The Export-Import Bank of Korea (KEXIM) has integrated environmental, social and governance (ESG) factors into New Deal investment mandates, after the criteria was identified as a key priority for the state-run bank.
A request for proposals (RFP) issued on February 22 said that KEXIM will award private equity mandates totaling 50 billion won ($44.7 million) to two managers. Proposals are due on March 12 and selections will be made before the end of April.
KEXIM said the selected managers should invest in sectors listed in the government’s guidelines on the New Deal investment. ESG factors will be included in the evaluation of the fund’s performance, and a manager will receive an incentive fee based on the improvement of ESG scores by the fund’s portfolio companies. KEXIM also plans to select an ESG ratings firm to help with the evaluation process.
The bank’s focus on ESG issues is in line with its three top priorities this year: the other two are achieving the $600 billion export milestone and digital innovation.
The RFP has been issued earlier this year, as the 2020 selection process for private equity mandates was not launched by the bank until April.
“KEXIM’s early issue of the RFP seems to be aimed at attracting asset managers with strong track records before they apply for tender processes launched by other institutions,” an industry insider said.
Another industry watcher added: “Integrating ESG factors is a positive attempt when considering the rise of ESG investing globally.
“Managers that showed interest in the New Deal mandates awarded by Korea Development Bank and Korea Growth Investment Corp will likely consider submitting proposals to KEXIM.” (Reporting by Byung-yoon Kim)