The revised K-Taxonomy guidelines announced at the end of last December have entered their implementation phase. With the revision, the number of economic activities recognized by the K-Taxonomy rose from 84 to 100. It is the result of widening the scope around greenhouse gas reduction and climate change adaptation, separating out ICT activities, and reworking the criteria for innovative items, the recognition criteria and the common exclusion criteria. Which industries green bond and green loan money flows into depends on this list.
The K-Taxonomy was established in 2022 and has followed a revision cycle of about two years since, with a first revision in 2024 and a second at the end of 2025. This revision reflects the 100 core technologies for carbon neutrality, and newly includes economic activities such as a wider scope for high-emitting industries, the construction and operation of heat pumps, and the development and operation of renewable energy specialized zones. ICT activities, which apply across all six environmental objectives, were newly created as a "common" category, together with a recognition criterion that such activities must be substantively linked to economic activities in the green sector.
On the recognition criteria, the scope of green building certification was widened to include overseas certifications, and LEED certification is presented as an example. Environmental management activities carried out in the course of doing business, such as wastewater treatment, waste recycling and air pollution prevention, can also be recognized as green economic activities. The uncertainty in interpretation that had arisen over whether the activities of local subsidiaries qualify has also eased. The full list of overseas certifications that will actually be recognized has not been finalized.
Assessments differ on the size of the expansion. Cho Jung-sam, head of the ESG division at Korea Investors Service (한국신용평가), explained that a considerable part of the increase from 84 to 100 is the result of subdividing new and renewable energy into solar, wind and other categories. Since both newly introduced activities and the subdivision of existing ones are reflected, the increase in the number of activities is not the same as the increase in the scope of support.
Funding conditions vary by support program. The Ministry of Climate, Energy and Environment and the Korea Environmental Industry and Technology Institute said on January 11 that they would expand the support program for issuing Korean green bonds and green asset-backed securities to reflect the revised K-Taxonomy. The core of the expansion lies in lowering issuance costs and administrative burdens for small and mid-sized firms with poor access to the bond market. The government is also widening interest subsidy programs for green loans and green bonds in the financial sector.
Market indicators moved the other way. Domestic green bond issuance last year came to 6.599 trillion won, down 20.1% from the previous year. Cited factors behind the decline include companies scaling back issuance amid the economic slowdown and worsening investment conditions, along with a contraction in renewable energy projects. The share of ESG bonds in Korea is understood to fall short of the 10% range of all bonds.
The makeup of issuers is also skewed to one side. As participation by ordinary companies in ESG bonds has fallen, financial firms and public corporations have kept their place as the existing issuers, and on the strength of public corporation issuance Korea's social bonds are counted as first in the world. Cho said small and mid-sized firms in sectors such as resource circulation could benefit from the interest subsidy incentives, while pointing to increasing ESG bond issuance by ordinary companies that are left out of the incentives as a task ahead.
The global market shows a different trend. Forecasts put the size of the world's green bonds and related loans this year at a record 947 billion dollars (about 1,374.8546 trillion won).
A case of issuance applying the revised criteria has also emerged. Hyundai E&C raised its issuance size on January 21 after its green bond book building drew more than five times the target amount, and it became the first domestic construction company to issue a bond meeting K-Taxonomy criteria. It is a case in which a large issuer with credit standing and issuance experience took the lead.
The wider revised list has increased the number of companies that qualify, but unless the capacity to handle external review and post-issuance reporting follows, the wider scope of recognition will stay an expansion on paper. The point at which interest subsidy rates and eligibility requirements are finalized will set the actual shape of how funds are allocated by company size.
