KB Financial Group has signed a memorandum of understanding with the Korea Chamber of Commerce and Industry jointly to provide special loans for small and medium-sized enterprises making environmental, social and corporate governance efforts.
KB Financial Group Vice Chairman Yang Jong-hee and Woo Tae-hee, executive vice chairman of the KCCI, gathered at the KCCI headquarters in Seoul on Thursday to sign the memorandum.
"Based on this MOU, KB Financial Group plans to provide various and extensive supports to enable small and medium-sized enterprises to strengthen their ESG competitiveness," a KB Financial Group official said in a statement.
A sustainability-linked loan that the Korean lender will offer is designed to encourage SMEs voluntarily to strengthen their ESG management.
Under the memorandum, KB Kookmin Bank will launch a special loan called the "KB Green Wave ESG Excellent Corporate Loan" in mid-April, which provides up to a 1.0-percent discounted rate to small and medium-sized enterprises.
Through this loan program, the Korean lender will be providing a total of 500 billion won ($381.2 million) for SMEs.
To receive the benefits of these loans, such as interest rate discounts, companies must first select among the lender's nine key performance indicators for sustainability-linked loans and set up their own ESG goals. The local firms also have to manage their firms accordingly to reach their goal.
KB's nine key performance indicators for sustainability-linked loans include criteria such as the employment rate of people with disabilities, the development of a code of ethics, and the establishment of an anti-corruption management system.
In addition to the loan, the bank will also assist the KCCI in providing ESG education programs and consulting services for local companies.