Korea Development Bank Not Calculating Carbon Emissions Despite 9.5 Trillion Won in Fossil Fuel Loans

1.2 Trillion Won Increase Over Five Years
Han Changmin: "Bank Must Disclose Range and Limitations of Estimates"

Although Korea Development Bank's outstanding loans related to fossil fuels are approaching 9.5 trillion won, it has been pointed out that the bank does not calculate financed emissions, a key indicator of carbon emissions.

Seoul Yeouido Korea Development Bank Headquarters. Korea Development Bank

According to data submitted by Korea Development Bank to Assemblyman Changmin Han of the Social Democratic Party, a member of the National Assembly’s Political Affairs Committee, the bank’s outstanding fossil fuel loans reached 9.4533 trillion won as of the end of last year, an increase of 1.187 trillion won compared to the end of 2021 (8.2663 trillion won).

The cumulative amount of new loans related to fossil fuels from 2021 to 2025 stood at 10.7914 trillion won. By fuel type, this includes 5.8204 trillion won for liquefied natural gas (LNG), 4.1697 trillion won for oil, and 801.3 billion won for coal.

Recently, the bank’s new lending for overseas fossil fuel projects has been on the rise.

Last year, new overseas fossil fuel lending totaled 1.4021 trillion won, marking a 33.2% increase from the previous year’s 1.0529 trillion won. Over the same period, new domestic fossil fuel lending decreased sharply by 66.4%, from 1.2268 trillion won to 412.2 billion won.

From 2021 to 2025, new overseas lending increased by 141.7% (822.1 billion won), while new domestic lending decreased by 80% (1.6461 trillion won).

As a result, the share of new fossil fuel loans going overseas rose by 55.3 percentage points, from 22% in 2021 to 77.3% in 2025.

Outstanding overseas loans increased from 3.2365 trillion won to 5.581 trillion won, whereas domestic outstanding loans decreased from 5.0298 trillion won to 3.8723 trillion won.

In response, Korea Development Bank explained to the Assemblyman’s office that it is preparing to calculate financed emissions but currently has no figures that can be disclosed. Financed emissions refer to the share of customers’ carbon emissions that financial institutions are indirectly responsible for, through investments, loans, and other financial activities.

The bank stated, “Because there is a lack of actual carbon emissions data disclosed by companies, it is difficult to provide an accurate report of financed emissions, and a plan for measuring and disclosing these emissions can only be devised once company emissions disclosures become mandatory.”

However, Assemblyman Han pointed out that in the case of Industrial Bank of Korea (IBK), the bank calculates financed emissions in accordance with standards set by the Partnership for Carbon Accounting Financials (PCAF), which is the international guideline.

If no emissions data for the debtor is available, PCAF estimates greenhouse gas emissions based on economic activity data such as revenue or assets, and then allocates a portion according to the financial institution’s share of funding as financed emissions.

Assemblyman Han stated, “As a state-run bank, Korea Development Bank cannot present data showing how much emissions are linked to its financing. If there is a lack of company disclosures, the bank should first release the ranges and limitations of feasible estimates and gradually improve the accuracy of its data.”

This content was produced with the assistance of AI translation services.