In today's globalized world, ESG (Environmental, Social and Governance) has become an important standard for measuring corporate sustainable development. What are the challenges? How to further build sustainable financial institutions in the future? At the 2024 ESG Global Leaders Conference held from October 16 to 18, the presidents of five major banks, namely ICBC, Agricultural Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank, discussed the above topics and demonstrated the practice and future planning of China's banking industry in the field of ESG.
ESG practices and challenges in the financial industry
At the conference, Zhang Yi, President of China Construction Bank, and Zhang Baojiang, President of Bank of Communications, delivered keynote speeches respectively, sharing their respective ESG practices and challenges.
Last year's Central Financial Work Conference proposed to do a good job in the "five major articles" of finance, and green finance was among them. In the past year, five state-owned banks have actively explored ESG with green finance as a starting point. Zhang Yi emphasized that CCB has fully integrated ESG into its development strategy, operation and management, and corporate culture, and is committed to becoming the world's leading sustainable development bank by taking the pioneering exploration of the "Five Major Articles" as an important starting point.
"Innovate and promote ESG risk management, integrate ESG risks into comprehensive risk management, independently build a climate risk stress testing system, and carry out stress tests on climate transition risks in 10 carbon-intensive industries. In the industry, it is the first to launch the ESG rating tool for all corporate customers to achieve refined ratings for millions of corporate customers, incorporate ESG elements into customer credit ratings, and promote the integration of ESG risk management into the whole process of investment and financing. Zhang Yi said.
Wang Zhiheng, President of the Agricultural Bank of China, said that in recent years, with the goal of serving the country's high-quality development, the Agricultural Bank of China has gradually improved its ESG governance system, actively served rural revitalization and the real economy, highlighted the three major strategies of inclusive agriculture, rural areas and rural areas, green finance and digital operation, continued to promote the deep integration of ESG concepts and business operations, served a wide range of stakeholders, and strived to build a sustainable development force with a high level of governance, strategy, management and disclosure. "Sustainable development is the 'golden key' to solve the current global problems, and we call on enterprises to comprehensively deepen the construction of the management system and improve the sustainable development governance system." Wang Zhiheng pointed out.
Talking about exploring the practice of sustainable development, Liu Jianjun, President of the Postal Savings Bank of China, said that for a long time, the Postal Savings Bank has adhered to the comprehensive integration of ESG concepts into its operation and management, and actively carried out exploration and practice in serving sustainable development from the aspects of corporate governance, policies and systems, product innovation, financial technology, internal control management, and capacity building.
Zhang Baojiang focused on the contribution of the banking industry to transition finance. He believes that transition finance is the proper meaning of the sustainable development of the banking industry, and puts forward the positive actions of the banking industry in participating in the formulation of transition finance standards, innovating financial products and services, and serving enterprises to carry out carbon accounting.
Although financial institutions have made some progress in ESG practices, they still face many challenges, such as the rise of populism and the rise of anti-wake culture.
"Strategic and holistic rethinking and repositioning of global ESG development." Liu Jun, President of the Industrial and Commercial Bank of China, pointed out in his speech, "Adverse selection and moral hazard caused by information asymmetry are important reasons for ESG controversy: on the one hand, this makes the concept of ESG generalized, breeding speculation, false disclosure and other problems, and it is not uncommon for free-riding phenomena such as 'greenwashing' and 'green inflation', and on the other hand, it has triggered controversial topics such as forced labor and government subsidies, resulting in the deformation of market behavior based on false information and misinformation and the distortion of resource allocation." ”
The sustainable development of financial institutions helps solve global problems
In their speeches, the five presidents of the major banks gave their views on the future of sustainable development. They believe that the construction of sustainable financial institutions will bring new vitality and vitality to global sustainable development. Financial institutions should continue to deepen the concept of ESG, serve the economy and society with financial responsibility, and improve people's well-being.
"The key to sustainable development is to always follow the trend of economic and social development and always follow the financial needs of our customers." In Zhang Yi's view, sustainable finance is finance based on a scientific governance system, finance that promotes the harmonious coexistence of man and nature, finance that is committed to improving social and people's livelihood and well-being, and finance that is open and inclusive and win-win cooperation.
Zhang Baojiang said that at present, the banking industry can start from three aspects in participating in the construction of transition finance: First, participate in the formulation of transition finance standards. Defining standards and providing an authoritative basis for transition activities is an important prerequisite for the development of transition finance. The second is to innovate financial products and services. Serving key carbon emission enterprises to reduce emissions is the top priority of transition finance. The third is to serve enterprises to carry out carbon accounting. Carbon accounting and information disclosure based on this is an important foundation for the development of transition finance.
Liu Jianjun proposed that in the process of building sustainable financial institutions, we should adhere to six principles: First, use the system concept to promote as a whole. The second is to abide by the business logic of seeking profit from righteousness. Third, we must persist in improving the governance system. Fourth, adhere to the theme of prudence and stability. Fifth, the implementation of innovation-driven. Sixth, adhere to the people-oriented management concept.
In the view of the presidents of major banks, financial institutions are deeply engaged in sustainable finance, and they are using the power of finance to promote global sustainable development.
Liu Jun said that although green development has gradually become a global consensus, green barriers, especially trade barriers, technical barriers, and financing barriers, are still visible. For example, China's PV and new energy vehicles, which are competitive to meet global demand, are often accused of undermining competition, overcapacity, and facing trade barriers. These behaviors will undoubtedly constrain the global green transition efforts and set a negative example.
Liu Jun stressed that such contradictions or conflicts need to be resolved through fairer systems and mutually trusting consultations, and a dynamic optimization mechanism should be established to better balance the interests of all parties and jointly respond to global challenges.
Wang Zhiheng also believes that sustainable development is the "golden key" to solve the current global problems, and emphasizes that enterprises should comprehensively deepen the construction of the management system and improve the sustainable development governance system. At the same time, Wang Zhiheng also emphasized that under the general trend of global sustainable development, ESG is becoming an international common language for evaluating the comprehensive value and long-term competitiveness of enterprises, leading the global economy to be greener, more inclusive and transparent.
(This article is from Yicai)