The Bank of Korea has published an assessment of Korea’s green bond market, finding that issuance has expanded rapidly but remains narrow and concentrated among highly rated institutions and a limited range of projects. Administrative demands, complex issuance and reporting procedures, and difficulty securing projects aligned with the K-Taxonomy are the main barriers to further growth, while direct financial incentives remain limited. Issuance rose from KRW 3 trillion during 2018–2020 to KRW 40.6 trillion during 2021–2025, but green bonds represented only 1.8% of total Korean bond issuance in 2025, compared with a 4% average across major economies. Additional costs for external reviews, certification and reporting are broadly offset by government interest subsidies and an estimated greenium of about 2 basis points, leaving overall issuance costs similar to those of conventional bonds. The assessment recommends streamlining issuance and reporting requirements, aligning the Korean Green Bond Guidelines with the Green Credit Management Guidelines, broadening eligible projects, maintaining cost support and developing secondary market data, green bond indices and related investment products.
Bank of Korea identifies procedural burdens and project shortages as key constraints on green bond growth
The Bank of Korea found that Korea’s green bond market has grown rapidly but remains concentrated and represents only 1.8% of total bond issuance. Administrative burdens, complex procedures and a shortage of K-Taxonomy aligned projects are the main constraints. It recommends streamlined requirements, continued cost support and stronger market infrastructure.