximbank intends to motivate Korean companies to actively internalize ESG values in their business operation by requiring General Partner (fund manager) to consider ESG factors in their deal selection process and providing incentives based on ESG performance.

 

Specifically, Korea Eximbank plans to invest KRW 25 billion each into two funds of the total size of the funds at more than KRW 200 billion.

 

Once General Partner of the funds is determined, it would focus on supporting business activities, such as trade, overseas investments, and establishment of local subsidiaries, of Korean businesses under seven areas tied to the Green New Deal and Digital New Deal initiatives. The seven areas include green energies such as hydrogen, solar and wind, 5G, healthcare and more.

 

These funds are characterized by the approach that a state-owned bank becomes Korean companies' ESG management partner, inducing them to adopt ESG values and supporting socially responsible investments at the same time.

 

The Bank aims to help Korean firms incorporate ESG values in their business by establishing measures to improve ESG adoption among the invested companies, which involve initial ESG analysis and ESG improvement assessment at the time of investment recovery.

 

In order to ensure objective evaluation, Korea Eximbank will entrust ESG analysis and ESG improvement assessment to outside ESG experts to assess the firms receiving the investment.

 

If the invested companies show advances in ESG adoption, the proceeds from the funds would be shared with General Partner as a way to encourage socially responsible investment.

 

Korea Eximbank Chairman Bang Moon-kyu said, “ESG-related investments led by developed economies have risen as a global keyword, with the COVID-19 pandemic, climate change and pollution luring the global investors’ interest in sustainable businesses.”

 

He further explained the purpose of ESG investment saying, "In order for Korean companies to dominate the global market in the K-New Deal sectors and establish a sustainable life cycle leading to business expansion and new investment, ESG values should be embedded in their corporate management."

 

The Bank posted the notice of tender to select General Partner for the funds on its website. Once the manager of the funds is selected, the Bank will confirm the investment plan by the first half of the year after receiving approval from the Minister of Finance.

 

Korea Eximbank plans to invest a total of KRW 80 trillion in the next decade to support globalization of the Korean New Deal initiative. Various types of investments including loans, equity securities and funds would be utilized in the process.