Korean ESGs: KB Asset Management (KBAM) is Korea’s oldest asset management firm, so news that, at $2.7 billion, the value of its ESG (Environmental, Social, and Governance) funds had outstripped that of its alternative investment portfolio is being seen as a milestone in the upward trajectory of the Korean ESG market. It also confirms the extent of a boom in demand which saw 37 separate entities issue a combined total $14.6 billion in environmentally or socially responsible bonds in the first eleven weeks of 2020. That represents just under one fifth of the total issuance since 2018.
KBAM is now considering the rollout of an infrastructure fund which will be in line with one of Korean President Moon Jae-in’s pet projects, the Green New Deal. Launched last July, the initiative is part of the wider $144bn New Deal which aims to create 1.9 million new jobs by 2025 and centres on ten key projects that range from green mobility to smart healthcare. The green element will focus on renewable energy, green infrastructure and the industrial sector, and its green car subsidy programme offers up to US$17 million in subsidies to people buying electric cars in 2021 and up to US$33.5 million for hydrogen fuel-cell electric vehicles.
Government commitment to the environmental cause has given the Korean ESG market a significant boost and, with inflows to ESG funds not showing any signs of abating, many Korean fund managers are looking to make the most of the trend. Several of them are ramping up the size of their ‘green’ research teams as they look to grow the number of socially responsible investment funds on offer to the swelling ranks of potential investors, many of them with a younger demographic than has historically been the case.
In February, Samsung Asset Management, launched its Kodex Carbon Efficiency Green New Deal ETF and in the same month rolled out a renewable-energy themed fund-of-funds portfolio in South Korea to invest in an ESG strategy run by BNP Paribas Asset Management that was the best-performing fund sold in Asia last year. Citibank Korea also recently launched a range of ESG products, including overseas funds with huge exposure to European markets.