Green bonds account for 1.8% of the domestic bond market. That is the case even though issuance has passed 40 trillion won since 2021. The average for major countries presented in the Bank of Korea's report "Review of Green Bond Issuance Conditions" is 4.0%, and the domestic share does not reach even half of that.
Issuance has grown more than 13-fold since 2021. A market that started from a low base has quickly built up its size, but its stake in the bond market as a whole still remains at a level contested below the decimal point.
The Bank of Korea assessed that, thanks to government support, the cost burden of issuing green bonds does not diverge much from that of ordinary bonds. The report pointed to complicated issuance procedures, and a shortage of eligible eco-friendly projects to put the funds into, as constraints on expansion.
Korea National Railway said on the 4th that it had issued 150 billion won in green bonds. It is the largest amount since its first issuance in 2023. It began with the 30 billion won used for Phase 1 of the Honam high-speed railway in 2023, went through 50 billion won for the metropolitan area high-speed railway construction project in 2024 and 70 billion won for Phase 2 of the Honam high-speed railway in 2025, and the 150 billion won raised this year will go into roadbed construction for the Pyeongtaek-Osong double-track expansion.
This bond received a rating of "conforming" in Korea Ratings' ESG bond certification assessment, recognized for conformity with the Korean Green Taxonomy guidelines and other criteria. The K-Taxonomy is a classification system the government put together to sort out which economic activities meet eco-friendly standards. The corporation was selected in March 2026 for the Korea Environmental Industry and Technology Institute's "2026 Korean Green Bond Issuance Interest Subsidy Program" and will receive an interest subsidy of 0.2% a year.
The financial sector is putting its weight on lending rather than bonds.
Woori Financial Group's cumulative ESG finance came to 75 trillion won at the end of June 2026, equal to 75% of its 100 trillion won target for 2030. The figure, which stood at 11.7 trillion won at the end of 2021, rose to 23 trillion won at the end of 2022, 39.3 trillion won at the end of 2023, 54 trillion won at the end of 2024 and 67 trillion won at the end of 2025. Of that, green bonds amounted to only 700 billion won from 2025 through the first half of this year. Woori Bank issued 450 billion won for eco-friendly energy storage and waste-to-energy recovery, and Woori Financial Capital issued 250 billion won for loans on eco-friendly vehicles including electric cars.
The same group's cumulative green lending stood at 1.2 trillion won at the end of June 2026. Woori Bank introduced a "K-Taxonomy specialist consulting AI" that applies the K-Taxonomy to loan screening, attaching it to the process of determining eligibility.
On an end-2025 balance basis, ESG-related loans accounted for 12.1% of retail loans, 8.5% of loans to small and medium-sized enterprises and 4.2% of corporate loans. By contrast, ESG bonds, which combine green bonds, social bonds and sustainability bonds, made up 10.4% of total bond issuance that year, while ESG investment and project finance made up 8.0% of the related total.
Lifting 1.8% to the 4.0% range calls for an increase in the projects able to pass the certification gate, more than an increase in the size of a single issuance. That is where the Bank of Korea's citing of a shortage of eligible projects as a constraint also hinges. If the procedural burden eases and the number of projects receiving a K-Taxonomy conformity rating grows, the share has room to move.
The corporation spent three years growing its issuance from 30 billion won to 150 billion won. Which line and which construction the next round will be attached to, and how far the number of projects receiving a conformity rating will grow, remain the variables that will move the 1.8% share.
