Samsung, financial groups to raise $1.5 bn to tackle climate crisis

On the 24th, leaders from major financial groups and Samsung Electronics gathered at the Korea Federation of Banks in Seoul for a signing ceremony to support SMEs in addressing the climate crisis. (Financial Supervisory Service)

Samsung Electronics Co. and the five major financial holding companies in South Korea will create a fund of 2 trillion won ($1.51 billion) to support small and medium-sized enterprises (SMEs) in their transition to low-carbon operations.

The five major financial groups are KB, Shinhan, Hana, Woori, and NH Nonghyup, and it is also the first time the Korean industry and financial sectors are jointly raising funds for a sustainable future.

The country’s Financial Supervisory Service signed a business agreement with Samsung Electronics and the five major financial holding companies on Tuesday to support SMEs in responding to the climate crisis.

Under the agreement, Samsung Electronics will deposit 1 trillion won into environmental, social, and governance (ESG) funds at the five banks, and the financial holding companies will add another 1 trillion won from their own resources, bringing the total to 2 trillion won for loans. These funds will be used to provide low-interest loans for SMEs to facilitate their low-carbon transition and comply with relevant regulations.

SMEs that invest in responding to the climate crisis will be eligible to receive loans with up to a 3.7 percentage point reduction in interest rates, with a limit of 2 billion won per company.

SMEs benefiting from this fund are expected to save approximately 65 billion won in interest costs annually, while primary suppliers to Samsung Electronics and Samsung Display Co. will receive interest-free loans for up to three years within the loan limit.

Despite the growing global regulations requiring ESG compliance amid the climate crisis, Korean SMEs and middle-market company have struggled to invest in high-efficiency production equipment and environmental and safety facilities due to the significant costs involved. Samsung Electronics and the five major financial groups are stepping in to help address these challenges.