National Policy Banks Launch ESG Committees and Organizations... "Expecting a Leading Role" (Comprehensive)

IBK, ESG Committee Established at This Month's Board Meeting
Export-Import Bank to Announce ESG Management Vision on Next Month 1st

[Asia Economy Reporter Park Sun-mi] Policy banks are belatedly revealing their commitment to ESG (Environmental, Social, and Governance) management and are actively working on establishing control towers. Although they lag behind domestic financial holding companies that have long established ESG committees and dedicated departments within their boards, there are expectations that they will demonstrate strengths in areas such as building ESG evaluation systems, which are difficult for private banks to approach.

According to the financial sector on the 18th, IBK Industrial Bank of Korea, which will celebrate its 60th anniversary on August 1, established an ESG committee at the board meeting held this month. This decision was based on the judgment that it is necessary to create an ESG management decision-making body within the board to strengthen the ESG-based management system and continuously generate ESG performance. This organization is responsible for establishing the bank’s ESG management strategy and managing and supervising its performance. The chairperson is Outside Director Jung So-min, the only female member of the board.

Under Director Jung’s leadership, three members?Executive Director Kim Sung-tae, Outside Director Kim Se-jik, and Outside Director Kim Jung-hoon?hold meetings at least once every quarter to make decisions related to ESG management. They plan to deliberate on ▲ ESG management strategy and policy establishment ▲ ESG management goals, progress, performance, and evaluation ▲ Enactment and repeal of ESG-related regulations ▲ Other matters deemed necessary by the board and committees.

IBK is also making efforts to integrate its strongest role of supporting small and medium-sized enterprises (SMEs) with ESG management. Currently, it is promoting projects to support sustainable development centers and SME ESG management. This project aims to provide proactive support measures so that SMEs, which have limited human and material resources, can respond to ESG management. An IBK official explained, “Through this project, we aim to present the direction for supporting SME ESG management and ultimately create an ESG ecosystem together with enterprises.”

KEXIM to Announce ESG Management Vision Next Month

Korea Export-Import Bank (KEXIM) is also preparing to announce its ESG management vision at its 45th anniversary ceremony on the 1st of next month. It plans to establish six principles for ESG management focusing on tasks that KEXIM, as a policy financial institution, can perform, such as reflecting ESG management indicators in loans and investments and providing preferential interest rates to excellent ESG companies. It will also establish an ESG committee within the board and create a dedicated ESG task force. Recently, it received a consulting report from Deloitte Anjin for establishing an ESG management strategy.

However, KDB Industrial Bank of Korea does not plan to establish an ESG committee within its board. Chairman Lee Dong-gul stated in a recent online briefing, “Instead of setting up an ESG committee, we will focus on areas that can produce tangible results, such as establishing an ESG evaluation process and fulfilling the role of a leading green finance policy financial institution.” In January this year, KDB established the ESG and New Deal Planning Department, which serves as a green finance control tower, and is promoting extensive green finance support.

In the financial sector, although the establishment of dedicated ESG management organizations by policy banks started later compared to private financial holding companies, it is expected that they will be effective in areas such as building ESG evaluation systems, which are difficult for private banks to approach, and presenting ESG guidelines through cooperation with government agencies, given their role in policy finance.

An official from a bank said, “Domestic financial companies have just crossed the starting line by recognizing the necessity of ESG management and establishing organizations, but even in terms of ESG bond issuance alone, they have faced much criticism due to insufficient evaluation processes. Policy banks can play a role in setting benchmarks so that they can take a leading role in ESG management in the financial sector.”