Recent Trends in Domestic Banks’ Management of Financed Emissions and Policy Implications [BOK Issue Note 2024-20]

구분
Business·Industry
등록일
2025.01.13
조회수
1859
키워드
Business.Industry 기후변화 Climate Change
담당부서
Office of Sustainable Growth(02-750-6833)

  In recognition of the key role of financial institutions in allocating funds for low-carbon transition, global banks have increasingly led efforts to measure and manage financed emissions by setting reduction targets. Although domestic banks are following suit by declaring carbon neutrality and making voluntary disclosures on their reduction strategy, it remains difficult to compare the data across time points or institutions, due to the absence of a standardized measurement method for financed emissions.

  Domestic banks’ financed emissions (corporate credit) began to decline since 2022, dropping to an estimated 157 million metric tons of CO2e in 2023. However, this de- cline is primarily driven by both direct and indirect greenhouse gas emission reductions from power generation sector, which were achieved through government action on national energy transition policy. Therefore , such reduction is not a direct result of the bank’s own efforts on reducing financed emissions. 

  Despite the recent downward trend in financed emissions, it seems that domestic banks are expected to face difficulties in achieving their interim targets for 2030 without their significant efforts. Moreover, the high share of credit to manufacturing, a loan portfolio focused on SMEs, and insufficient green finance infrastructure are the challenges that could hinder domestic banks’ efforts to reduce financed emissions. 

  Failing to meet pledged emissions reduction targets significantly can expose a bank to reputational risk and lead to outflows of global investment capital, undercutting competitiveness. However, simply decreasing the supply of credit to carbon-intensive in- dustries as an effort to reach pledged targets may have unintended consequence of slow transition to a low-carbon economy.

  To effectively reduce financed emissions, it is important to diversify management in- dicators to include emission intensity and carbon offset and find ways to encourage companies to invest in green technologies and standardize climate-related disclosures and green finance.

  

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