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Seoul-based consulting firm KPMG Samjong on Wednesday urged local financial firms to accelerate their sustainable corporate governance through business strategies that focus on environmental, social and governance (ESG) factors.

“To improve corporate values, local financial institutions should incorporate ESG values ​​into their business processes, from strategy development to risk management,” said KPMG Samjong in his report.

“For example, improving the governance structure, developing ESG-related financial products, disclosing ESG information and raising awareness of financial corporate social responsibility are all required to advance their ESG management,” it said Report entitled “Coexistence”. of Finance and ESG: Sustainable Financial Firms’ Management Strategy. “

In the midst of the COVID-19 pandemic, more and more investors and bankers in the global financial markets are paying more attention to so-called “sustainable finance”, the process of taking ESG aspects into account when making investment decisions in the financial sector, which leads to more long-term investments in sustainable economic activities.

The world’s largest wealth management company, BlackRock, introduced global principles and guidelines last year to reflect its commitment to climate and diversity, while launching new investment products that seek out fossil fuels. Banco Bilbao Vizcaya Argentaria, Spain’s second largest bank by asset size, has also used digital technology to develop ESG-related financial products, while UK bank HSBC is taking the lead in green bond issuance, the report said.

“It is necessary for domestic financial institutions to strengthen their social responsibility through measures for sustainable finance. To fuel its ESG efforts, the government should play an active role in promoting communication between different market participants for strategic collaboration to strengthen ESG management in financial circles, ”said Kim Jingwi, Head of Competence Center at KPMG Samjong of ESG management.

In response to the ESG boom triggered by the pandemic, local banking giants have prepared for sustainability activities, including the establishment of ESG committees within the company, the climate neutrality initiative and the issuance of social bonds.

Meanwhile, Vigeo Eiris, a subsidiary of Moody’s ESG Services, praised the country’s major banking groups for their continued ESG efforts.

“Shinhan Financial took a robust approach to integrating ESG considerations into its credit and investment activities through risk assessment, positive screening, thematic funds and active engagement, while KB Financial increased its commitment to ethical risk prevention and the number of internal incidents that downward trend, ”the rating agency told The Korea Herald.

“Hana Financial stepped up its efforts to provide customers with better access to digital financial services, supporting financial education programs and projects run as part of the Korean Bankers Association aimed at financial consumers, especially the elderly, who are behind the digital transformation in the local banking sector stay behind. ”

However, Woori Financial faces “frequent ESG controversies” as the group has been relatively passive about improving corporate governance structure compared to its efforts to promote green projects, the company added.

By Choi Jae-hee ([email protected])