LG Chem issues South Korea’s biggest-ever ESG bond
South Korea’s LG Chem has raised US$744.1 million through sales of environment, social and governance (ESG) bonds, making it the largest-ever ESG bond issued in the country. IT will be used to fund new and sustainable growth drivers, including renewable energy, battery materials and new drug development.
According to one of South Korea's leading corporations, it issued bonds totalling US$1.1 billion, including the US$744.1 million in ESG bonds and a further US$344 million won in corporate bonds, breaking previous records for bond issuance in the country.
With this, LG Chem breaks Hyundai Steel’s record for the largest ESG Bond, issued in January and worth US$454 million.
LG Chem's sustainable reinvention journey
The chemicals company, which has vowed to achieve zero carbon emissions by 2050, has earmarked its record-breaking ESG bond funds to help the company transition to renewable energy sources and reduce carbon emissions, establishment of manufacturing processes using eco-friendly raw materials, production expansion of electric vehicle battery materials, and expansion of facilities for polio vaccine quality control.
LG Chem has made sustainability its highest priority and is accelerating its ESG management by developing new business models that provide innovative and sustainable solutions to the environment and society, from biodeiesel-based eco-friendly resins to supply of next-generation polio vaccines.
“LG Chem was able to sell the ESG bonds successfully thanks to the investors’ optimistic expectations of the company’s petrochemicals, advanced materials and life sciences divisions even after the split-off of its battery division, LG Chem’s CFO Dongseok Cha said in a s tatement.
“LG Chem will establish and implement specific measures to accelerate ESG management in all business sectors, and further solidify the company’s position as the leader in the field of sustainability.”
With LG Chem’s battery businesses booming (shares in LG Chem jumped 162.4% last year as investors bet on its battery businesses to join the booming electric market), industry officials say LG Chem’s biopharmaceutical division could be main beneficiary for the new investments.
Focus will be on its Life Sciences Division
Last year, LG Chem stated it would invest 200 billion won in its Life Sciences Division in 2021 and in January, the company announced that its Sabin-Inactivated Polio Vaccine had received WHO prequalification enabling it to be supplied globally.
As a result of beginning to supply its Eupolio vaccine to UNICEF this year, as well as expanding sales of Yvoire filler products, the company expects 10% growth in sales in its life sciences division.
"We can't say that the company will concentrate on the biopharmaceutical business by abandoning other businesses, but it is true that the company is aware of the need to scale up the biopharmaceutical business," an LG Chem official said.
During the J.P. Morgan Health Care Conference in January 2021, Son Jee-woong, head of LG Chem’s life science business, said the company has secured more than 40 novel drug candidates in its pipeline following the merger of LG Chem and LG Life Sciences.
Asia-Pacific seeing surge in cleantech-focused VC funds
Cleantech became one of the hottest investment sectors among VCs a decade ago with cleantech VC deal volumes doubling between 2005-2007, according to Brookings Cleantech Venture Capital report. And while the global recession in 2007-2008 halted many investments in cleantech, the sector has gained traction over the last few years.
Asia Cleantech Capital is an early-stage investment firm focused on clean tech projects and companies in the APAC region; DreamLabs Innovation is a US$50m fund established to invest in disruptive, scalable, people-focused companies in areas including cleantech and energy; and ENGIE New Ventures runs a US$61.2m fund dedicated to making minority investment in tech startups in sustainable energy including across Asia.
More recently, in 2021, in light of the pandemic and increasing focus on sustainability, there’s been a surge of cleantech-focused VC funds being set up both globally and across Asia-Pacific with the aim of supporting startups that are developing advanced technologies to tackle global problems, whether renewable energy or food waste.
Climate Solutions Partnership unveiled
Just last week, HSBC, World Resources Institute (WRI) and WWF unveiled their Climate Solutions Partnership (CSP), which aims to unlock barriers to finance for innovators developing climate solutions with a focus on startups in Asia developing carbon-cutting technologies, projects that protect and restore biodiversity, and initiatives to help the transition to renewable energy.
Backed by US$100m of philanthropic funding over five years from HSBC, and part of the banking giant’s climate strategy, this partnership will help identify future business opportunities for sustainable innovations, and mobilise finance, including helping startups and next-generation new sustainable approaches.
Spotlight on Japan and China
Set to launch this month is a new cleantech-focused fund targeting investments in Japan, Europe and the US. Sony Group, Suzuki Motor, Mizuho Bank and 15 other Japanese companies have joined forces on a startup investment fund focused on companies that are developing technologies related to digital transformation and decarbonisation.
The fund, set up by California-based VC firm World Innovation Lab (WiL) with a maximum fund size of US$911m and a lifespan of 10 years, will invest in 50-60 startups in the first 3-5 years. Focused on the environmental sector, the fund is set to invest heavily in companies with digital technology, such as software and data analysis tools that can help streamline the operations of large companies, and those developing advanced technologies to tackle global problems, from water shortages to development of plastics-free products.
And the recently launched TDK Ventures, the corporate venture capital arm of Japanese multinational TDK Corporation, is scouting for more industrial tech investments in Asia and especially China, following the recent close of its US$150m TDK Ventures Fund II. This fund is targeting early-stage, global investments in ‘hard tech’ spanning the advanced materials, industrial, robotics, energy, autonomous vehicles, electric vehicles, clean-tech and health-tech verticals.
“This new fund renews our commitment to supporting hard-tech entrepreneurs creating innovations for the greater good,” says Nicolas Sauvage, managing director, TDK Ventures. The materials science field has always been part of the technology sector’s foundation, and as such, it can help the sector address some of the world’s biggest challenges, including sustainability.”
ADB Ventures brings a more sustainable future to Asia
Back in March, ADB Ventures, the Asian Development Bank’s venture capital arm, announced its first two investments since its founding in 2020. ADB Ventures, which aims to pursue environmental, social and governance (ESG) investments in verticals such as FoodTech, AgriTech, HealthTech, FinTech and CleanTech, revealed two green investments, funding Indian electric vehicle manufacturer Euler Motors and Indian CleanTech startup Smart Joules.
The firm is currently partnered with the Ministry for Foreign Affairs of Finland, the Climate Investment Fund, Nordic Development Fund, Korea Venture Investment Corp., and Korea’s Ministry of Economy and Finance to help bring a more sustainable future to Asia.
Nordic Development Fund managing director Karin Isaksson says: “ADB Ventures represents a timely complement to traditional development approaches through the involvement of the private sector in addressing critical climate change challenges. We are pleased to be working with the ADB on this important initiative that has particular relevance in the post-COVID recovery.”
And finally, while not exclusively tech-focused, last month Singapore-headquartered global gaming firm Razer announced the launch of its new (and first) sustainable US$50m fund. The Razer Green Fund aims to invest in environmental and sustainability startups with up to US$1m funding for startups in the seed and series A stages.