NH NongHyup Financial Group holds the CEO Council Meeting at NongHyup Financial Headquarters in Jung-gu, Seoul on June 25. NH Chairman Son Byung-hwan and CEOs of group affiliates discuss the direction of management for the second half and affiliates’ major pending issues. (Photo: NH NongHyup Financial Group)

NH NongHyup Financial Group has joined the UN Environmental Programme Financial Initiative (UNEP FI) to establish a global ESG standard in accordance with its ESG promotion plan, declaring the implementation of the Principles for Responsible Banking (PRB).

UNEPFI is an international partnership formed in 1992 by the United Nations Environmental Programme and major financial institutions around the world.

It focuses on financial institutions' responsible investment in tackling climate change and sustainable management.

In particular, the PRB is a financial principle that defines the roles and responsibilities of banks in achieving the Paris Climate Agreement and UN Sustainable Development Goals.

NH NongHyup Financial Group plans to explicitly reflect the principles of responsible banking on its banking operations, including management strategies, products and services, in order to expand its positive impact on the environment and society, following the registration of its membership in the UNEP FI.

Accordingly, NH Bank plans to analyze the environmental and social impacts of its core businesses, products and services and set and attain goals to implement the PRB.

NH NongHyup Financial Group also established a systematic and concrete roadmap to gradually expand its membership in international agreements on climate change and carbon neutrality at the group level, starting with the registration of its membership in the UNEP FI.

NH NongHyup Financial Group is preparing to participate in carbon-neutral international agreements, such as the Task Force on Climate-related Financial Disclosures (TCFD) and Carbon Disclosure Project (CDP) to proactively respond to climate change risks. It is also pushing forward with joining the Equator Principles.

The Equator Principles is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in project finance.

It is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making.

“Responses to climate change are a top priority at the global level,” said Son Byung-hwan, chairman of NH NongHyup Financial Group.

“We will preemptively play a key role in the environment and society. NH NongHyup Financial Group will become an ESG leading financial group that will participate in various international agreements to establish a global ESG standard and ultimately contribute to the Korean government’s achievement of 2050 carbon neutrality goals.”

In a related development, NH NongHyup Financial Group announced on July 20 that the group completed evaluations of 694 industrial ratings in the second half of 2021 through in-depth discussions with affiliates in an Industrial Strategy Council meeting on June 2.

The Industrial Strategy Council establishes the group’s portfolio strategy with the attendance of risk-related departments of all affiliates under the auspices of the NH NongHyup Financial Research Institute.

During the evaluations of industrial ratings, council members calculated ratings by reflecting the results of ESG analyses.

Based on the results of industrial analyses in the second half of the year, Risk Management Department reviewed limits on industrial exposure and set the limits for all affiliates in June.

This was not the first time NH NongHyup Financial Group has reflected ESG elements in terms of risk management.

All affiliates established and are operating a systematic review process to reflect ESG evaluation items, such as environmental issues, ethical management and social responsibility in deciding corporate credit ratings.

In the future, NH NongHyup Financial Group plans to continue to expand and apply ESG elements to its risk management system and review process to preemptively and actively respond to risks sparked off by climate change.

“NH NongHyup Financial Group should actively support eco-friendly transformations and carbon neutrality by playing its roles in encouraging companies to practice ESG management by utilizing investments and products,” Chairman Son added.