Listed Banks' ESG Credit Initiative Enhancement Experts suggest unifying the scope and caliber of data collection
A few days ago, the head of the relevant department of the CSRC said that at present, the CSRC is guiding the Shanghai and Shenzhen Stock Exchange to study and draft sustainable development (ESG) disclosure guidelines for listed companies in combination with market demands.
Among many listed companies, the market value of listed banks accounts for a high proportion of the total market value of A-shares, the number of investors is large, and they play an irreplaceable key role in serving the real economy.
In "ESG", E refers to the environment, S refers to society, and G refers to corporate governance. On the whole, the ESG initiative of listed banks has improved, but due to the lack of unified regulatory standards, the standards for data collection and the inconsistency of statistical data of different listed banks still need to be improved. The board secretary of a large bank told the reporter of "Securities Daily" that at present, data is an important challenge for ESG information disclosure, especially ESG information disclosure of commercial banks. Large banks have a relatively complex business structure, covering a wide range of industries and customers, involving a huge amount of ESG-related data, and their information sources are relatively scattered and there is still a lack of unified data standards in the industry.
There are currently only two listed banks
Disclosure of ESG-related reports in the first half of the year
According to incomplete statistics from the reporter of "Securities Daily", as of October 8, among the 42 A-share listed banks, only ICBC and China Construction Bank disclosed ESG/social responsibility reports for the first half of 2023. However, all 42 banks disclosed their 2022 ESG/Social Responsibility reports.
The ESG concept emphasizes that enterprises should pay attention to ecological environmental protection, fulfill social responsibilities and improve governance levels, which are also the main lines of ESG governance disclosure by listed banks.
Among them, in terms of environment, listed banks generally emphasize green finance, and the green finance business as a whole shows the characteristics of green credit products as the mainstay, supplemented by green bonds. At the same time, listed banks are also deploying green investments in asset management, as well as actively participating in financing and trading activities in the carbon market. For example, according to the reporter's incomplete combing, at least 15 listed banks will have a green loan balance of more than 100 billion yuan in 2022.
In terms of society, listed banks mainly focus on inclusive finance, rural revitalization, customer service, employee development, and public welfare services. For example, last year, the loan balance of five large state-owned banks inclusive small and micro enterprises exceeded 1 trillion yuan, with a year-on-year growth rate of more than 20%; Four large state-owned banks have a balance of more than 1 trillion yuan in agriculture-related loans.
In terms of corporate governance, listed banks generally focus on key issues such as shareholder dividends, risk management, anti-money laundering and fintech. In addition, an increasing number of listed banks have set up ESG-related committees at the board and management level. For example, the management of China CITIC Bank has fully refined ESG-related committees according to the current business situation and business needs, and established 7 ESG working groups.
Judging from the trend, in recent years, many commercial banks have increased their initiative in disclosure, and the breadth and depth of their disclosure have improved. Among them, many banks' ESG/CSR reports in 2022 are longer than in 2021, with richer disclosure issues and a wider range of disclosure dimensions for the same issue.
Regarding ESG governance, Xu Xueming, vice president of Postal Savings Bank of China, said that in recent years, PSBC has made some explorations from four aspects. First, adhere to the innovation drive. The second is to improve the incentive and constraint mechanism, adopt a measurement coefficient of 0.9 for green finance businesses such as green loans and green bonds, provide preferential interest rates for projects, and provide internal fund transfer pricing and other support. The third is to incorporate ESG into the risk management system, incorporate ESG risks into the whole process of credit granting business, and carry out ESG and climate risk special investigation and climate risk stress testing for seven consecutive years. The fourth is to promote sustainable development with science and technology, and the investment in technology has exceeded 3% of the annual revenue for many consecutive years.
In addition, Hu Changmiao, Director General of CCB, said that in recent years, CCB has carried out a lot of useful explorations in ESG, especially through new financial actions, implementing new development concepts, and promoting the integration of ESG concepts into strategic development, product design, risk management and daily operations. While doing a good job in ESG-related work, we will also continue to strengthen ESG information disclosure, build and continuously improve a diversified ESG information disclosure system based on its own actual conditions, refer to regulatory guidelines and industry standards, continue to enrich the disclosure content, and improve the depth and breadth of ESG-related information disclosure.
The relevant indicators are "personalized"
"Standardization" is weak
In addition to the above-mentioned common characteristics, listed banks have also disclosed a large number of "personalized" indicators in the ESG field, which are conducive to highlighting the business characteristics and highlights of different banks, but "non-standardization" also makes it difficult for investors and the public to understand the practical significance behind the indicators.
First, ESG reporting disclosure frameworks vary widely. According to the reporter, the ESG reports of listed banks generally cover three aspects: environmental, social and corporate governance, but different banks have different focuses on the disclosure order and specific content of the three major sectors. For example, in addition to these three aspects, some banks have also added sections such as "economic chapter" and "corporate business development", while others have also selected a number of key topics for disclosure, such as ICBC's ESG report in the first half of 2023, which set 8 major topics.
Secondly, there are differences in statistical caliber and comparability is weak. Taking "green loans" as an example, Bank of Communications' 2022 social responsibility (ESG) report uses the statistical caliber of People's Bank of China, while other large state-owned banks use the relevant caliber of the former China Banking and Insurance Regulatory Commission. For another example, some large state-owned banks disclose the "balance of loans supporting strategic emerging industries", while some large state-owned banks do not disclose this indicator, and it is difficult to quantitatively compare the "unique" indicator with peers.
Moreover, the frequency and channels of disclosure vary. In general, the vast majority of listed banks will focus on annual ESG reports, and only a small number of banks will disclose ESG interim reports in addition to their annual reports. In addition, in terms of disclosure channels, some banks disclose ESG reports on relevant platforms of stock exchanges, while others choose to disclose them on official WeChat public accounts, official websites and other channels.
Regarding the above phenomenon, industry insiders believe that the "non-standardization" phenomenon of ESG governance and credit disclosure of listed banks is related to the lack of corresponding institutional basis on the one hand, and the complex business structure of listed banks, the wide distribution of service industries and customers, and the difficulty of data collection on the other hand.
Liu Jiandong, risk director of Bank of China, said that at present, there are indeed problems such as inconsistent standards and evaluation systems in ESG governance and credit disclosure of listed banks, insufficient third-party data and intermediary services, and it is urgent to establish an ESG system that conforms to international consensus and China's national conditions.
"To improve ESG information disclosure for listed banks, the regulatory authorities need to accelerate the formulation of information disclosure templates and guiding systems that are in line with the actual situation at this stage on the basis of full consideration of feasibility." Yang Haiping, general manager of the research and development department of Bank of Inner Mongolia, told the Securities Daily reporter that on this basis, commercial banks should continue to improve the ESG governance system and corresponding data governance, and steadily improve the quality of ESG information disclosure.
Tian Lihui, dean of the Institute of Financial Development of Nankai University, told the Securities Daily reporter that listed banks should also take the initiative to improve ESG information disclosure from multiple dimensions: First, the scope and caliber of data collection should be unified, a normalized information collection mechanism should be formed, and the readability of ESG reports should be improved. The second is to gradually expand the scope of data disclosure, establish enterprise-level ESG data collection standards, clarify the definition of each indicator, and provide reference calculation methods. The third is to match the data collection corresponding to the topic to the corresponding department to improve the integrity of indicator management. The fourth is to actively respond to policy requirements and sort out whether there are omissions in key performance indicators.
ESG development is still facing
There are many constraints
With the improvement of the capital market's recognition of ESG concepts, promoting ESG governance and improving the ESG evaluation system are not only the needs of banks and other financial institutions, but also the requirements of investors.
Hu Changmiao said: "CCB has about 450 billion shares in the hands of institutional investors who adhere to ESG investment philosophy and sustainable development concept, so doing a good job in ESG management, promoting ESG governance, and doing a good job in ESG disclosure are not only its own development needs, but also the requirements of investors for CCB." "In recent years, CCB has done a lot of work in the disclosure of non-financial information, and has strived to increase the proportion of non-financial information disclosure in annual reports and interim reports, especially those related to ESG.
In addition, from the perspective of institutional investors, insurance institutions have been holding heavy positions in bank stocks in recent years, and they have also called for integrating ESG evaluation systems into the valuation system of central SOEs, including banks.
The general manager of the equity investment department of a large joint venture insurance asset management company told the Securities Daily reporter that the valuation system purely oriented by the pursuit of short-term profit growth is not enough to reflect the more pillar functions of state-owned enterprises in the social role and the guiding role of future industrial development trends, so it is necessary to integrate the ESG evaluation system into the value assessment of central enterprises and state-owned enterprises.
"However, ESG is still in the early stages of development in China, and problems such as insufficient awareness of investment concepts, limited scope of data disclosure, limited length of data time, and lack of a unified evaluation system still hinder the development of ESG in China to varying degrees." The general manager of the equity investment department of the above-mentioned insurance asset management company said that in the future, the in-depth promotion and development of ESG in China requires deeper participation of regulators.
