Korea Exchange Holds Seminar on Introduction of Sustainability-Linked Bonds

[Asia Economy Reporter Minji Lee] Korea Exchange announced on the 15th that it held a seminar at its Seoul headquarters conference hall to introduce Sustainability-Linked Bonds (SLB).

Sustainability-Linked Bonds refer to bonds whose financial and structural characteristics may vary depending on whether the issuer achieves pre-set sustainability performance targets. Since external evaluation agencies conduct pre- and post-issuance verification, concerns about greenwashing are minimized.

This seminar was organized to gather expert opinions on managing Sustainability-Linked Bonds as a type of Socially Responsible Investment (SRI) bond and to build consensus for the early establishment of Sustainability-Linked Bonds.

In his opening remarks, Sohn Byung-doo, Chairman of Korea Exchange, stated, "Existing Socially Responsible Investment bonds had the limitation that issuance was only possible if there were eligible projects," adding, "Sustainability-Linked Bonds are gaining attention, especially in Europe, because bonds can be issued as long as there are ESG goals, even without eligible projects."

During the keynote presentation session, the International Capital Market Association (ICMA) explained the current status and necessity of Sustainability-Linked Bond issuance and the Sustainability-Linked Bond Principles (SLBP). Korea Credit Rating, an external evaluation agency, not only analyzed and presented overseas issuance cases to provide practical assistance for Sustainability-Linked Bond issuance but also introduced external evaluation methods.

Finally, Korea Exchange announced that it will strengthen disclosure by mandating the submission of pre- and post-external evaluation reports and investment prospectuses through the registration and management of a dedicated SRI bond segment for Sustainability-Linked Bonds, and that it will exempt new listing fees and annual charges.

In the panel discussion chaired by Professor Hyun Seok of Yonsei University Graduate School of Environmental Finance, experts from various fields?including Jeon Su-han, Director of the Sustainable Finance Division at the Financial Services Commission; Song Young-hoon, Executive Director of Korea Exchange; research institutions; external evaluation agencies; and lead managers?engaged in in-depth discussions on the external evaluation and registration management of Sustainability-Linked Bonds.