Green Bonds

Green bonds refer to debt securities issued with special purposes to raise capital to invest in environmentally-friendly projects such as renewable energy projects or social infrastructure.

Social Bonds

Social bonds refer to debt securities issued to raise capital to invest in businesses that can create social values.

Sustainability Bonds

Sustainability bonds refer to debt securities issued to fund businesses that are environmentally-friendly and can create social values

Sustainability-Linked Bonds

Sustainability-Linked Bonds refer to debt securities for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability/ESG objectives

GBP, SBP and Sustainability Bond Guidelines

These are voluntary guidelines for issuing green bonds, social bonds, and sustainability bonds, which is based on Use of Proceeds, and they are comprised of 4 core elements: 1) Use of Proceeds, 2) Process for Project Evaluation and Selection, 3) Management of Proceeds and 4) Reporting.

Sustainability-Linked Bond Principles(SLBP)

These are voluntary guidelines for issuing Sustainability-Linked bonds, which is based on General Corporate Purpose, and they are comprised of 5 core elements: 1) KPI, 2) SPT, 3) Characteristics of Bonds, 4) Reporting, 5) Verification.

Climate Bond Standards (CBS)

These are standards to assess the eligibility of bonds and other debt instruments as green bonds, and their key features include: requirements on the use·tracking·reporting of proceeds based on full alignment with the Green Bond Principles (GBP), specific standards on the eligibility of low-carbon·climate adaptation projects and assets, verification process with independent verifiers and consistent procedures, and independent certification by the Climate Bonds Standard Board.

Green Bond Guidelines, K-GBG

These are Korean guidelines for green bonds which were established in cooperation with the ministry of environment, Financial Services Commission, Korea Environmental Industry & Technology Institute, Korea Exchange, and they include definitions, framework, external review and supplements.

Benefits to Issuers

1. A more advanced sustainable management
   External evaluation and accreditation of ESG may facilitate a progress towards a more systemized sustainable management. Since an issue of ESG bonds, in particular, also serves as an indicator of ESG activities, it may lead to higher performance in external ESG evaluations and ultimately, greater corporate values.
2. An enhanced corporate image
   An issue of ESG bonds may raise awareness of the company's carrying out of a project that is in line with sustainable development goals of our society, thereby actively improving corporate reputation, social contribution, corporate image and brand value.
3. A greater accessibility to ESG investments
   The issuer may have a greater accessibility to investments from investors around the world who value corporate social responsibility. Also, domestically, a growing number of pension funds and private institutional investors are increasing their socially responsible investments. Already, the demand for ESG bonds is higher than that for other bonds, making it easier to raise capital.

Benefits to Investors

1. Pursuing both investment returns and contribution to sustainable growth at the same time
   Robust investment in bonds that invest in socially responsible investment projects is likely to contribute to both achieving stable returns (interest and principal) and building a sustainable society, such as improving environment and creating social values.
2. Joining in the Sustainable Development Goals (SDGs)
   There may be demand for sustainability-themed projects mandated by international agreements and other arrangements for institutional investors. Investing in ESG bonds may help fulfill such obligations.
3. Managing risks through alternative investment
   ESG bonds can be classified as alternative investing as they invest in specific projects with special purposes. If the investments are mixed with less-correlated traditional assets, risks associated with investment may effectively be managed through diversification.

Benefits to Society

1. Contributing to environmental protection
   A vibrant investment in green projects can contribute to environmental protection by, for example, curbing emissions, preventing air pollution, and combating global warming.
2. Contributing to building a sustainable society
   If a sustainability project ESG bonds are invested in starts to make progress effectively, it can contribute to addressing social and economic issues, such as saving energy, protecting environment, and improving social values. Furthermore, a country can benefit from a reminder and a heightened awareness of the need for socially responsible investing, charting a path to a more sustainable growth of our economy.