Current Status of Climate Risk Management and Supervision and Review of Financial Sector Preparations Including the Green Finance Handbook
[Asia Economy Reporter Kwangho Lee] On the 8th, the Financial Services Commission held the 4th full meeting of the 'Green Finance Promotion TF' chaired by Secretary-General Sehoon Lee, checking the progress of detailed green finance tasks for this year and discussing additional tasks.
At this meeting, in line with recent discussions on carbon neutrality such as the upward revision of the national greenhouse gas reduction target (NDC), the current status of climate risk management and supervision in the financial sector, and the green finance handbook for the financial sector were reviewed. The scope of related discussions was expanded not only to green finance but also to the 'ESG field,' including establishing ESG (Environmental, Social, Governance) disclosure and evaluation systems and linking financial companies' ESG management to the activation of social finance.
The Financial Supervisory Service is promoting three major tasks for systematic management and supervision of climate risks: preparing a climate risk management guideline, operating a financial sector climate risk forum, and raising awareness and expanding the base of climate risk recognition. Going forward, to ensure climate risk management is firmly established in the field, the use of the climate risk management guideline by the financial sector will be encouraged, and excellent cases of private financial companies utilizing it will be shared with the industry. Additionally, in cooperation with financial companies, a climate economy scenario will be developed by the first half of next year, and pilot application in the financial sector will be promoted.
The five major financial associations?Korea Federation of Banks, Korea Financial Investment Association, Korea Life Insurance Association, Korea Non-Life Insurance Association, and Korea Credit Finance Association?plan to prepare a 'Green Finance Handbook for the Financial Sector,' a reference material containing guidelines and domestic and international operational cases that financial companies can use for green finance tasks. The handbook will undergo additional feedback collection procedures by March next year and will be supplemented and published and distributed in booklet form.
Participants in the meeting agreed on the importance of activating green finance and managing climate risks in the financial sector, as well as the need to expand social finance, stating, "For the firm establishment of green finance and climate risk management in the field, two-way communication between financial authorities and the private sector is important, so specific methodologies should be shared with the industry and developed together." They also mentioned, "It is a desirable direction that social finance, which has been steadily discussed, is now being discussed within the ESG framework."
Meanwhile, Shinhan Financial Group introduced and presented actual operational cases within the financial group for green finance and risk management, stating, "We hope that by sharing Shinhan Financial Group's operational cases as leading exemplary cases for the financial sector to refer to, it will be an opportunity to contribute to the activation of green finance."
A Financial Services Commission official emphasized, "We expect that a green wave will spread throughout our industry and economy based on systematic management of climate risks faced by the financial sector and support for green finance," adding, "To achieve an inclusive economy that embraces marginalized areas, the role of social finance will continue to be emphasized and systematized in connection with financial companies' ESG management."
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