Latecomer in ESG Management National Policy Banks... Accelerating Committee and Dedicated Organization Setup Ahead of Anniversary

IBK Industrial Bank, ESG Committee Established at This Month's Board Meeting

[Asia Economy Reporter Park Sun-mi] Policy banks are belatedly showing their commitment to ESG (Environmental, Social, and Governance) management and are actively working on establishing control towers. Although they have fallen behind domestic financial holding companies that early on set up ESG committees and dedicated departments within their boards, there are expectations that they will demonstrate strengths in areas such as building ESG evaluation systems, which are difficult for private banks to approach.

According to the financial sector on the 18th, IBK Industrial Bank of Korea, which is approaching its 60th anniversary on August 1, established an ESG committee at its board meeting held this month. This decision was based on the judgment that it was necessary to create an ESG management decision-making body within the board to strengthen the ESG-based management system and continuously generate ESG outcomes. This organization is responsible for establishing the bank’s ESG management strategy and managing and supervising its performance. The chairperson is Jeong So-min, the only female outside director on the board.

Under Director Jeong’s leadership, three members?Executive Director Kim Sung-tae, Outside Director Kim Se-jik, and Outside Director Kim Jeong-hoon?hold meetings at least once every quarter to make decisions related to ESG management. They plan to deliberate on ▲ESG management strategy and policy establishment ▲ESG management goals, progress, performance, and evaluation ▲Enactment and repeal of ESG-related regulations ▲Other matters recognized as necessary by the board and committees.

The Export-Import Bank of Korea is also preparing to announce its ESG management vision at its 45th anniversary ceremony scheduled for next month on the 1st. It plans to establish six principles for ESG management focusing on tasks that the bank can perform as a policy financial institution, such as reflecting ESG management indicators in loans and investments and providing preferential interest rates to outstanding ESG companies. It will also set up an ESG committee within the board and establish a dedicated ESG task force. To this end, it recently received a consulting report from Deloitte Anjin for establishing an ESG management strategy.

However, KDB Industrial Bank does not plan to establish an ESG committee within its board. Lee Dong-gul, chairman of KDB, stated in a recent online briefing, “Instead of setting up an ESG committee, we will focus on areas that can produce tangible results in fulfilling the role of a leading policy financial institution in green finance, such as establishing an ESG evaluation process.” KDB already established the ESG and New Deal Planning Department in January this year to serve as a green finance control tower and is promoting extensive green finance support.

Within the financial sector, although the establishment of dedicated ESG management organizations by policy banks started later compared to private financial holding companies, it is expected that, given their role in policy finance, they will be effective in areas such as building ESG evaluation systems that are difficult for private banks to approach and presenting ESG guidelines through cooperation with government agencies.

An official from a bank said, “Domestic financial companies have just crossed the starting line by recognizing the necessity of ESG management and establishing organizations, but even in terms of issuing ESG bonds alone, they have faced much criticism due to inadequate evaluation processes. Policy banks can play a role in setting benchmarks so that they can take a leading role in ESG management within the financial sector.”