Banks rush to establish ESG committees

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By Lee Min-hyung

Banks are rushing to establish in-house committees dedicated to environmental, social and corporate governance (ESG) management, as part of their efforts to tighten internal structures for transparent ESG management at a time when global institutional and retail investors place more value on companies with clear roadmap for sustainable growth.

Late last month, Shinhan Bank decided to build its own ESG committee under its board of directors. The move was aimed at speeding up ESG drives in seven key areas such as eco-friendly finance, customer protection and social contribution expansion, according to the lender.

Members of the committee consist of the lender's non-executive directors. They will help the bank set up a clear vision to fulfill its core ESG strategies and make them into reality.

Kakao Bank, the nation's leading internet-only lender, also joined the bandwagon by establishing its ESG committee during a recent regular shareholders' meeting. Kakao Bank CEO Yoon Ho-young and board members will work on the committee to ensure sustainable growth.

This was the first major step that the bank has taken for ESG management since its founding in 2017. The latest move by Kakao Bank was somewhat belated given that most other financial firms and commercial banks have been going all out in recent years to generate ESG outcomes, but this marked the first time that a mobile-only bank here has built a committee of the same kind.

Kakao Bank pledged to become a “company growing with society” by launching the ESG committee.

Other major lenders such as KB, Hana and Woori are also fulfilling their ESG management under the supervision of their holding companies.

KB Financial Group is particularly standing at the forefront in ESG among local financial firms. In 2020, the nation's largest financial holding company by market capitalization set up its group-wide ESG committee, mapping out ESG strategies for its key subsidiaries including KB Kookmin Bank.

Hana Financial Group and Woori Financial Group are also taking similar steps, with their holding firms serving as control towers for ESG management of their banking subsidiaries.

Hana Bank has recently issued ESG bonds worth $600 million (732 billion won). In January this year, Woori Bank also issued ESG bonds worth $500 million as part of its first major achievement in attracting foreign capital after its privatization last year.

“Any companies lacking a clear ESG vision or any gestures in the area will lose market competitiveness gradually, as they will face a tougher time in attracting capital unless they jump on the ESG bandwagon,” a financial industry analyst said.