Shinhan Financial Group Develops Korea's First 'ESG Evaluation Model' for Financial Groups

Shinhan Financial Group and Shinhan Bank Jointly Develop Corporate ESG Level Evaluation Model
ESG Evaluation Results Using the Model Applied to Group Companies' Credit and Investment Decision-Making

[Asia Economy Reporter Yoo Je-hoon] Shinhan Financial Group announced on the 30th that it has developed an 'Environmental, Social, and Governance (ESG) Evaluation Model' to be used in various decision-making processes such as lending and investment by assessing the ESG levels of companies, becoming the first domestic financial group to do so.

The ESG evaluation model, jointly developed by Shinhan Financial Group and Shinhan Bank, is divided into two types: ▲ the Shinhan ESG Model, which evaluates the level of corporate ESG investment, and ▲ the Shinhan Sustainability Model, which assesses the impact and sustainability level of such investments.

The ESG evaluation model rates the overall ESG level of companies on seven grades ranging from A+ to A- (Excellent), B+ to B- (Average), and C (Insufficient). Starting with evaluations of companies subject to International Financial Reporting Standards (IFRS) and external audit firms, which have relatively large data disclosure scales, the model will be further refined to expand evaluations to non-audited small and medium enterprises through accumulation of related data in the future.

Shinhan Bank plans to use the grades derived from the ESG evaluation model for the first time in the banking sector as selection criteria for the 'Shinhan ESG Excellent Win-Win Support Loan.' Additionally, Shinhan Financial Group will continuously explore ways for its affiliates to utilize ESG evaluation results in various ways.

Cho Yong-byeong, Chairman of Shinhan Financial Group, stated, "The ESG evaluation model jointly developed by Shinhan Financial Group and Shinhan Bank is significant in that it allows quantitative evaluation of corporate ESG levels based on data," adding, "As a leading ESG financial group, we will accelerate ESG practices aiming to achieve net-zero carbon emissions."

Meanwhile, in March, Shinhan Financial Group became the first domestic financial group to develop a ‘Financial Emissions Measurement System’ to efficiently manage the carbon emissions of financial assets, laying the foundation for systematic ESG risk management.

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