Seoul-headquartered Woori Bank has inked a multilateral business agreement with the Forestry Administration of Cambodia and the Asian Forest Cooperation Organization to launch a forest carbon emission reduction project in Cambodia.

The project, which will run for 30 years, aims to promote REDD+ (Reducing Emissions from Deforestation and Forest Degradation) and global environmental, social and governance (ESG) management.

The commitment from the South Korean lender follows its issuance on January 18 of  US$700 million worth of foreign currency ESG bonds, the first foreign currency bond issuance by a South Korean commercial bank this year.

The bonds have a dual-tranche structure with maturities of three and five years, with the funds to be used for overseas renewable energy projects as well as for domestic inclusive finance projects.

The issuance interest rates for both the three- and five-year bonds are 4.750% per annum. The rates for the three- and five-year bonds are set at 0.75 and 0.85 percentage points above the equivalent US treasury yields, respectively.

The Cambodian forest project will involve the conservation of a pristine forest area of about 30,213 hectares in the northern part of Cambodia, bordering the Mekong River. This area is home to about 220 wildlife species and is threatened by ecological destruction from activities like deforestation and land clearing.

“This project will be an exemplary case for preserving Cambodia’s ancient forests and for fostering coexistence between the ecosystem and the local people,” says Cho Byung-kyu, the bank’s president.

Woori entered the Cambodian market in 2014 when it acquired a microfinance institution (MFI). Since then, it has expanded its presence by acquiring a local deposit MFI and a finance company, and establishing a local branch as it transformed into a commercial bank in 2022.