Sustainability

KDB is committed to promoting and disseminating the concept of sustainable development and its promotional activities in local and overseas markets to help its partners and borrowers achieve their development goals (i.e. to reduce poverty, bring prosperity, secure peace, promote democracy, shape globalization in an equitable manner, and engage in environmental and climate protection).

* Click the title to check the detailed information

1. KDB is committed to supporting sustainable and quality growth through helping people and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. KDB believes that sound economic growth, grounded in sustainable private and public investment, is crucial to sustainable development. KDB’s investment and advisory services are developed and delivered in accordance with its mission and operational strategies
2. Central to KDB’s development mission are its efforts to carry out investment and advisory activities to enhance the sustainability of public and private sector operations and the markets they work in, and to achieve positive development outcomes. KDB is committed to ensuring that the costs of economic development do not fall disproportionately on those who are poor or vulnerable, that the environment is not degraded in the process, and that renewable natural resources are managed sustainably.
3. KDB recognizes that climate change is a serious global challenge and that climate related impacts may impede economic and social well-being and development efforts. Given the importance of the private sector’s role in the reduction of greenhouse gas emissions, KDB will engage in innovative investment and support adaptation measures that promote sustainable investments through the use and development of relevant products, instruments, markets, and advisory services as well as through the adoption of appropriate technologies, processes, and practices in the activities it supports.
4. KDB also recognizes the importance of ecosystem services and their role in climate change mitigation and adaptation. KDB will build on its experience in energy efficiency, cleaner production, renewable energy, and carbon markets as well as in the development of GHG accounting and approaches to climate change risk assessment, to produce instruments and develop practices that allow its borrowers to consider climate-related risks and opportunities in their investment decisions.

Corporate Social Responsibility (“CSR”)

For KDB’s activities in relation to the CSR, please see the CSR section in the Annual Report.

To reinforce its sustainability activities, KDB has been collaborating with international association and/or has adopted initiatives that are greatly committed to sustainability.

KDB signed the United Nations Global Compact (UNGC) in 2007 and since then has published its annual report stating KDB’s achievement in sustainability and social responsibility activities.

KDB is a founding member of International Development Finance Club (IDFC) established in 2014 (through the legacy KoFC). KDB is reinforcing its partnership with other financial institutions to collaboratively address international development issues such as green and environmentally friendly infrastructure development and climate finance.

KDB engages with the Green Climate Fund as its accredited entity (AE). KDB became Korea’s first AE of the GCF in December 2016. Becoming an AE of the GCF shows that KDB has the ability to manage the GCF’s resources in line with best-practice fiduciary standards for the scale and type of funding sought, as well as the ability to manage environmental and social risks that may arise at the project level.

KDB as a member of Equator Principles Association adopts the Equator Principles (January 2017), a globally recognized benchmark for determining, assessing and managing environmental and social risk in bank financed projects. As a first mover in the Korean finance industry to uphold environmental and social safeguards, KDB sets a standard for domestic institutions in promoting sustainable development and corporate responsibility.

KDB recognizes the importance of climate change, biodiversity, and human rights, and believe negative impacts on project-affected ecosystems, communities, and the climate should be avoided where possible. KDB adopted the Equator Principles (EPs) in January 2017 and established operational policies and guideline which set out the Bank's objectives, standards and procedures for managing the environmental and social (E&S) risks for Project-Related transactions in line with EPs.

Objectives of E&S Risk Management

• Ensure that the Projects we finance and advise on are developed in a manner that is socially responsible and reflects sound environmental management practices
• Contribute to delivering on the objectives and outcomes of the United Nations Sustainable Development Goals (SDGs)

Process of E&S Risk Management

• Determine if the financial product supporting the project is subject to E&S due diligence (Project Finance Advisory Services, Project Finance, Project-Related Corporate Loans, Bridge Loans, Project-Related Refinance and Project-Related Acquisition Finance)

• Categorize the project into Category A(High Risk), Category B(Medium Risk), Category C(Low Risk)

• Conduct compliance review against the EP requirements (commensurate with project’s risk category)
  as a part of loan approval process

• Incorporate covenants on client’s E&S undertakings into financial documents

• Client conducts monitoring and reporting to validate continued compliance with the EP requirements

What are the Equator Principles?

The Equator Principles is a risk management framework for determining, assessing and managing environmental and social risk in Projects. The Equator Principles is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making. It is based on the International Finance Corporation Performance Standards (IFC PS) on social and environmental sustainability and on the World Bank Group Environmental, Health, and Safety Guidelines (EHS Guidelines). Equator Principles

KDB and the Equator Principles

As the first Korean institution to adopt the EPs, KDB has continued to advocate for wider adoption of the EPs within the local financial community. Specifically, KDB provided official translations of the EPs-III and EPs-IV, which are available on the EPs Association (EPA) homepage. The Bank’s E&S team has also been active in providing advise and sharing experiences with financial institutions contemplating adoption of the EPs.

With growing capacity in E&S risk management, KDB is expanding its engagement in the work of the EPA. Following the official release of the EPs-IV in November 2019, KDB took on the role of "Work Group Lead“ tasked to coordinate the overall transition process from EPs-III to EPs-IV.
KDB's contribution helped Equator Principles Financial Institutions (EPFIs) maintain consistency and robustness of EPs application.

Scope of Application

The Equator Principles applies globally, to all industrial sectors and to the financial products described below when supporting a new Project:

• Project Finance Advisory Services where total Project capital costs are US$10 million or more.

• Project Finance with total Project capital costs of US$10 million or more.

• Project-Related Corporate Loans (including Export Finance in the form of Buyer Credit) where all of the following three criteria are met:
  • i. The majority of the loan is related to a Project over which the client has Effective Operational Control(either direct or indirect).
  • ii. The total aggregate loan amount and the EPFI’s individual commitment(before syndication or sell down) are each at least US$50 million.
  • iii. The loan tenor is at least two years.
  Bridge Loans
  • Bridge Loans with a tenor of less than two years that are intended to be refinanced by Project Finance or a Project-Related Corporate Loan that is anticipated to meet the relevant criteria described above
  Project-Related Refinance and
  Project-Related Acquisition Finance
  • Project-Related Refinance and Project-Related Acquisition Finance, where all of the following three criteria are met:
    • i. The underlying Project was financed in accordance with the Equator Principles framework.
    • ii. There has been no material change in the scale or scope of the Project.
    • iii. Project Completion has not yet occurred at the time of the signing of the facility or loan agreement.

    Equator Principles in Brief

    Equator Principles in Brief

    Principle	Requirement
    1. Review and Categorization	EPFI to categorize the project based on the magnitude of its E&S risks and impacts
    2. E&S Assessment	Client to address the relevant E&S risks and impacts of the project and propose measures to minimize, mitigate, and offset adverse impacts
    3. Applicable E&S Standards	Client to ensure that the assessment process evaluates compliance with the applicable standards, including relevant host country laws, regulations and permits
    4. E&S Management System and EPs Action Plan	Client to develop or maintain an E&S Management System and agree on an EPs Action Plan with the EPFI
    5. Stakeholder Engagement	Client to demonstrate effective stakeholder engagement as an ongoing process with the affected communities, and where relevant, other stakeholders
    6. Grievance Mechanism	Client to establish a grievance mechanism designed to receive and facilitate resolution of conserns and grievances about the project's E&S performance
    7. Independent Review	Independent E&S consultant to carry out a review of assessment documentation in order to assist EPFI's due diligence and assess the project's compliance with the EPs
    8. Covenants	Client to incorporate covenants linked to compliance with the EPs
    9. Independent Monitoring and Reporting	Independent E&S consultant to verify the client's monitoring information and assess project's compliance with the EPs
    10. Reporting and Transparency	Client to disclose a summary of the assessment documentation and publicly report GHG emission levels

    Data & Implementation Reporting more view Detail

    In order to ensure transparency in the implementation of the EPs, KDB reports annually on its EPs transactions following the minimum reporting requirements detailed in the EPs.