KDB: Overview

Founded:
1954
Mission:
"Advanced policy bank at the forefront of Korea's sustainable growth." The Mission envisions “an advanced policy bank” whose identity and roles are supporting industrial and social development by promoting the national economy and improving people’s quality of life.
Total assets:
$239,670,560,456 (KRW ₩ 268,839,664 mio.)
Headquarters:
Seoul, South Korea
Top five shareholders:
Government of the Republic of Korea (100%): Ministry of Economy and Finance (91.71%); Ministry of Land, Infrastructure and Transport (7.60%); Ministry of Oceans and Fisheries (0.69%). Note that KDB reports to the Financial Services Commission, rather than the Ministry of Economy and Finance.
Summary of Paris alignment assessment:
The Korea Development Bank has a significant amount of work to do to implement its commitment of aligning to the Paris Agreement on climate change. It would appear that this work has only just begun. It should prioritise the creation of an overarching climate strategy (and dedicated climate change team within the institution), full GHG accounting and targets and implementing fossil fuel exclusion policies.

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

Share
MetricSummary
Promotion of green financeSome progress –  Whilst not at the forefront of innovation at the international level, KDB is actively promoting and shaping the nascent green capital market in Korea.
Fossil to non-fossil energy finance ratio and scaling up climate financeUnaligned – Between 2016-18 for every $1 the KDB provided to fossil fuels, $0.35 went to renewables. This is one of the highest ratios in favour of fossil fuels amongst the public banks included in this analysis.
Nature based solutionsUnaligned – No information can be found for a targeted investment programme in biodiversity, nature-based solution or sustainable agriculture.
Climate risk, resilience, and adaptationUnaligned – No processes to screen or manage climate risks at project level, no disclosure of adaptation finance.
Overarching climate strategyUnaligned – KDB does not have a standalone climate
strategy, but recognises climate change as a “challenge”
in its overarching strategy.
Integration of climate mitigation and resilience in key sectoral strategiesUnaligned – There is no information or evidence of sector-specific strategies. KDB does state its intention to finance projects related to hydrogen/electric charging stations, electric vehicles and public transport.
Institutional leadershipSome progress – KDB is the leading institution for green finance in South Korea. Internationally, the bank does not belong to the leading development finance institution.
Energy access and fuel povertyNot applicable – KDB does not have a dedicated strategy nor targets to promote energy access. It mostly operates in countries where energy access is not an issue.
Energy efficiency strategy, standards and investmentUnaligned – While KDB has no institution-wide energy efficiency policy, its Sustainability Bond Framework sets out standards for energy efficiency. However, the share of its issued Sustainability Bonds equals only 0.1% of its entire portfolio.
Fossil fuel exclusion policiesUnaligned – KBD has no coal, oil or gas exclusions and there are examples of KDB loans for coal, oil extraction and gas projects. However, due to a domestic ban of new coal-fired power generation and a government announcement to stop funding coal projects internationally, KDB has effectively stopped funding coal.
Greenhouse gas accounting and reductionUnaligned – There is no GHG accounting at project or portfolio level (with the exception of renewables projects financed by green bonds). This is despite being a signatory of the Equator Principles and accredited to the Green Climate Fund.
Shadow carbon pricingUnaligned – No information on the application of an internal carbon price can be found.
Country level workUnaligned – Despite signs of taking some initiative to promote cleaner technologies in partner countries, KDB lacks a coherent approach to integrate climate into its partner country engagement.
Technical assistance for implementing Paris goalsNot applicable – Almost no information could be located
on KDB technical assistance.
Transparency of climate finance dataUnaligned – No project level information is available and there is no disclosure of financial intermediary sub-projects.

 Top recommendations

  • KDB should put in place a standalone climate strategy, in addition to its implementation of Korea government policy in this area.
  • KDB should put in place a fossil fuel exclusion for coal, and then extend that to oil and gas projects. It is noted however that as the Korean government has no current plans for coal-fired power stations, KDB in turn has no plans to finance any coal power stations in Korea.
  • KDB should start providing project-level and portfolio data, including GHG emissions, to increase its transparency. Publishing GHG data would bring it into line with the Equator Principles to which it has committed.
  • KDB should include climate risk assessments within its project appraisal process. 

Leadership area

KDB is a leader within the Korean financial market. It has signed up to the Equator Principles, which are based on the IFC’s environmental, social and human rights performance standards, and represents a minimum starting point for financial institutions. It was also accredited to the Green Climate Fund in 2016 as the first and only Korean institution, which is a significant achievement. To date, it has not submitted a project to the GCF. However, it has signed a Memorandum of Understanding (MoU) with the Korea International Cooperation Agency (KOICA) and the Korea Environmental Industry & Technology Institute (KEITI) for the joint development of GC projects. KDB has also estblished a  Sustainable Bond Framework in 2019 to establish a standardised framework for ESG (Environment, Social and Governance) bonds. KDB and the Korena Electric Power Corporation (KEPCO) host.

Last updated: June 2020.

Subscribe to our newsletter