Climate change may lead to losses of over 45 trillion won for financial firms: BOK

SEOUL, March 18 (Yonhap) -- South Korean banks and other financial institutions may lose nearly 46 trillion won (US$31.83 billion) by around 2100 if the country fails to properly address climate change, the central bank said Tuesday.

The Bank of Korea (BOK) issued the forecast in a report based on the results of a climate stress test conducted in cooperation with the Financial Supervisory Service, the Korea Meteorological Administration and major financial firms.

Under the scenario where the government takes no action to address climate challenges, seven major local lenders and seven major insurance firms would face combined losses of 45.7 trillion won by 2100.

If the government belatedly pushes for net-zero policies after 2030, their losses would amount to around 40 trillion won.

The losses would be approximately 27 trillion won if the government achieves its zero-emission goals by 2050 or reduces carbon emissions by half by that time, the test showed.

"Climate-related issues are expected to become a key risk factor down the road, which could undermine the financial soundness and stability of banks and insurance companies," the BOK said in the report.

"It is essential to revise risk management guidelines, strengthen measures against unexpected losses and promote green investment," it added.

South Korea has pledged to reduce its greenhouse gas emissions by 40 percent from 2018 levels by 2030 and achieve carbon neutrality by 2050.

graceoh@yna.co.kr
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