In June this year, the International Sustainability Standards Board (ISSB), which was established less than two years ago, officially released the first two international sustainability disclosure standards: the General Disclosure Standard and the Climate-related Disclosure Standard (hereinafter collectively referred to as the "ISSB Standards").In August, the European Commission formally adopted the ...... of the first 12 sets of delegated information disclosure under the EU Sustainability Reporting StandardsThe world is setting off a wave of sustainability disclosure standards.
Under the "dual carbon" goal, how to do a good job in the research and development of the Chinese version of the sustainability disclosure standard has attracted great attention from the domestic industry, and all parties have actively explored and practiced. Among them, the environmental information disclosure of financial institutions is one of the five pillars of China's green financial system, and the financial industry should take the lead in the research and development of domestic sustainability disclosure standards.
Recently, at the 2023 Green Finance North Bund Forum hosted by the Green Finance 60 Forum (GF60), the "Research Report on Climate Information Disclosure and Carbon Accounting in the Banking Industry (2023)" jointly compiled by the Shanghai Jinsinan Institute for Financial Research and the Sustainable Investment Program of Duke Kunshan University, and participated by DCIT, was officially released. The report constructs an evaluation index system from multiple dimensions, and uses the "AI model + manual" method to evaluate the quality of climate information disclosure and carbon accounting in the banking industry.
In the context of the gradual improvement and stricter requirements for climate information disclosure by financial institutions, it is hoped that this report can provide a useful reference for relevant institutions to carry out high-quality climate information disclosure, manage climate risks more effectively, and grasp climate change opportunities. Zhang Junjie, chief economist of GF60 and professor at Duke University, said.
Therefore, the introduction of ISSB standards has undoubtedly played an important role in accelerating the formulation of relevant standards for domestic financial institutions, but how to do it first has become a practical problem for financial institutions. "The ISSB Code is based on internationally recognized standards and provides a useful reference framework for Chinese financial institutions, helping domestic financial institutions to align with international markets and improve the consistency of global sustainable finance information. Domestic financial institutions can refer to these international standards to ensure that their disclosures are consistent with international best practices, and to help domestic financial institutions improve the quality of their information disclosure. In an exclusive interview with the Financial Times, Zhang Junjie said that in addition, Chinese financial institutions can actively participate in international cooperation, share best practices with financial institutions in other countries and regions, and jointly participate in the development of global sustainable finance standards.
Financial Times: What do you think is the current situation of international and domestic financial institutions in terms of the establishment and practice of sustainability disclosure standards?
Zhang Junjie:Since 2017, a large number of climate initiatives have been established internationally and many sustainability disclosure standards and guidelines have been issued, including the Guidelines for Climate Change Financial Disclosures issued by the Task Force on Climate-related Financial Disclosures (TCFD), the Principles for Responsible Banking (PRB) led by the United Nations Environment Programme Finance Initiative (UNEP FI), and the Global Financial Accounting and Reporting Standards for the Financial Sector in the Financial Sector for Carbon Accounting (PCAF) , the Science Based Targets Initiative (SBTI) developed by the Science Based Targets Initiative (SBTI) and the International Financial Reporting Sustainability Disclosure Standard 2 – Climate-related Disclosures (IFRS S2) published by the ISSB, among others.
International and domestic financial institutions have made many efforts to establish these standards. For example, PRB was developed by 30 banks, including Industrial and Commercial Bank of China, Citibank, and BNP Paribas, led by the United Nations Environment Programme Finance Initiative. After the release of the IFRS S2 consultation draft, hundreds of revisions were received from around the world, including many commercial banks.
At the same time, international and domestic financial institutions are also actively practicing sustainability disclosure. At present, more than 4,800 institutions around the world support the TCFD Climate Information Disclosure Framework, and more than 400 financial institutions have joined the PCAF, involving more than $90 trillion in financial assets. We hope that in the future, more and more domestic financial institutions will be able to further strengthen the accounting of carbon emissions in investment and financing, and better optimize and promote their own sustainability information disclosure. Financial Times: What do you think are the similarities and differences between carbon accounting reports, environmental information disclosure reports, ESG reports and sustainability reports for domestic financial institutions?
Zhang Junjie:Domestic financial institutions generally disclose climate-related information through carbon accounting reports, environmental information disclosure reports, ESG reports and sustainability reports, which reflect the enthusiasm of financial institutions in responding to climate change.
The Technical Guidelines for Carbon Accounting for Financial Institutions (Trial) issued by the People's Bank of China in 2021 provide a technical reference for financial institutions to calculate carbon emissions and emission reductions related to their investment businessThe environmental information disclosure report is made by financial institutions with reference to the Guidelines for Environmental Information Disclosure of Financial Institutions led by the People's Bank of China, and discloses the environmental impact of environment-related governance, policies, products and services, and investment and financing activities, and focuses on environmental informationESG and sustainability reports have a broader range of disclosures and may involve corporate governance and social responsibility in addition to environmental information. Financial Times: What do you think are the indicators that domestic financial institutions should focus on in the process of building sustainability disclosure standards?Or what disclosure capabilities should be improved?
Zhang Junjie:Financial institutions can refer to international disclosure standards, benchmark against leading foreign disclosure institutions, learn from useful experience, and focus on strengthening the following disclosure indicators and capabilities: First, financial institutions need to further improve the ability of Scope 3 investment and financing carbon accounting, and promote the disclosure of carbon emissions from investment and financing business while disclosing their own operational carbon emissions;The second is to strengthen the disclosure of risk assessment and response measures related to climate change, quantitatively analyze the physical risks and transition risks brought about by climate change, and incorporate the analysis into the evaluation of enterprise customersThe third is to improve the quality of data, and use financial technology to establish a data collection, statistics, testing, analysis, and reporting system to improve efficiency and accuracyFourth, strengthen the capacity building of senior management and executive level of financial institutions, reduce communication costs, and improve professional capabilities. Financial Times: What do you think is the practical significance of doing a good job in sustainability information disclosure for domestic financial institutions and non-financial enterprises?
Zhang Junjie:As regulators pay more and more attention to sustainable information disclosure, financial institutions can first meet regulatory requirements when carrying out sustainable information disclosure. Second, climate risk management can be better managed. By disclosing information related to climate change, financial institutions can better identify and manage potential environmental and social risks, reducing the risk of loan defaults and asset depreciation. Thirdly, sustainability-related investment opportunities can be identified and explored, and sustainable finance can be promoted. Sustainability disclosure by financial institutions can help direct capital to more sustainable projects and industries, and promote sustainable development. Finally, it can improve reputation and attract investors. Quality sustainability disclosures can help financial institutions improve their reputation, attract more investors, and increase their competitiveness.
In addition to meeting regulatory requirements, non-financial institutions, especially state-owned enterprises and some emission control enterprises, are also conducive to attracting green financing and sustainable investment from financial institutions for sustainable development projects. At the same time, high-quality sustainability disclosures can help non-financial companies improve their visibility and reputation with investors and consumers, increase market share and customer loyalty, and help them better capture climate opportunities and drive sustainable business development while reducing costs. Financial Times: After formulating the standards, how do you think we can promote the practical application and more fully integrate sustainable information disclosure into the business decision-making process of financial institutions?
Zhang Junjie:Incorporating sustainability information disclosure into the business decision-making process of financial institutions requires integrated strategy, system construction and full participation, including policy formulation, data management, risk assessment, reporting mechanism, monitoring process, etc. For example, we should formulate a mechanism for compatibility with incentives, clarify internal policies and processes, clarify the role and weight of sustainability information disclosure in business decision-making, pay attention to incentives for relevant performance evaluations, and encourage the implementation of sustainability-related policies. In terms of capacity building, we encourage staff to provide training courses in the field of sustainable finance, and regularly review the organization's internal sustainability policy and action processes, and make continuous adjustments and improvements based on experience and feedback. If you still have questions, please leave your questions and we will continue to answer them
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