Morgan Stanley Capital International (“MSCI”) has recently released its latest environmental, social and governance (“ESG”) ratings of 2021, giving an “A” rating to Postal Savings Bank of China (“PSBC”) as one of the industry leaders in China.

ESG is a means by which companies are evaluated with respect to its sustainability in environmental, social and governance matters, and has increasingly become an important yardstick for investors in measuring the investment value of listed companies. Widely recognized by global institutional investors, MSCI ESG Ratings  focus on key issues such as corporate governance, access to finance, impacts on environment of finance, consumer financial protection, privacy and data security, and human capital development in its ESG scoring. It aims to measure a company’s resilience to long-term, operationally and financially relevant ESG risks and support global investors’ decision making as well as data analysis.

As a bank listed on both A- and H-share markets, PSBC places a high value on ESG management, practice and disclosure, and continuously improves its sustainability and corporate transparency.

In terms of corporate governance, PSBC incorporates ESG criteria into its development strategy, governance structure, corporate culture and business process, continuously enhances its management, and works with shareholders, customers, employees and other sectors of society to generate sustainable commercial value and build a first-class modern commercial bank that is responsible, resilient and caring.

In terms of access to finance, PSBC “has strong focus on supporting underbanked group”, the MSCI ESG Ratings report notes. Since its establishment, PSBC has maintained its strategic positioning as a retail bank dedicated to serving Sannong, urban and rural residents, and small and medium-sized enterprises. It vigorously promotes the in-depth integration of finance and technology and actively explores new models and ecosystems of inclusive finance, blazing a path for sustainable development of inclusive finance with its own characteristics. In terms of the institutional guarantee for inclusive finance, PSBC has specified inclusive finance responsibilities in the working rules of the Strategic Planning Committee of the Board of Directors to fully support the development of inclusive finance. Statistics show that as at the end of September 2021, PSBC had nearly 40,000 outlets, serving more than 600 million individual customers; registered RMB1.58 trillion in the balance of agriculture-related loans, which accounted for about a quarter of the Bank’s total loans. In the year of 2021, the Bank granted more than RMB750 billion of inclusive loans to over 1.65 million micro and small enterprises, ranking among the top in the banking industry; its balance of online loans for micro and small enterprises reached RMB662,844 million, an increase of 45% over the end of the previous year.

In terms of financing environmental impact, PSBC vigorously develops sustainable finance, green finance and climate finance, strengthens biodiversity protection, and strives to build itself into a first-class green inclusive bank and climate-friendly bank to help China achieve the carbon peak and neutrality goals. In 2021, PSBC officially adopted the Principles for Responsible Banking (PRB) and joined the United Nations Environment Programme Financial Initiative (UNEP FI), becoming the second large Chinese state-owned commercial bank to sign the PRB; formally became a supporter of the Task Force on Climate-related Financial Disclosure (TCFD) and is poised to improve the quality of its environmental and climate-related information disclosure. Data show that as of the end of September 2021, PSBC’s balance of green loans stood at RMB346,743 million, up 23.42% over the end of the previous year. The MSCI ESG Ratings report observes, “PSBC maintains strong practices to integrate ESG-related risks into its lending business. Notably, it conducts ESG due diligence aided by Fintech, and has client engagements to improve ESG practices. The bank prioritized resources to support green credit through branch appraisal and lower transfer price.”

The MSCI ESG Ratings report also notes that PSBC has “improved data security and talent management measures”. In recent years, PSBC has been continuously improving the working mechanism for consumer protection, and the working framework centering on decision making, execution oversight, review of consumer protection, internal assessment of consumer protection and information disclosure mechanism, effectively protecting the security of customers’ property and personal information, and continuing to improve its service quality. In terms of human capital development, PSBC stepped up market-oriented talent recruitment and selection, pushed forward talent pool building, optimized remuneration and welfare management, continued to promote talent development and training, and strengthened talent team building in all respects.

Meanwhile, PSBC attaches great importance to ESG information disclosure. By referring to the disclosure requirements of government departments, regulatory authorities, Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited, and the guidelines for the preparation of sustainability and corporate social responsibility (CSR) reports at home and abroad and relevant rating standards, PSBC prepares and discloses the CSR/ESG report every year, and continuously improves the disclosure quality while meeting the disclosure compliance requirements. These reports in turn guide the improvement of ESG management and practice across the Bank.

It is learned that in a research report released in June this year, JP Morgan evaluates the ESG performance of China’s banking sector using quantitative and qualitative indicators, and prefers PSBC among China banks on ESG performance, fully recognizing the leading position and key role of PSBC in the field of inclusive finance.

As ESG investment philosophy gains increasing importance in the capital market, ESG rating has become an important basis to measure the investment value of listed companies. Professionals said that both MSCI and JP Morgan have rated PSBC as one of the industry leaders of ESG in China, which acknowledges PSBC’s continuous efforts in promoting ESG sustainability, and reflects investors’ confidence in PSBC’s sustainability and long-term investment value.