Korea Exchange to create ESG investment valuation indicator

2021.04.01 10:50:06 | 2021.04.14 14:13:44

[Photo by Korea Exchange]이미지 확대

[Photo by Korea Exchange]

Korea Exchange (KRX), the sole securities exchange operator in South Korea, is developing an investment gauge that measures a company’s performance in the environmental, social, and governance (ESG) criteria as ESG has emerged as a key theme in global financial markets.

The Korean bourse operator aims to create an investment indicator that is similar to price-to-earnings ratio and price-to-book ratio to help investors evaluate a firm’s market capitalization against the ESG criteria, said KRX Chairman Sohn Byung-doo at a press meeting on Wednesday.

ESG is a set of standards that investors use to assess a company’s behavior and policies related to environmental issues, social impact, and corporate governance deals.

KRX already has kicked off the process to develop the so-called price-to-ESG ratio. It anticipates this measure helps socially conscious investors locate companies with high ESG scores but low market cap as their attractive investment targets.

The operator also plans to create ESG-themed exchange-traded funds and exchange-traded notes.

It is currently preparing to launch three new eco-friendly indices - KRX 300 Climate Change Index, KOSPI 200 Climate Change Index and Climate Change Leaders` Index.

By Kim Gyu-sik and Cho Jeehyun

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