To prevent confusion and clarify the meaning of the terms used in this document, ‘Environmental & Social Risk Management Policy’, we define the terms used to identify the holding company and subsidiaries thusly.
All BNK companies, including BNK Financial Group and subsidiaries
BNK Financial Group
BNK Busan Bank, BNK Kyongnam Bank, BNK Capital, BNK Securities, BNK Savings Bank, BNK Asset Management, BNK Credit Information, BNK System
Due to the emergence of diverse stakeholders and global issues such as climate change, there is a higher level of demand for corporate social responsibility (CSR). Expectations for socially responsible management from financial institutions are also rising, particularly when it comes to financing. In addition to traditional risk management vis-a-vis investment recoupment, considerations about the environmental and social effects are becoming increasingly important factors that need to be reflected when making decisions about loans and investments.
In response to such changes in the business environment, it is necessary to define the Group's task and specify the working process regarding the essential environmental and social aspects that need to be managed. The Group Environmental & Social Risk Management Policy was established to enable consistent policy operations across the Group.
Environmental and social risk management refers to a series of activities that recognizes, evaluates, and manages the effects that financing recipients' economic activities have on the environment and society.
Therefore, the purpose of environmental and social risk management is to preemptively manage a multitude of potential risks by considering the environmental and social effects of the Group's financing and carrying out management activities, and in doing so, support the stable growth of the Group.
The principles of environmental and social risk management are as follows.
The Group Environmental & Social Risk Management Policy consists of management of areas of interest (including financing exclusions and conditions) and tasks related to environmental and social risk review.
Specific processes for the management of areas of interest and environmental and social risk review are defined through a separate work manual.
The Group selects and manages areas of interest that may be sensitive or harmful from an environmental or social perspective. Subsidiaries will follow the minimum selection criteria put forward by the Holding Company, but may add their own areas of interest based on the priorities, main business or product area, etc. of each Subsidiary's portfolio.
The following factors must be considered when selecting areas of interest.
Group-wide areas of interest are as follows.
-Crop Production, Forestry, Chemicals, Mining, Oil refining, Infrastructure,
Power generation, Wastewater/ Wastes, Arms and munitions, Drift-net fishing,
Tobacco, Coal processing
The Holding Company will select the areas of interest for the whole Group, and confer with Subsidiaries about monitoring and other management methods.
Each Subsidiary’s risk management department will select areas of interest based on the Subsidiary’s characteristics in addition to the Group-wide areas of interest, and carry out monitoring of issues for specific areas, such as exposure, asset quality, etc. in the chosen areas of interest. The Subsidiary’s risk management department will report the results of its monitoring to the Holding Company’s risk management department.
For areas of interest that have a serious environmental or social impact, the Group will either exclude them from financing or establish conditions for financing.
The Group excludes the following illegal activities from financing.
The Group operates conditional project financing for coal-fired power plants based on criteria that it established in consideration of recent global issues related to fossil fuel use, such as climate change and particulate matter emissions. Project financing for the construction of new coal-fired plants in Korea or another OECD country will only be granted if the technology or CO2 emissions satisfy a certain level of standards.
For large-scale, long-term project financing transactions that have a major impact on the environment or society, the Group will apply its Environmental & Social Risk Review process to identify the risks and evaluate the impact of the project, which will then be reflected in the investment decision.
The Environmental & Social Risk Review applies to project financing excluding regular corporate loans, and includes investments in the form of funds that can be reviewed and controlled from an environmental and social perspective.
Details about the applicable subjects that depend on the domestic/overseas region or the project amount will follow specifications defined in the work manual.
The Environmental & Social Risk Review process consists of four steps: pre-screening, risk categorization, environmental & social impact assessment, and post-transaction monitoring.
The Group will publically disclose the main contents and results of its environmental and social risk management policies as part of its efforts to communicate with diverse stakeholders and improve transparency.
Through a variety of education and training programs about the Environmental & Social Risk Management Policy, the Group will persist in its efforts to boost employee participation and strengthen environmental and social risk management capabilities across the Group.
