Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
INTERVIEW AIIB calls for Korea's efforts in 'climate finance'
Asian Infrastructure Investment Bank (AIIB) Director General Lee Dong-ik / Courtesy of AIIB
By Park Jae-hyuk
The cover image of “Climate Change Investment Framework” that AIIB and Amundi released in September / Courtesy of AIIB
Bank joins hands with Amundi to fight climate change in Asia
By Park Jae-hyuk
A growing number of financial institutions here have started making efforts recently to counteract climate change, following the global trend of emphasizing management with regards to environmental, social and corporate governance (ESG) factors.
Last month KB Financial Group decided to stop all its investments in construction of coal-fired power plants worldwide and Shinhan Bank joined the Equator Principles Association vowing to stop its investments in projects that can cause environmental destruction or abuse human rights.
The Asian Infrastructure Investment Bank (AIIB), however, pointed out climate commitments are still absent from most financial firms in Korea and other Asian nations, compared to those in Europe.
“Unfortunately, we have not seen significant cases led by Korean institutions yet,” Lee Dong-ik, director general at AIIB's investment operations department, said in a recent interview with The Korea Times.
The multilateral development bank launched the “Climate Change Investment Framework” in September as part of its continuous efforts to fight climate change.
According to AIIB, the framework translates the three key objectives of the Paris Agreement into fundamental metrics, equipping investors with a new tool to assess a bond issuer's level of alignment with climate change mitigation, adaptation and low-carbon transition objectives.
It is particularly aimed at driving Asia's green recovery and transition, but the bank selected Amundi, Europe's largest asset management company headquartered in France, as its main partner for the project, instead of Asian financial institutions.
“Amundi is a recognized global leader for sustainable investment management, as well as one of the world's largest emerging market bond investment management businesses,” Lee said. “We are currently in ongoing discussion with several prominent Asian financial institutions, including life insurance companies, pension funds and sovereign wealth funds, regarding climate finance.”
AIIB's recent announcement was made amid growing focus on the importance of climate finance once the COVID-19 pandemic subsides.
“Obviously, the latest pandemic is making fundamental changes to every aspect of normal business,” Lee said. “Uncertainties in the real sector should remain a main concern to influence financial markets at least for the next few years. However, the agenda of climate finance is a long-term, ongoing issue and this should not be excluded in any circumstances and situations of financial markets.”
He also expected the current crisis will provide sophisticated and like-minded institutions chances to make preemptive moves, show their leadership and find attractive opportunities down the road.
Korea's Green New Deal
Although AIIB has yet to be fully satisfied with Korea and other Asian countries' efforts for climate finance, Lee was confident that Korean institutions will start to play major roles and participate actively in the new framework in the near future.
“We are aware Korean financial institutions are keen to follow the trend and acknowledge the growing importance of climate finance,” he said. “Actually, Asian financial institutions are very interested ― and recently more so ― in climate finance.”
From that standpoint, AIIB has a positive view on Korea's Green New Deal initiative.
The Korean government decided recently to invest 73.4 trillion won ($63 billion) in the country's transition into a low-carbon society by 2025 with an expectation of creating 659,000 new jobs.
“It is a very interesting and fresh idea that other countries may consider especially in such a difficult global economic situation,” Lee said. “We sincerely hope the initiative results in a big success and shows an example for other countries to follow.”
For the government-led investment plan to be successful, AIIB stressed it should guarantee effectiveness, transparency and proper governance and generate enough private sector demand.
Who is Lee?
Lee is responsible for financial intermediaries, structured financial products, capital markets, private equity, ICT and other productive sectors at AIIB.
Before joining the bank in 2016, he worked for the Korea Investment Corporation, Singapore-based Temasek and the Russia Direct Investment Fund. The financial expert also spent several years at STIC Investments, Samsung Life Insurance and International Finance Corporation.
He earned a Bachelor Economics degree from Korea University, an MBA in Finance and Investments and a Master of Science in Management Information Systems degree from George Washington University.