Press Release

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Ministry of Environment, first government ministry to play a role on green finance for climate risk management

Date:
2020-05-28
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1,591

▷ Supporting the Task force on Climate-related Financial Disclosures (TCFD) to join the fight against climate change

▷Actively engaging in domestic/international discussions on green finance, providing support to increasing number of domestic enterprises


The Ministry of Environment (Minister Cho Myung-rae) and the Korea Environmental Industry & Technology Institute (President Yoo Jechul) announced, as the first government entities, their support for the Task Force on Climate-related Financial Disclosures (TCFD) to raise awareness among domestic organizations of climate change responses and to increase climate-related information disclosure.


* TCFD: Task force on Climate-related Financial Disclosures


TCFD was established as an interim unit by the Financial Stability Board, commissioned by G20* Financial Ministers and Central Bank Governors in December 2015. It is mandated to develop consistent climate-related financial risk disclosure standards for use by investors and other stakeholders in providing information about green finance investment. The Secretariat of TCFD is based in Basel, Switzerland.


*G20: 7 developed countries including Unites States, France, United Kingdom, Germany, Japan, Italy, and Canada (G7), 12 emerging countries such as South Korea, China, India and Argentina, and a Country holding the European Union Presidency (G20, if one of G7 countries become the EU Chair Country, then it becomes G19).


The significance of green finance is that it can serve as a business operation strategy, as in the form of asset diversification, that helps improve the resilience against external shocks such as climate and environmental risks.


Int this context, the TCFD Recommendations published in June 2017 categorized climate-related risks into transitioning risks to a lower-carbon economy and physical risks resulting from climate change.


Globally 1,057 financial and non-financial institutions and 7 governments such as the United Kingdom, France, Canada, Chile, Sweden, Japan and Belgium have expressed their support for the TCFD recommendations since June 2017. Domestically 7 private financial institutions including Shinhan Financial Group, KB Financial Group have shown their support since September 2018. More recently, in March this year, POSCO announced its support for the first time as a domestic manufacturer.


The Ministry of Environment and the Korea Environmental Industry & Technology Institute (KEITI) submitted for the first time as government organizations in Korea a supporting to the TCFD website (www.fsb-tcfd.org) early May this year, which was recently ed to be accepted by the TCFD.


The announcement is believed to offer a new momentum that not only supports business strategy on environmental values management but also shifts climate change risks into new opportunities.


The KEITI joins as a supporting institution to the United Nations Environment Programme Finance Initiative (UNEP FI) on May 21st in an effort to enhance sustainability of domestic financial industry and companies in the environment-related domains.


United Nations Environment Programme Finance Initiative is a partnership between UNEP and the global financial sector to help support financial institutions their sustainable operations.


Over 300 global financial institutions have joined the initiative; in Korea, 8 financial institutions such as Financial Supervisory Service, Shinhan Bank, Hana Bank, KB bank, DGB Finance, Samsung Fire and Marine Insurance, Hyundai Marine and Fire Insurance, and DB Non-life Insurance have engaged in the initiative.


Director General Kim Dong-gu of the Environmental Economy Policy Bureau at the Ministry of Environment said "we will give our full support to domestic financial industry and institutions so that they adapt well, as the green finance is spreading fast globally."


He added that "to do so, we will first establish related taxonomy that will serve as a foundation of green financing, and also expand subsidy for green industry, facilitate investment in environment facilities, and nurture green finance professionals."