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ESG bond market to benefit from KRX’s fee-waiver

(The Korea Exchange)
(The Korea Exchange)

The stock market operator’s move to offer benefits to companies running socially conscious bonds is likely to add vitality to the environmental, social and governance-related bond market in South Korea, according to industry sources Tuesday.

The Korea Exchange is slated to waive listing fees and yearly managing costs for the socially conscious bonds of local firms for three years from June 15. It will also open a website to provide investment details and disclosures of each bond on the same day.

“To issue ESG bonds, companies have to get notarization from other institutions that they are responsible for social investments. In the process, they need to pay for external evaluation fees, but we’d like to reduce their burden,” an official at KRX’s bond market rules and regulations team told The Korea Herald.

“Currently, investors need to go to individual bond issuance’s website to get information. However, we’ll provide easy access for investors by gathering information on the related bonds on one site,” he said. “Within three years, we believe the local ESG bond market expand.”

ESG investing has gained momentum since 2018 with major institutional investors such as the state-run National Pension Service vowing to exercise a stewardship code. Citing rising demand for sustainability in corporate management and investment, the bond market is expected to grow, according to experts.

Amid the unprecedented coronavirus pandemic, ESG bonds have emerged as one of the key social bonds in the capital market. Recently, local financial companies such as Shinhan Card, KB Kookmin Bank and Shinhan Bank issued the bonds to support businesses affected by the pandemic.

Some local brokerage firms have also geared up for ESG bond-related business. While KB Securities formed an ESG committee to discuss ways to expand its business, NH Investment & Securities has organized a team to develop an ESG index to evaluate holding firms.

By Jie Ye-eun (yeeun@heraldcorp.com)
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