South Korean banks take small steps in direction of ESG
A buyer indicators paperwork displayed on a pill PC put in in a sales space at a department of NH NongHyup Financial institution in Seoul. (NH NongHyup Financial institution)
Of all of the modifications stemming from the banking business’s adoption of environmental, social and governance values in recent times, in keeping with Shin Hae-jin, 53, the one which stands out essentially the most is the dearth of paper within the “crimson tape”. “.
“Since final yr, I’ve seen that each time I am going to open or handle a financial savings account, the paperwork are signed via pill PCs put in in every sales space,” stated Shin, who’s a loyal buyer of Woori Financial institution for over 30 years.
“The worker additionally at all times checks if I actually need to make a paper booklet, which was given to me with none questions a number of years in the past,” she added.
Environmental, social and governance values turned a high precedence for main South Korean banking teams final yr, when President Moon Jae-in pledged to realize a zero carbon society by 2050.
The nation’s 5 largest banking teams – KB, Shinhan, Hana, Woori and NH – have both launched particular ESG job forces or employed ESG specialists as exterior administrators within the hope of protecting tempo with the 73, The nation’s 4 trillion gained ($ 64.7 billion). Inexperienced New Deal coverage. The measures they’ve taken deal with the environmental facets of ESG financing.
As Shin seen, a key step is to reduce the waste of paper.
KB Kookmin Financial institution launched a marketing campaign in June final yr, dubbed “KB Inexperienced Wave”, which inspired using much less paper in photocopiers and promoted financial savings accounts with higher returns for many who created accounts. cellular accounts solely or on-line solely.
“The corporate truly reduce our paper funds for our photocopiers,” stated a Kookmin official.
“It is irritating at instances, nevertheless it’s additionally one thing we all know we’ve got to get used to.
KB Kookmin’s rival Shinhan Financial institution launched an analogous marketing campaign final yr, providing reward factors to prospects who’ve created cellular accounts. Shinhan stated final yr that 2,879 bushes had been used annually to make paper financial institution books and that the marketing campaign was a approach to defend ESG shares.
Hana turned one of many first banks to cut back paper financial institution books in 2019, whereas Woori and NH NongHyup are additionally utilizing pill computer systems for customer support in an effort to cut back paper use.
Total, paper passbook issuance fell 10% yr on yr in 2019 and the decline seems to have accelerated since then, in keeping with business information.
Electrical automobiles are one other key space the place the banking business is striving to ‘go inexperienced’, with firms turning to electrical automobiles for firm vehicles and putting in charging stations close to their headquarters and places of work. bodily branches.
Woori Financial institution is an business pioneer within the subject of electrical automobiles.
Woori Financial institution worker promotes the corporate’s electrical automobiles (Woori Financial institution)
KB Kookmin began the swap to electrical automobiles final yr. It owns round twenty electrical automobiles for worker use and has charging stations in three of its branches.
Different lenders are both within the early levels of adopting electrical automobiles or plan to take action by the tip of the yr.
NH NongHyup has pledged to extend the variety of electrical automobiles by no less than 20 after beginning its personal transition in February. Shinhan plans to buy and use no less than 30 electrical automobiles by the tip of the yr.
On the company aspect, lending advantages for firms that meet sure ESG standards are gaining reputation with lenders, together with the issuance of ESG bonds.
Shinhan launched a particular mortgage program final month with decrease lending charges for companies that meet its ESG requirements, and NH NongHyup is providing a product that features a increased credit score restrict for ‘eco-friendly companies’. surroundings”.
On Monday, Korean banks had issued won-denominated ESG bonds value a complete of 1.7 trillion gained thus far this yr, in keeping with information from the Korea Inventory Alternate. This represents 70% of ESG bonds issued all through the previous yr, which collectively had been value some 2.4 trillion gained.
Lengthy approach to go
Regardless of this plethora of inexperienced campaigns, business watchers say it would take for much longer for ESG shares to be actually mainstreamed into core areas of financial institution enterprise, corresponding to undertaking finance.
Because the begin of the yr, the heads of the 5 main banking teams have pledged to assist ‘coal-free’ financing, saying they intend to cease all undertaking funding for coal-fired energy crops and the ‘buy of coal bonds. any longer.”
However their statements drew criticism because the banks had no plans to finish funding for current tasks for coal-fired energy crops.
Final yr, for instance, the Nationwide Export and Import Financial institution of Korea was chosen to finance a $ 2.2 billion undertaking to construct the 1,200 megawatt Vung Ang 2 energy plant within the north. -est of Vietnam.
In accordance with a neighborhood civic group, the Korea Sustainability Investing Discussion board, KB Monetary Group offered a complete of 6.3 trillion gained for coal-related tasks from 2009 to 2020, rating No. 1 when it comes to investments made by banking teams. NH adopted with 3.5 trillion gained, and Shinhan got here third with practically 1.2 trillion gained.
Amongst their flagship banking models, NongHyup ranked No. 1 with 676.9 billion gained within the cited interval, whereas Shinhan and KB Kookmin lagged behind with 366.7 billion gained and 333.3 billion gained. of gained, respectively.
“Though it will be important for monetary establishments to chorus from financing coal, the manufacturing business should assist the trigger so as to create a really virtuous circle,” an official from the monetary monitoring service stated on Wednesday beneath the guise of ‘anonymity.
By Jung Min-kyung ([email protected])