Events Recap

PCAF-KOREA Working Group:
Challenges and Solutions in Calculating Financed Emissions

PCAF-KOREA Working Group: Challenges and Solutions in Calculating Financed Emissions

The Korea Sustainability Investing Forum (KoSIF), serving as the PCAF-KOREA Secretariat, hosted the PCAF-KOREA Working Group on May 15, 2025, at the KB Financial Group New Building under the theme "Challenges and Solutions in Calculating Financed Emissions." The event was co-hosted by the Partnership for Carbon Accounting Financials (PCAF) and PCAF-KOREA and sponsored by KB Financial Group.

Since its inception in 2022, PCAF-KOREA has contributed to financial institutions' Net-Zero targets through the calculation and disclosure of financed emissions. PCAF-KOREA member institutions have applied the financed emissions measurement methodology developed by PCAF to their operations, maintaining a spirit of collaboration over competition to advance the shared goal of sustainable finance. This event was organized to bring together key working-level personnel from member institutions to discuss operational challenges in calculating financed emissions, explore solutions, and foster networking among participating financial institutions.

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The event opened with welcoming remarks from Chun Seung Yang, Executive Director of KoSIF, the co-host and organizer. He expressed hope that the working group would serve as a platform to discuss various challenges, including climate stress test results and data management, enabling the Korean financial sector to grow into a global leader. He emphasized that accurate calculation of financed emissions will accelerate the transition toward sustainable finance and restore market trust.

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Next, Kyung Nam Kim, Managing Director at KB Financial Group, the chairing entity of PCAF-KOREA and event sponsor, delivered a congratulatory address. She noted that PCAF-KOREA’s activities over the past three years have created a collaborative framework for financial institutions to measure financed emissions, expressing her wish that the gathering would reaffirm the spirit of cooperation championed by PCAF-KOREA.

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In the first official session, Jae-yoon Kim, Manager at the Bank of Korea’s Sustainable Growth Department, presented on "Domestic Financial Institutions' Climate Stress Test Results and Future Challenges," sharing analysis and implications. The test was conducted based on Climate Stress Test Task Force scenarios to measure the vulnerability of the domestic financial system to climate change. The analysis categorized risks into four main types, evaluating the impact of each on industry-level losses and the macroeconomy.

The findings revealed that if no action is taken against climate change by 2050 and average temperatures rise by approximately 6°C, physical damage could cascade across the economy, with heatwave days in summer jumping from 9 to 70 days, leading to lower GDP growth, reduced industry profitability, and increased insurance claims. Consequently, the presentation highlighted the need for financial institutions to reduce exposure to high-emitting sectors and strengthen climate risk management frameworks.

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In Part 2, a roundtable discussion was held to hear directly from practitioners at PCAF-KOREA member institutions. Serving as moderator, Tae Han Kim, COO at KoSIF, led the discussion by categorizing the challenges practitioners face during the calculation and reduction of financed emissions into seven stages, from establishing governance structures to continuous improvement. Attendees then discussed practical difficulties in data collection, internal system integration, and data standardization, along with potential solutions.

Participants also actively exchanged views on securing data from small and medium-sized enterprises (SMEs) and responding to regulatory shifts. The blend of operational experiences, challenges, and forward-looking recommendations from financial practitioners resulted in an in-depth discussion that yielded practical insights.

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As PCAF's partner in Korea, KoSIF reaffirmed that measuring and disclosing financed emissions is essential for systematically managing climate risks and advancing toward sustainable finance aligned with international standards. In particular, systematic measurement and disclosure by domestic financial institutions enhance resilience against climate risks and bolster competitiveness in global financial markets. Moving forward, KoSIF will continue to support financial institutions in managing climate risks effectively and contribute to building a more resilient, sustainable financial environment.