Insights

Interview with Nam Young Park, Senior Researcher at Korea Sustainability Investing Forum

Government and corporate sectors acknowledge the necessity of green finance and green industries. However, because individual institutions' green commitments remain fragmented rather than integrated, an efficient green transition is delayed and falling behind international standards. Nam Young Park, Senior Researcher on the ESG Finance Department at Korea Sustainability Investing Forum (KoSIF), assesses that if key conditions, such as governance capable of driving inter-ministerial collaboration and a reliable roadmap, are met, a virtuous cycle where green finance and green industries reinforce each other becomes entirely achievable.

     ESG-focused non-profit organizations are somewhat unfamiliar to the public. What kind of organization is the Korea Sustainability Investing Forum?

The Korea Sustainability Investing Forum (KoSIF) is a non-profit organization specializing in sustainable finance, established in 2007. Our goal is to build a virtuous ESG ecosystem, acting as a hub to explore diverse solutions in collaboration with the government, civil society, and related organizations. We build networks between companies and investors, engage in stewardship activities, conduct research, develop policy, and support legislative activities by serving as the secretariat for the National Assembly ESG Forum.

With a focus on addressing climate change, we also serve as the Korean secretariat for global initiatives such as CDP (Carbon Disclosure Project), RE100, SBTi (Science Based Targets initiative), and PCAF (Partnership for Carbon Accounting Financials). Furthermore, we regularly publish reports including the Fossil Fuel Finance White Paper, ESG Finance White Paper, and Scorecard (insurance industry analysis reports).

     How would you evaluate the maturity of green finance in South Korea?

Following the revision of the Korean Green Taxonomy (K-Taxonomy) at the end of 2022, the Green Lending Management Guidelines were announced in December 2024. Financial authorities are making efforts to activate green finance, and the high level of acceptance and willingness to participate among financial institutions is notable.

Nevertheless, further progress is required in institutional foundations and disclosure framework improvements. Implementing green finance carries structural complexity that cannot be achieved through the efforts of a single institution alone. Due to limitations in policy frameworks, there is a lack of inter-ministerial cooperation and policy consistency is lacking.

The disclosure framework also faces serious issues. The implementation timeline for corporate disclosures has been delayed, and a concrete roadmap is currently lacking. Consequently, collecting green-related corporate data has become difficult, posing an obstacle to activating green finance. Financial institutions lack the foundational data required to evaluate green investments or lending. Systems to track environmental impacts, such as greenhouse gas reduction data, also remain weak.

     Aligning environment, industry, and finance in green finance and green industry seems challenging.

For example, while the K-Taxonomy was established by the Ministry of Environment, disclosure and supervision of financial institutions are managed by the Financial Services Commission and the Financial Supervisory Service. There is a lack of alignment between these policies, which can make driving consistent and integrated green finance policy difficult. From the perspective of financial institutions, this creates challenges in setting a clear direction.

Ultimately, green finance in Korea can be viewed as being in a transitional stage toward maturity. We have reached a point where balanced growth must be achieved by securing policy consistency and improving disclosure systems. Close cooperation among government, financial institutions, and corporations is essential to resolve these challenges.

     Green bonds are a representative product of green finance. What do you see as the trends or characteristics of Korea's green bond market?

Green bonds are a key fundraising mechanism in green finance. However, due to requirements for high credit ratings and complex pre- and post-issuance procedures, Korea's green bond market is primarily concentrated on large corporations and large-scale projects. This is because large enterprises hold relatively stable credit ratings and verified fund allocation plans.

Conversely, participation by small and medium-sized enterprises (SMEs) remains limited. Because their financing sizes are small and management costs are relatively high, cost-efficiency during the issuance process is low. This concentration carries the potential to deepen capital polarization.

Regarding K-Taxonomy, many point out that detailed application criteria remain insufficient for actual implementation by financial institutions. Because accessible corporate information is limited, expanding from project-centric to corporate-centric application remains difficult.

     While individual issues exist across green finance and green industry, a macroeconomic approach seems necessary.

Three major areas can be considered. First is establishing integrated governance. A dedicated control tower for green finance should be established to coordinate policies across ministries and present a unified direction. In particular, corporate disclosure, financial disclosure, and supervisory policies must be organically linked. To support this, staffing expansion in relevant authorities, particularly supervisory bodies like the Financial Supervisory Service that oversee financial institutions, appears necessary.

Second, a clear roadmap is needed. A clear roadmap allows financial institutions to minimize policy uncertainty and establish actionable internal plans and procedures, providing a foundation to execute green finance effectively.

Third, we must consider ways to build practical support systems. Establishing a centralized review body or an external expert pool to assist financial institutions in making green finance determinations is needed. Tailored support and consulting for SMEs should also be strengthened.

Reporter Baek-sang Kim k103@busan.com