Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Shinhan develops own system to measure 'financed emissions'
By Yi Whan-woo
Shinhan Financial Group said Thursday it has developed a measurement system on its own to keep track of its “financed emissions” ― the first among Korea' s financial services providers to come up with such a system amid the accelerated global campaign to go carbon neutral.
Shinhan Financial Group headquarters in central Seoul / Korea Times file
By Yi Whan-woo
The system observes the guidelines of the Partnership for Carbon Accounting Financials (PCAF), a group of more than 200 financial institutions worldwide committed to the facilitation, transparency and accountability of the 2015 Paris Climate Agreement.
It correspondingly calculates the carbon footprint associated with loans, investments, underwriting and other business activities, collectively called financed emissions, involving the company and its affiliates as well as their corporate customers.
“Being able to manage financed emissions and other relevant data is directly linked to a banking group's capacity concerning climate change,” Shinhan Financial Group Chairman Cho Yong-byoung said in a press release. “We will bring together all our capacity and do our best to achieve net-zero carbon emissions through environmentally-friendly finance.”
The nation's second-largest banking group said it has already carried out an assessment of the greenhouse gases emitted by financial assets worth 230 trillion won ($191 billion), linked to six different business sectors.
The measurement also will be used to customize targets for the group's affiliates to reduce their carbon footprint, and to materialize sales strategies to accelerate its long-term carbon-neutral goal called, the “Zero Carbon Drive.”
Global banking and asset management companies have been under growing pressure to calculate and reduce carbon emissions properly across their portfolios, considering the fact that financed emissions tend to be much larger, in aggregate, than the emissions from their direct operations or energy consumption.
According to an April 2021 report from the Carbon Disclosure Project, an environmental transparency organization, 84 financial institutions that collectively managed $27 trillion in assets on average had financed emissions more than 700 times greater than their operational emissions.