Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
BOK, FSC underperform in green initiatives despite economic capacity
Bank of Korea headquarters in Seoul / Yonhap
By Lee Yeon-woo
The Bank of Korea (BOK) and Financial Services Commission (FSC) are facing criticism for lagging behind in green finance initiatives, despite Korea's economic clout and significant historical contribution to climate change, a report showed Thursday.
In its latest report, Positive Money, a London-based nonprofit, ranked Korea eighth among the 13 ASEAN Plus Three economies in its Green Central Banking Scorecard. The report evaluated how central banks and regulators incorporate environmental objectives into monetary and financial policies.
Korea scored just 24 out of a possible 130 points. The evaluation encompassed four categories: research and advocacy (10 points), monetary policy (50), financial policy (50) and leading by example (20). Korea received 5, 13, 3 and 3 points, respectively.
China, Malaysia, Singapore, Indonesia, the Philippines, Japan and Thailand — in that order — ranked ahead of Korea.
The report said weaker performances from countries like Vietnam, Cambodia, Laos, Brunei and Myanmar reflected limited capacity and resources, while calling Korea's showing "underwhelming."
"Countries with greater economic power and larger historical contributions to environmental degradation should lead the charge here, and support the most vulnerable countries to develop their own green central banking policies, both within the region and beyond," said Joe Herbert, senior researcher at Positive Money and lead author of the report.
Korea pledged in 2021 to make the public sector a driver of its 2050 net zero goal. But progress since has been patchy.
Monetary policy emerged as Korea's strongest area. The BOK offers preferential lending terms to commercial banks that provide financing for small and medium-sized green enterprises. Still, the report said these incentives aren't directly tied to green lending volumes or backed by clear definitions — unlike policies in China.
The BOK has also yet to incorporate green securities into its open market operations or collateral frameworks, despite promising to do so in 2021. A lack of green government bonds is partly to blame, highlighting the need for tighter coordination with fiscal authorities.
As for the FSC, the report criticized the absence of key policies aligned with a net zero pathway, such as differentiated capital requirements for green loans and the integration of climate risks into supervisory processes.
Environmental, social and governmance (ESG) disclosure requirements for corporations have also been delayed until at least 2026.
"The BOK and FSC have laid important groundwork through monetary operations and regulatory frameworks, but delivery has lagged behind early ambitions," the report stated. "The BOK should prioritize integrating green securities into its core monetary operations, while both the BOK and FSC can strengthen supervisory tools to align the financial sector with the country’s net zero targets."