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The Bank of Korea stated on the 3rd that it has allocated some of its foreign currency reserves into the BIS Climate-Aware Corporate Bond Fund, which was introduced on the 26th of last month. The fund was created to address climate-related challenges and promote the shift toward a low-carbon economic system.

It allocates capital to corporate bonds that have favorable credit ratings (with some sectors excluded), yet places greater emphasis on firms showing robust climate action, like those implementing low-carbon transition strategies. The fund was established after discussions with an advisory panel made up of 14 central banks from leading economies, including the Bank of Korea, and is overseen by the BIS Asset Management department at the Bank for International Settlements (BIS).

Since outlining its fundamental approach to ESG management of foreign currency assets in 2021, the Bank of Korea has progressively broadened its ESG-focused investments. After joining the BIS Asia Green Bond Fund in 2022, the Bank intends to keep supporting global climate initiatives by participating in the BIS Climate-Aware Corporate Bond Fund. This approach also aims to deepen collaboration with the BIS and other central banks abroad, while boosting its global reputation.

By the end of 2024, the Bank of Korea’s ESG-related assets reached around 20.38 billion dollars. This marks almost a fourfold rise from the end of 2020, when the amount was 5.45 billion dollars.

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