LG Chem Ltd., South Korea’s biggest petrochemical company, just sold the biggest-ever environmental, social and governance corporate bond offering in the country, which has vowed to zero-out carbon emissions by 2050.
The chemical giant raised 820 billion won ($744 million) selling three-year, five-year and seven-year ESG notes. The company pledged to spend 785 billion won to move entirely to renewable energy, build facilities that use eco-friendly feedstock and expand capacity to produce battery components, such as cathodes, according to a filing. It’s also spending about 224 billion won expanding vaccine plants and facilities that help prevent industrial accidents. The money from the ESG bonds will go toward those investments.
South Korea in October joined neighbors China and Japan in setting a deadline to reduce net carbon emissions to zero under its 42.7 trillion won Green New Deal. To help meet the national target, private-sector firms in the country have offered more than 5 trillion won of ESG bonds in the first two months of 2021, a total that is expected to rise to about 20 trillion won by the end of the year, according to Samsung Securities Co.
The petrochemical sector is South Korea’s second-biggest emitter after the steel industry, and LG Chem has vowed keep its carbon emissions at 10 million tons in 2050, equivalent to the level in 2019. The company’s latest issuance is part of a 1.2 trillion won bond offering by the company, the country’s largest since 2012 when the financial regulator introduced a book-building system, according to data compiled by Bloomberg.
Asian companies and governments have sold about $20 billion of ESG bonds across all currencies so far this year, more than three times as much as in the same period of 2020, according to data compiled by Bloomberg. South Korea was the biggest issuer after China.