Shinhan Financial Group operates loan and investment policies in consideration of ESG issues to fulfill the social responsibility of a financial institution through sustainable finance and recognize risk factors related to the Environmental, Social and Governance (ESG) in determining its intent of loan and investment. To this end, we have introduced the Environmental & Social risk management policy framework (ESRM) and established the sector policy to designate and manage risky areas that are critical to the environment and society and create many issues and implemented the Environmental & Social risk review procedure (ESRP) for risk assessment and management of large-scale projects’ financing.
Shinhan has designated and managed areas and industries with huge social and environmental risks including GHG emissions, settlement violations and habitat destruction, industrial safety and health. By doing so, we have excluded areas that pose a negative impact on the environment and society significantly from our financial support and provided optional financing support for projects related to fossil fuel uses including climate change and fine dust. We have selected 12 risky areas based on the International Finance Corporation (IFC) guidance, excluded them from our financial support, and operated optional financing support as our policies.
As for project financing, we grade risk levels according to the social and environmental impact of the potential development project and reflect the result of ESRP in our investment decision. Also, we prohibit loans to unhealthy types of businesses such as manufacturers of unhealthy entertainment tools, adult entertainment bars, and loan shark establishments on principle, and any new applications must be approved by the loan review committee. We conduct a series of reviews such as target selection, risk level classification, environmental and social impact assessment based on the Equator Principles to evaluate environmental and social risks of the project.