Research Report
E.S.G. Legislative Policy Study [I] -Utilization of Green Finance to Promote E.S.G. Investment-
Ⅰ. Backgrounds and Purposes
▶ Necessity of ESG-related Policy Finance
○ ESG is recognized both conceptually and practically as an area that cannot depend only on the spontaneity of a company or leave it to the flow of the corporate ecosystem. Therefore, in addition to establishing an ESG evaluation and disclosure system, it is necessary to review the use of policy finance as a way to support ESG management.
○ Green finance started to be used after the 「Framework Act on Low Carbon Green Growth」, but the legal basis for green finance is still ambiguous as the term green finance is used as a part of the plan without a legal concept or category of it being established. to be. Since the 「Framework Act on Carbon Neutrality and Green Growth for coping with Climate Crisis」 was enacted, this study review the legal concept of green finance and legislative supplements related to green finance focusing on the contents of this act.
Ⅱ. Major Content
▶ Analysis on Concept and Category of Green Finance
○ Green finance includes the following: First, increase the allocation of funds to new technologies and industries that reduce climate risk (green technology and green industry), and support the development and expansion of green financial products so that production and consumption activities of companies and individuals can be eco-friendly; Second, to provide brokerage and advisory services in the corporate carbon credit market.
- The provisions on financial support under the current “Carbon Neutrality Framework Act” can be interpreted as an extension of the existing green finance. It is necessary to find ways to expand in the future.
○ Core policies of green finance include the creation of a green fund through public offering, the provision of additional points according to the green investment performance of the pension fund, the issuance of green long-term deposits and green bonds and green local bonds that are exempt from interest income, and the creation of a carbon fund.
- Specific examples currently being used include green finance-related products such as green funds, deposits, and bonds, green technology certification for selection of investment and support targets, green technology products, green business certification, and certification systems for green specialized companies.
○ Due to the recent emphasis on climate and environmental risks, the proportion of responses to climate change such as greenhouse gas emissions in the environmental sector is more important than a portion of the index. Considering the relatively easy international standardization of indicators compared to social and governance and the severity of the climate crisis, it is also necessary to pay attention to the scalability of green finance to prepare for climate risks.
▶ Measures to Promote Green Finance and to Improve Laws related to Green Finance
○ In Section 58 of the Carbon Neutral Framework Act, although there is a clearer legal basis for finance to respond to the climate crisis, there is little need to maintain green finance through the National Carbon Neutral Green Growth Basic Plan as before. Therefore, it is important to determine the scope of finance to respond to the climate crisis that can sufficiently cover this scope in consideration of the existing green finance.
○Although the「Carbon Neutrality Framework Act」was enacted and provisions on green finance were presented, there are factors that hinder the vitalization of green finance. These are the uncertainty about the profits and risks of green gold, the lack of expertise and information of financial companies on green industries and technologies, and the unclear legal system for green finance.
Ⅲ. Expected Effects
▶ A Plan for the Development of Green Finance
○ In accordance with the Framework Act on Low-Carbon Green Growth, the limitations of the concept of green finance included in the 5-year green growth plan and the necessity for expansion were analyzed.
○ According to the “Carbon Neutrality Framework Act,” the relationship between “finance for climate crisis response” and “green finance” was established, and measures to improve the relevant legal system were presented.