Press Releases

ESG Finance Surges 213% over 5 Years Growth Keywords Are 'ESG Investment, Public Finance, National Pension'

• - ESG finance scale reaches KRW 1,880 trillion as of late 2023, driven by the public sector
• - National Pension Service continuously expands ESG investments in line with policies to activate responsible investment
• - Represents one-quarter of total financial assets; high potential for growth, but expanding the private sector remains a challenge
• - Korea Sustainability Investing Forum and National Assembly Member Byoung Dug Min's Office publish '2023 Korea ESG Finance White Paper'

The scale of domestic ESG finance has continuously expanded, growing 213% over the past five years (2019–2023) to reach KRW 1,880 trillion. Analysis shows that the keywords for ESG finance growth are 'ESG investment', 'public finance', and 'National Pension'.

The Korea Sustainability Investing Forum (KoSIF, Chairman Young-ho Kim) and the Office of National Assembly Member Byoung Dug Min(National Policy Committee) announced this as they published the '2023 Korea ESG Finance White Paper', which aggregated and analyzed the scale of ESG finance among domestic financial institutions.

[Photo] '2023 Korea ESG Finance White Paper' published by National Assembly Member Byoung Dug Min and the KoSIF

According to the '2023 Korea ESG Finance White Paper', the scale of ESG finance in domestic financial institutions was recorded at KRW 1,882.8 trillion (based on 156 responding institutions) as of late 2023. This is a figure that grew 213% over five years, rising from KRW 610 trillion in 2019 to surpassing KRW 1,000 trillion in 2021. However, compared to total financial assets of KRW 7,129.5 trillion, the proportion of ESG finance remained at only one-quarter level.

[Data 1] Annual ESG Finance Outstanding Growth Trend (Unit: KRW Trillion)

[Data 2] Annual ESG Finance Outstanding Breakdown (Unit: KRW Trillion)

An analysis of ESG finance by type (investment, loans, bond issuance, financial products) showed an increase across all types, with ESG investment and loans accounting for a particularly large portion. Specifically, ESG investment was KRW 795.5 trillion (42.2%) and ESG loans were KRW 761.8 trillion (40.5%), with these two types accounting for more than 80% of total ESG finance. In addition, ESG bond issuance was recorded at KRW 244.7 trillion (13.0%) and ESG financial products at KRW 80.7 trillion (4.3%).

[Data 3] ESG Finance Type Classification Standards and Proportion (As of late 2023)

The growth of ESG finance in 2023 was found to be led by public finance. The scale of public finance was KRW 1,430.6 trillion, an increase of 242.7% over five years compared to KRW 417.5 trillion in 2019. This accounts for 76% of the total ESG finance scale.

The growth of the National Pension Service was particularly notable. The responsible investment scale of the National Pension Service reached KRW 587.2 trillion at the end of 2023, surging 1,735% from KRW 32 trillion in 2019, playing an important role in the growth of ESG finance. This scale significantly increased after the National Pension Service resolved the 'Plan to Activate Responsible Investment' in 2019 to expand ESG finance in earnest and included overseas direct investment equities as responsible investments under the 'Guidelines for Expanding Responsible Investment Asset Classes' announced in 2022. However, concerns about ESG washing still remain as a challenge to be resolved.

Meanwhile, as the public sector leads to the growth of ESG finance, the ESG scale of private financial institutions is also expanding. According to the white paper, the private sector grew steadily by 146.3% compared to 2019, but its scale remained at KRW 452.2 trillion, which is still lower than public finance. Institutional improvements and policy support are required to expand private ESG finance.

Nam Young Park, Senior Researcher at the Korea Sustainability Investing Forum, stated, "While domestic private financial institutions are making efforts to establish financial goals based on ESG, the burden of responding to external factors as well as internal capacities remains large." She added, "The government needs to create a clear policy environment so that private financial institutions can set targets for their ESG finance scale." She also noted, "Considering the growth potential of private ESG finance, it is important to further expand related policies while strengthening the effectiveness of currently implemented policies, such as the 'Green Lending Management Guidelines'."

Young-ho Kim, Chairman of the Korea Sustainability Investing Forum, emphasized, "Amid growing concerns over recent anti-ESG trends, our companies and financial institutions must expand ESG finance from a long-term perspective to secure sustainable competitiveness." National Assembly Member Byoung Dug Min also stated, "The spread of ESG finance is necessary as a primary catalyst to support corporate ESG management." (End)

Find out more about the White Paper →