On Korea: Academic Paper Series
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On Korea: Academic Paper Series 2021About On Korea: Academic Paper Series
In December 2006, KEI initiated our Academic Paper Series in which we commission up to 10 papers per year with diverse perspectives on original subjects of current interest to Korea watchers. This year-long program provides both leading Korea scholars and new voices from around the world to speak and write on trends and events affecting the Korean peninsula.
This paper assesses the potential for South Korea to be a regional leader in advancing environmental, social, and governance (ESG) investing, and supporting sustainable development in the Asia-Pacific region. Many economies in the Asia-Pacific region are facing threats from climate change or other environmental limits to growth. Thus, the expansion of ESG investment and green infrastructure is a major regional challenge that must be addressed for sustainable growth.
We argue that Korea can play a central role in overcoming this challenge based on the following conjectures. First, Korea’s developmental legacy has allowed it to reshape its financial market and investment habits to quickly expand its ESG market. This model is more relatable to developing economy governments than those offered by Western economies. Sharing Korea’s experience and know-how with the region’s developing economies can augment their ESG compliance capacities and make them a more attractive destination for sustainable infrastructure investments. Second, Korea’s significant presence in the region as a major creditor and exporter can induce ESG adherence from the private sector as Korean investors enhance their commitment to ESG principles. While questions remain about the sustainability of Korea’s ESG adherence due to the market’s heavy reliance on government agency finance and ad hoc pandemic response investments, the increasing global interest in the ESG market makes it likely that the Korean government will continue to incentivize adherence to ESG principles.