S.Korea’s central bank to raise ESG focus in foreign currency asset management

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Economy16 minutes ago (Sep 27, 2021 11:06PM ET)

(C) Reuters. FILE PHOTO: The logo of the Bank of Korea is seen on the top of its building in Seoul, South Korea, July 14, 2016. REUTERS/Kim Hong-Ji/File Photo

By Joori Roh

SEOUL (Reuters) – South Korea’s central bank said on Tuesday it would raise its focus on environmental, social and governance (ESG) issues in managing its foreign currency assets and prepare guidelines to be applied to these assets going forward.

To respond to growing demand for socially responsible investing, the bank will “upgrade” its asset management strategy from the current stage of investing in ESG products to applying ESG elements to all foreign currency assets, the Bank of Korea (BOK) said in a statement.

The BOK has invested a total $7.12 billion of its foreign currency assets in ESG-related stocks and bonds as of end of June, with around $1.22 billion in stocks and $5.90 billion in bonds. That compares to $5.45 billion invested by end of 2020.

The central bank will continue to increase its investment in ESG-related bonds and stocks, it added.

The bank plans to apply negative screening – a policy that excludes investment in companies or sectors that does not meet specific ESG criteria – by utilising the MSCI ESG screened indexes https://www.msci.com/esg-screened-indexes, while the BOK may also review establishing its own negative screening system within two to three years.

The central bank also said it sees the widening of ESG investment raising the rate of return of its foreign currency assets going forward.

S.Korea’s central bank to raise ESG focus in foreign currency asset management

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