Sejong, December 15 - The Ministry of Environment (Minister Han Wha-jin) released the results of the "Pilot project for K-Taxonomy," which was conducted to apply K-Taxonomy in financial and industrial sectors. The ministry ran the pilot project from April to November 2022. Six banks and companies issued green bonds totaling KRW 640 billion for various projects, such as renewable energy generation and the construction of zero-emission vehicle infrastructure.
The K-Taxonomy outlines clear principles and standards for "green economic activities" that contribute to achieving six environmental goals, including greenhouse gas reduction and climate change adaptation. The Ministry of Environment established the "K-Taxonomy Guidelines" on December 30, 2021, to tackle greenwashing and accelerate the transition to a carbon-neutral economy by helping direct capital flows to the green industry.
The objectives of the pilot project are to test the market applicability of the green taxonomy, discover unexpected issues during the application process, and establish a green financing system by correcting the K-taxonomy. The Ministry of Environment held fifteen meetings with the working-level consultative body composed of the Financial Services Commission, the Korea Environmental Industry & Technology Institute, and participating companies. The ministry issued green bonds aligned with the K-Taxonomy together with participating companies.
The Ministry of Environment successfully issued green bonds worth KRW 640 billion aligned with the K-Taxonomy, despite the recent worsening of the financial market. The funds raised by issuing green bonds will be solely used for green projects. For example, KRW 586.2 billion of the funds will be mainly used for greenhouse gas reduction. In detail, KRW 334 billion will be used for renewable energy(e.g., solar power, wind power), and KRW 147 billion for supplying zero-emission vehicles and building related infrastructure. Such initiatives are anticipated to reduce nearly 1.27 million tons of greenhouse gases annually.
The Ministry of Environment will establish an institutional foundation to boost green finance by correcting any flaws found in the K-Taxonomy and its guidelines based on feedback from the financial and industrial sectors and publishing a detailed manual for green bonds.
The ministry will financially support issuing green bonds from 2023, when the K-Taxonomy will be applied fully. The ministry will also educate stakeholders about green taxonomy. The ministry will expand the application of the K-taxonomy to the loan business, including investment and loans.
Han Wha-jin, Minister of Environment, said, "We have ed the possibility of applying the K-taxonomy to the market in collaboration with the financial and industries sectors through the pilot project." She added, "We believe it will be a good opportunity to enhance our capacity for green financing. We will do our best to help the financial sector boost green finance to move forward to a carbon-neutral society."
Contact: Geum Byung-wook, Deputy Director
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