To Foster Green Ecosystem in Private Financial Sector
The Financial Services Commission said on Jan. 25 that the BIS capital adequacy ratio of South Korean banks would drop to 4.7 percent in 2029 without South Korea’s well-organized efforts to reduce carbon emissions.
The commission recently analyzed how climate change and a decline in asset value on the part of carbon-emitting industries would affect the soundness of domestic financial institutions. According to its scenarios, the common equity Tier 1 capital ratio will drop from 12.4 percent to 4.7 percent without R&D and edge down to 11.7 percent if South Korea makes active R&D efforts such as renewable energy-based power generation and electric vehicle development.
The commission is planning to come up with green finance guidelines for the entire financial sector in the first quarter of this year so that a green ecosystem can be spontaneously fostered in the private financial sector. In addition, the commission will revise the stewardship code in the fourth quarter so that the trustee responsibilities of institutional investors include environmental, social and corporate governance elements.