Shinhan Financial Group Joins as Founding Signatory of the 'Carbon Neutral Bank Alliance'

[Asia Economy Reporter Kwangho Lee] Shinhan Financial Group announced on the 21st that it has participated as a founding signatory institution of the 'Net-Zero Banking Alliance (NZBA)' established under the leadership of the European Union (EU).

The European Union, in preparation for the United Nations Climate Change Conference of the Parties (COP26) scheduled to be held in Glasgow, UK, this November, launched the Glasgow Financial Alliance for Net Zero (GFANZ) under the leadership of Mark Carney, former Governor of the Bank of England and EU Special Envoy for Climate Action and Finance.

The Glasgow Financial Alliance is composed of various financial alliances considering the characteristics of banking, insurance, securities, and asset management sectors, among which the Net-Zero Banking Alliance is the banking sector's net-zero alliance.

The founding of the Net-Zero Banking Alliance included 43 global leading financial companies from 23 countries worldwide, such as Bank of America, Goldman Sachs, Morgan Stanley from the U.S., and Barclays, BBVA, BNP Paribas, Deutsche Bank, ING from Europe. Domestically, Shinhan Financial and KB Financial participated.

Financial institutions joining the Net-Zero Banking Alliance have agreed to achieve net-zero greenhouse gas emissions in their loan, investment, and other asset portfolios by 2050. Additionally, the targets set to achieve this will be reviewed at least every five years, and annual progress reports will be shared according to the alliance's guidelines.

The main guidelines of the Net-Zero Banking Alliance consist of four components: ▲setting medium- to long-term targets aligned with the Paris Agreement goals and carbon neutrality ▲defining the scope and quantitative reporting of asset carbon emissions ▲setting reduction targets consistent with the Paris Agreement using science-based scenarios ▲and regular target reviews.

Accordingly, financial companies joining the Net-Zero Banking Alliance must annually measure the carbon emissions of their assets according to internationally recognized standards and report the implementation status of their net-zero strategies to their respective boards of directors.

In particular, during the establishment of the Net-Zero Banking Alliance, Shinhan Financial's 'Zero Carbon Drive,' which was the first net-zero declaration by a financial institution in East Asia, received significant attention from global financial companies due to its close alignment with the alliance's implementation guidelines.

Since passing the group's net-zero strategy, Zero Carbon Drive, through the ESG (Environmental, Social, and Governance) Strategy Committee in December last year, Shinhan Financial became the first domestic financial company to join the Partnership for Carbon Accounting Financials (PCAF), an initiative for measuring carbon emissions.

Furthermore, Shinhan Financial has built and is monitoring a database of carbon emissions from domestic carbon emission allowance target companies and greenhouse gas and energy target management companies. Following the Science Based Targets initiative (SBTi) guidance, it has established specific plans to reduce emissions by 38.6% by 2030 and 69.6% by 2040, with quarterly progress checks.

This content was produced with the assistance of AI translation services.