Shinhan Bank has published its inaugural Transition Bond Framework, establishing a financing structure to support decarbonisation in South Korea's most emissions-intensive industrial sectors, including chemicals and heavy manufacturing. The framework received a Second Party Opinion from DNV on 30 October 2025, with the external reviewer confirming alignment with the International Capital Market Association's Green Bond Principles.
The announcement positions Shinhan as one of the first South Korean lenders to formalise a dedicated transition finance instrument for hard-to-abate industries, which have historically been underserved by conventional green bond markets that favour renewable energy and efficiency upgrades. By directing capital into sectors where full decarbonisation is technically challenging and costly, the bank is widening the scope of sustainable finance in the country.
TARGETING HARD-TO-ABATE SECTORS
The framework is designed to channel lending towards businesses in chemicals and manufacturing that are pursuing credible pathways to lower emissions but cannot yet qualify for standard green finance products. These sectors represent a significant share of South Korea's industrial base and are central to any national strategy for achieving net-zero financed emissions by 2050, a goal Shinhan has formally adopted.
As of the end of 2024, the Shinhan Financial Group held KRW 18.7 trillion in combined green and transition finance, a figure that reflects several years of expanding its sustainable lending portfolio. The transition bond framework builds on that foundation by creating a distinct product category with its own eligibility criteria, use-of-proceeds rules, and reporting obligations, all verified by DNV in the second-party opinion process.
DNV's assessment provides market participants with independent confirmation that Shinhan's approach meets internationally recognised standards, a factor increasingly important to institutional investors with sustainability mandates who require credible, third-party-verified documentation before allocating capital to transition-labelled instruments. The growing scrutiny of greenwashing risks has raised expectations around what constitutes adequate external review, and the DNV second-party opinion is intended to address those concerns directly.
KRW 30 TRILLION TARGET BY 2030
Shinhan has set an ambitious target to grow its green and transition finance portfolio to KRW 30 trillion by 2030, representing a 60 per cent increase from the KRW 18.7 trillion recorded at the close of 2024. The bank said the transition bond framework forms a key pillar of its strategy to reach that goal over the remainder of the decade.
The publication of the framework follows a broader acceleration of transition finance activity across Asian financial markets, where regulators and multilateral bodies have encouraged banks to develop products that bridge the gap between conventional lending and pure green finance. South Korea's own financial supervisory authorities have been pushing institutions to align their portfolios with the country's 2050 carbon neutrality roadmap, adding regulatory weight to voluntary commitments such as Shinhan's.
With the DNV review complete and the framework in place, Shinhan Bank said it is positioned to begin issuing transition bonds and extending transition-labelled credit facilities to qualifying borrowers in the chemicals and manufacturing sectors. Investor reporting and impact disclosure will follow in line with ICMA guidelines, giving bondholders ongoing visibility into how the proceeds are deployed and what emissions reductions are being achieved across the financed portfolio.