Yin Gefei: Six trends of ESG development in the banking industry

ESG policy system in the banking industry will focus on the standardization of key work areas.

In the future, the relevant government departments will issue more unified and standardized ESG disclosure guidelines, which will provide good norms and guidelines for the banking industry's own disclosure, and provide a good data basis to carry out the ESG credit operations. Besides, to promote the standardization of risk management in ESG credit operations and other businesses in the banking industry, the government will further clarify the specific guidelines including the construction of evaluation indicators, the use of evaluation results, and ESG incentives and supervision mechanisms.
 

ESG social promotion mechanism in the banking industry will be further improved and optimized.

The oversight role of the public, news media, social organizations, industry organizations and others will raise an attention to ESG in the banking industry, which will promote a better social climate to promote its ESG development. Third-party institutions will enhance the information technology, data, professional methods and tools related to ESG evaluation, and improve the adaptability and relevance of localization, which will further help the banking industry to carry out ESG work with high quality.
 

International cooperation on sustainable finance will be more in-depth and comprehensive.

Cooperation in sustainable finance will become more in-depth and comprehensive, such as innovating new modes of finance for sustainable development; strengthening international sharing of China's practical experience in green finance and inclusive finance; promoting the establishment of more consistent classification, assessment standards and methodologies for ESG financial products between China and the international community; and drawing on international best practices in sustainable finance.
 

ESG governance in the banking industry will focus more on generating practical effects.

ESG governance in the banking industry will pay more attention to the construction of a ESG governance system with Chinese characteristics, the ESG capacity building of directors and senior management, the establishment and improvement of a mechanism linking ESG performance to the remuneration of senior management, the convergence of ESG disclosure in the banking industry with relevant international standards, and the formulation of ESG-specific strategic plans and their in-depth integration into the overall strategic development strategy.
 

ESG risk management in the banking industry will focus more on quantitative analysis to enhance management resilience.

ESG management in the banking industry will give more emphasis on environmental risk management and control focusing on climate risk stress testing to improve the ability to mitigate and adapt to climate change risks. It will also put further emphasis on emerging risk system management that centers quantitative evaluation of ESG risks and integrate it into the comprehensive risk management system. Furthermore, it will focus more on quantitative assessment of biodiversity risks based on natural capital accounting to improve the ability to cope with nature-related risks.
 

The integration and innovation of ESG and business in the banking industry will be more in-depth to better serve the implementation of national strategy.

The implementation of national strategy through integration and innovation of ESG and business will be implemented with "three focuses":

The first is to explore sustainable financial products and service innovation, i.e. focusing on the protection of customer interests, ensuring customer satisfaction, guiding the sustainable consumption of financial products, and allowing social capital to flow to greener and more sustainable areas.

The second is to develop inclusive financial services, i.e. to further enhance service coverage, accessibility and satisfaction, which will further promote balanced development between urban and rural areas, and give full play to the characteristics of the financial industry to help boost rural vitalization and promote common prosperity.

The third is to stimultate employees' work enthusiasm and creativity, and better practice ESG to serve Chinese modernization. That is, to provide support for employees to better adapt to the development trend of financial technology, and to help grassroots employees update and enhance their vocational skills to adapt to the talent requirements of the new era.

For more information about ESG management consulting, report, rating, training, etc., you can contact the ESG and Climate Change Services at:

Email: esg@goldenbeechina.com

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