Korean Air plans to issue environmental, social and governance (ESG) bonds on July 7 to raise funds for its environmentally and socially responsible investments.

In a statement, it said that the bonds will have maturities of 1.5 years, 2 years and 3 years, and will amount to about KRW 200 billion (US$177.6 million).

It said the exact issue amount will be determined after the results of forecasted demand become available on June 29.

"ESG bonds include green bonds, social bonds and sustainability bonds, and should be used for eco-friendly projects or to create social value. Until now, ESG bonds have been issued mainly by state-run companies, financial institutions and manufacturing companies in Korea; Korean Air will be the first Korean airline to issue these bonds," the airline said.

Korean Air said raised funds will be used to purchase next-generation, eco-friendly Boeing 787 aircraft.

The carrier is currently operating a total of 10 Boeing 787-9s, and the airline plans to introduce Boeing 787-10s as early as next year. This new aircraft has 25% higher fuel efficiency per seat and emits 25% less carbon emissions than similar aircraft.  

Korea Investors Service (KIS), Korean Air’s ESG bond evaluator, evaluated that the Boeing 787, which will be funded by the green bond, will greatly reduce greenhouse gas emissions.