In releasing "A Roadmap to Build a Climate-Resilient Economy" in October 2021, the White House acknowledged that the climate crisis could pose a significant financial risk and announced key principles and core implementation strategies for an effective risk response. The Roadmap establishes standards to reflect climate risks in a number of areas of finance, including federal budgeting and expenditures, pension fund management, mortgage loans, insurance, and securities transactions. In order for Korea's financial system to closely respond to climate risk factors and operate on common guidelines and transparent information, the government needs to become involved.
HIGHLIGHTS
1. In releasing "A Roadmap to Build a Climate-Resilient Economy" in October 2021, the White House acknowledged that the climate crisis could pose a significant financial risk and announced key principles and core implementation strategies for an effective risk response.
2. The Roadmap establishes standards to reflect climate risks in a number of areas of finance, including federal budgeting and expenditures, pension fund management, mortgage loans, insurance, and securities transactions. With the upcoming introduction of the obligations to disclose climate risk, the US government is actively intervening in the reorganization of the financial system to lead decarbonization.
3. The South Korean government has taken steps, such as increasing green bond issuance, announcing ESG investment principles for the National Pension Service, and assessing the impact of greenhouse gas reductions in government spending, but the country's basic preparations - including climate risk assessment methodologies and standards, as well as climate risk disclosure obligations of financial market participants - are still lacking. In order for Korea's financial system to closely respond to climate risk factors and operate on common guidelines and transparent information, the government needs to become involved.