The Value Company 100 series value list is a comprehensive list released by Sohu Finance from the perspective of the media, in conjunction with professional research institutions, integrating value judgment and data judgment, and is committed to mining good companies in China and discovering the unique value of enterprises.
The "ESG Star List of China's Listed Banks" is a sub-list of sub-industries under the 100 series of value companies of value companies, initiated by Sohu Finance, through the environmental dimension indicators of the banking industry (green credit, green financing, energy conservation and emission reduction, greenhouse gases, waste management and low-carbon operations, etc.), social dimension indicators (products and services, employee rights, community services, public welfare and charity and supply chain management, etc.) and management dimension indicators (ESG strategy, corporate governance, legal operation, risk prevention and control and business ethics, etc.), and assign appropriate weights to each index, and finally calculate the corresponding score and corresponding star rating of the bank under each dimension, as well as the comprehensive score and corresponding star rating.
Interpretation of the list
In this issue of China's listed banks, Agricultural Bank of China topped the list, followed by China Construction Bank and Industrial and Commercial Bank of China, all of which received "five-star" ratings, in addition to China Merchants Bank and Industrial Bank of China. From the perspective of ESG sub-list, China Construction Bank, Agricultural Bank of China and China Merchants Bank won the first place in the environmental dimension, social dimension and governance dimension respectively.
From the perspective of the performance of listed banks in the three dimensions of ESG, the star performance of banks has improved under the environmental dimension. At present, the construction of the green financial system in mainland China has formed a multi-level and diversified green financial market based on green loans and green bonds. According to central bank data, as of the end of the third quarter of 2023, the balance of green loans in mainland China was 28.58 trillion yuan, a year-on-year increase of 36.8%, ranking first in the world, and the balance of the domestic green bond market was 1.98 trillion yuan, ranking second in the world.
In the social dimension, the average star rating of listed banks is the highest. The implementation of ESG by commercial banks mainly focuses on the construction of the ESG system of commercial banks and the social value of ESG of commercial banks. In addition, through the advantages of outlets, commercial banks have unique advantages in promoting social values such as inclusive finance, urban-rural co-ordination and regional coordinated development.
In the governance dimension, banks have the highest average star rating and the best overall performance. As the most stable link in the financial system, the banking industry has always been known for its rigorous governance. In recent years, under the guidance of relevant policies, large commercial banks have begun to pay attention to building ESG governance structures, and have set up green finance working committees, consumer rights protection working committees and other institutions under the management to be responsible for ESG management-related matters.
From the perspective of bank categories, the traditional "six major banks" are among the top 8 in the overall list, and they still have great advantages in green credit, green bonds, inclusive finance and other aspects. Joint-stock banks showed a staggered trend, with China CITIC Bank, Shanghai Pudong Development Bank and China Everbright Bank rising in the rankings, while Minsheng Bank, Zheshang Bank and Ping An Bank declined. In addition, urban commercial banks and rural commercial banks, represented by Bank of Suzhou, Bank of Nanjing and Shanghai Rural Commercial Bank, have fallen in the overall list due to insufficient information disclosure, average innovation ability, and poor growth rate of green finance scale.
Enterprise analytics
1. Demonstration Enterprise:
Agricultural Bank of China's green credit has invested in the new energy vehicle industry, and nearly 10,000 enterprises have been profiled by ESG
In terms of the environment, the Shanghai Branch of the Agricultural Bank of China aimed at the new track of green finance, increased the allocation of green credit, and demonstrated the direction and support of the project selection of the Agricultural Bank of China in the green loan delivery. As of November 2023, the company has achieved an annual service charge of 2 million vehicles, charging 40 million kilowatt-hours of electricity, and there are still 10 charging stations under construction.
On the social front, in 2023, ABC Zhejiang Branch innovatively launched the first ESG rating system in the ABC system, embedding the whole process of pre-loan, loan and duration management of credit business, realizing data empowerment and intelligent management of "environmental, social and governance" risks. At present, nearly 10,000 enterprises have obtained the "portrait label" of ESG rating.
In terms of governance, in December 2023, the State Administration of Financial Supervision issued an administrative penalty information disclosure form, and Agricultural Bank of China was fined about 27.11 million yuan for a number of violations of laws and regulations, such as the use of multi-liquidity loans for fixed asset investment, loan entrusted payment problems, non-performing asset transfer process problems, and misappropriation of loan funds.
To sum up, ABC topped the list in this edition of China's ESG Value Star List of Listed Banks.
ICBC's RMB5 trillion green loan ranked first in the industry, and its MSCI ESG rating was upgraded to AA
In terms of the environment, ICBC's green loan balance exceeded RMB5 trillion, ranking first among its peers, with a total of US$19.9 billion of green financial bonds issued overseas and RMB80 billion of green financial bonds issued domestically. This year, ICBC's MSCI ESG rating was upgraded to AA, making it the first listed bank in China to achieve this rating. In addition, ICBC, as the only Chinese-funded institution, participated in the drafting of the United Nations Principles for Responsible Banking. Led the drafting of the Beijing Initiative on Climate-Friendly Banks. It was the first to release the results of environmental risk stress tests and the "Belt and Road" Green Finance (Investment) Index.
On the social front, ICBC applied for a patent for database transformation and migration in November 2023 to realize the migration of data to be migrated to the second database. By adopting advanced encryption algorithms and data compression technologies, ICBC can effectively protect the security and integrity of data and prevent data from being tampered with or leaked during the migration process. In addition, ICBC has developed efficient data migration tools and platforms, which can achieve rapid migration and synchronization of large-scale data.
In terms of governance, ICBC was fined by the China Banking and Insurance Regulatory Commission (CBIRC) in March for two major violations of laws and regulations, namely "inadequate internal control management" and "failure to report case information as required", mainly for its former employees reselling customer property information. In addition, ICBC Financial, a wholly-owned subsidiary of ICBC in the United States, was hit by a ransomware attack, and ICBC Financial immediately cut down and isolated the affected systems and launched a thorough investigation. The above incidents still reflect the loopholes in ICBC's internal control, standardized operation and risk prevention.
To sum up, ICBC improved 4 places in this evaluation to become the third place in the annual ESG list.
2. Significantly improve the enterprise:
Shanghai Pudong Development Bank landed the first transformation finance loan in Shanghai, and many new leaders were "airborne" in the senior management
In terms of the environment, Shanghai Pudong Development Bank landed its first transition finance loan in Shanghai. This type of loan includes six major industries, namely water transportation, ferrous metal smelting and rolling processing, petroleum processing, chemical raw materials and chemical products manufacturing, automobile manufacturing and air transportation, into the first batch of supported industries. Shanghai Pudong Development Bank took the lead in completing the RMB 310 million transformation loan business of Spring Airlines Co., Ltd. to help air transport enterprises in their low-carbon transformation. Spring Airlines will also set a floating interest rate linked to key SPT indicators such as tonne-kilometre emissions and the proportion of sustainable aviation fuel (SAF) used, so as to reduce financing costs through emission reduction performance.
On the social front, SPD Bank held the "7th International Fintech Innovation Competition", which received more than 900 solutions from more than 700 participating companies from 15 countries, of which more than 30 outstanding achievements were implemented in SPD Bank. In the process of digital transformation, SPD Bank has launched special products such as online factoring, online banking tax loan, online science and technology quick loan, and online banking credit, forming an online financing service with "full-process online, fully automatic approval, and full-data management".
In terms of governance, the core management of SPD Bank was "reshuffled" in September, with the chairman and president resigning at the same time, and the new party secretary, the new deputy secretary of the party committee and the new vice president were all "parachuted", and none of them had previously served in the SPD bank system.
In summary, in this evaluation, SPD Bank only ranked 10th, 5th and 25th in the environmental, social and governance dimensions, respectively, and rose 10 places to 11th in the overall ranking.
The number of green finance customers of China Everbright Bank increased by more than 40%, and the National People's Congress jointly released a research report on data elements
In terms of the environment, CEB has seen significant growth in the scale of green finance support. As of the end of September 2023, CEB's green loans amounted to RMB288.8 billion, up 45% from the end of the previous year, the balance of loans to the clean energy industry was RMB54.5 billion, up 75% from the end of the previous year, and its green bond investment also increased by 38% from the end of the previous year. In addition, CEB revised the China Everbright Bank Green Investment and Financing Classification Manual (2023 Edition) to incorporate the latest domestic and foreign green taxonomy standards into CEB's green investment and financing classification standards, and the number of green finance corporate customers served by CEB increased by more than 40% during the same period, and the number of clean energy corporate customers increased by more than 70%.
In terms of society, in 2023, CEB will further expand its "New Townspeople+" education and publicity system with the characteristics of "Responsible Consumer Protection, Cultural Consumer Protection, and Smart Consumer Protection" and the brand culture of "Sunshine Consumer Protection". In addition, China Everbright Bank and Renmin University jointly released two research results on data resource elements, jointly promoting the multiplier effect of data elements in the economic development of the mainland.
In terms of governance, CEB has been penalized for failing to implement credit conditions for issuing loans, repatriating credit funds to borrowers, and inaccurate five-level classification of loans, and there are still loopholes in its risk control.
In summary, CEB ranked 13th, 12th and 22nd in the environmental, social and governance dimensions in this evaluation, and rose 15 places to 15th in the overall ranking.
Significance of the assessment
The banking industry is one of the first industries in mainland China to attach importance to and promote social responsibility and ESG. As early as 2007, the "Opinions on Strengthening the Social Responsibility of Banking Financial Institutions" issued by the former China Banking Regulatory Commission laid an important foundation for the social responsibility and ESG work of the banking industry in mainland China. Since then, with the successive release and implementation of policies such as green credit, green finance, inclusive finance, and ESG integrity, the mainland has basically formed a relatively complete ESG policy system for the banking industry.
Since 2023, the ESG disclosure policy and assessment and evaluation system have continued to improve, and Zhou Liang, deputy director of the State Administration of Financial Supervision and Administration, has said that the official will further improve the green finance statistical monitoring and assessment system, and study and formulate green financial information disclosure standards. During the year, the Guidelines for Environmental, Social and Governance Information Disclosure by Insurance Institutions and the Process and Assessment Requirements for the Issuance of Green Bonds by Central Enterprises (Draft for Comments) were also promulgated.
Based on the above reasons, Sohu Finance has continued to pay attention to the future ESG strategic layout of listed banks, and evaluated the banks' investment and financing, operation and management, forming the "ESG Star List of China's Listed Banks".
The list evaluates 58 banks listed on the Shanghai Stock Exchange (SH), Shenzhen Stock Exchange (SZ) and Hong Kong Stock Exchange (HK) for public securities trading, and announces the top 30 bank star ratings in terms of overall performance.
The purpose of this evaluation is to give star ratings to enterprises through in-depth analysis of the data of listed banks in various dimensions, pay attention to and explore the achievements and shortcomings of the banking industry in ESG development, correctly reflect their ESG development status in the industry, and provide strong support for the subsequent development of enterprises in the ESG field and related fields.
Assessment Methodology
This evaluation collects and collates data such as government public information and bank ESG announcements, conducts in-depth analysis of the banking industry in the dimensions of environmental resources (E), social responsibility (S) and corporate governance (G), and produces the ESG value star list and ESG sub-lists of China's listed banks.
In terms of index selection, this evaluation starts from the three dimensions of environmental resources, social responsibility and corporate governance, and assigns a star rating to the listed banks based on the 5-star evaluation standard by considering the achievements and shortcomings of listed banks in ESG management and development. In order to more fully evaluate the performance of enterprises, the three dimensions contain several sub-indicators, and the sub-dimensions include both general ESG indicators and industry indicators based on industry characteristics. The specific subdimensions are as follows:
Through the weighting calculation of a total of 60 indicators included in the 16 sub-dimensions, the scores and corresponding star ratings of all listed banks in the environmental, social and governance dimensions are obtained, and finally their overall scores and star ratings in ESG development are calculated, and the ranking of the top 30 banks is announced.
Produced by | Sohu Finance
Author | Zhang Zihao
Operations Editor | Xue Suwen
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