Yoon Seok-heon: "Time for Climate Risk Is Limited... Establishing Monitoring System"

Yoon Seok-heon, Governor of the Financial Supervisory Service, is attending the '3rd Real Estate Market Inspection Meeting of Related Ministers' held at the Government Seoul Office in Jongno-gu, Seoul on the 19th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Oh Hyung-gil] Yoon Seok-heon, Governor of the Financial Supervisory Service (FSS), stated on the 22nd, "We need to establish a monitoring system capable of managing and supervising climate risks."

Governor Yoon made these remarks during the opening address at the '2020 International Conference' held at Ewha Womans University’s Lee Sam-bong Hall in the morning. He said, "Financial systems could suffer damage due to shocks from climate change."

He added, "Recently, various efforts to support green industries have been underway in the private sector, including financial institutions," and noted, "The issuance of Korea’s Environmental, Social, and Governance (ESG) bonds has rapidly increased since 2016, reaching $11.9 billion as of the end of August this year, marking the largest scale in Asia."

It was explained that Korea’s ESG bond issuance was around $1 billion in 2016 but grew to approximately $12 billion last year.

He continued, "Last year, the Network for Greening the Financial System (NGFS) made six recommendations to central banks and supervisory authorities to prepare for climate change risks," and stated, "One of the key recommendations is to assess climate risks within the financial system and integrate them into the prudential supervisory process."

Governor Yoon emphasized, "Considering the uncertainty and complexity of climate change impacts, this will undoubtedly be a challenging task," and warned, "However, if delayed, the approaching shocks from climate change could cause serious damage to the financial system."

He further explained, "The FSS plans to continuously develop and improve a climate change stress testing model that comprehensively considers Korea’s climate change response plans and financial environment."

Since 2018, the FSS has held conferences under the theme of 'The Development of Global Financial Innovation and the Role of Supervision.' This year’s themes are finance, information and communication technology (ICT), and nature. Due to the impact of the novel coronavirus disease (COVID-19), the conference is being held in an untact (non-face-to-face) format. Google, Hyundai Motor Company, KB Kookmin Bank, the Green Climate Fund (GCF), the Bank of England, and the FSS will introduce the impacts of climate change, response cases, and innovations in green finance.