Case study: How BNK Financial Group identifies and works on strategic business opportunities to increase positive and reduce negative impacts

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

The BNK Financial Group has identified six key stakeholder groups in order to communicate effectively with stakeholders who influence management activities, and is engaging with them by diversifying communication channels for each stakeholder group. Additionally, as part of impact analysis, a quantitative assessment involving both internal and external stakeholders is conducted annually in the double materiality assessment process to incorporate the opinions of various stakeholders.

• Customer

– Definition: Group that uses financial products and services and wields influence, including individual customers and corporate customers.

– How to communicate and collaborate: The BNK Financial Group actively seeks feedback through various channels to enhance customer’s satisfaction by improving the quality of its products and services. In particular, the BNK Financial Group is gathering feedback from customers by recruiting them to participate in panel surveys and submitting necessary improvements related to the Group’s banking services on a regular basis. Busan Bank has completed the implementation of 57 out of 93 improvement proposals received from the customer panel in 2023.

• Stockholders and investors

– Definition: Group that wields influence on decision making for sustainable growth, including stockholders and investors.

– How to communicate and collaborate: In response to the growing interest of stockholders and investors in the sustainability of BNK Financial Group’s business structure and concerns about the greenwashing risk of green products and services, the Group is committed to providing transparent disclosure of information and proactive communication. Therefore, the BNK Financial Group is enhancing the trust of stockholders and investors by disclosing not only financial and stock information but also risk and opportunity factors related to climate change and corresponding strategies, current status of green finance such as sales performance and investment amounts, and social contribution efforts including types and budgets of support for low-income individuals and financially vulnerable groups.

• Government and supervisory agencies

– Definition: Group that leads the role of corporate social responsibility to strengthen the financial industry’s competitiveness, including Government, National Assembly, and Financial Supervisory Service.

– How to communicate and collaborate: The government and supervisory agencies are establishing relevant policies and guidelines to enable financial companies to execute an important role in the transition to a sustainable economy. In 2021, the Financial Supervisory Service published a guideline for financial companies, ‘Guidelines for Climate Risk Management’, for a sound climate risk management system. The BNK Financial Group  has established a governance structure for responding to climate change, measured climate risks, and established appropriate response strategies using this guideline as a reference. In accordance with the TCFD recommendations, the Group has transparently disclosed information on climate risk. Additionally, the BNK Financial Group is transparently reporting materials related to ESG finance and ESG management as required by the financial authorities and the Korea Federation of Banks.

• Employees

– Definition: Agent for realizing vision and value to achieve the corporate management goal, including staff and labor union.

– How to communicate and collaborate: The BNK Financial Group operates communication and harmony programs joined by all employees to spread the core values of the Group and improve the sense of membership. During the first half of 2023, all employees held a proposal for what they hoped for from BNK Financial Group. A total of 175 employees submitted 209 suggestions. Furthermore, the BNK Financial Group is operating a labor union and regularly holding HR meetings to establish cooperative and productive labor-management relationship.

• Local society

– Definition: Group that shares pending issues of the community and cooperates to resolve them, including local society, environmental organizations, press, and academia.

– How to communicate and collaborate: The local community is the foundation of BNK Financial Group, and under the management ideology of ‘To the World with the Region’, the BNK Financial Group seeks to promote the local economy. The Group aims to achieve mutual growth with the region by supporting promising ventures and startups within the locality and providing financial support for core regional industries. The BNK Financial Group is leading efforts to create job opportunities for the youth in the region to address the risk of local extinction due to the decline in the young population by intensifying financial support for job-creating enterprises and discovering and supporting local talent.

In addition, the BNK Financial Group is participating in various global initiatives. The Group discusses sustainability agendas such as climate change and human rights, and strives to manage the impact of its business effectively according to global standards.

• UNGC (United Nations Global Compact) Joined in July 2020

• CDP (Carbon Disclosure Project, Capital Market Signatory) Joined in May 2021

• TCFD (Task Force on Climate-Related Financial Disclosures) Joined in May 2021

• UNEP FI (United Nations Environment Programme Finance Initiative) Joined in March 2022

• PCAF (Partnership for Carbon Accounting Financials) Joined in March 2022

• SBTi (Science Based Targets initiative) Joined in March 2022

How did BNK Financial Group identify and work on strategic business opportunities to increase positive and reduce negative impacts?

In its 2024 PRB Reporting and Self-Assessment Template BNK Financial Group reports that it identified and worked on strategic business opportunities to increase positive and reduce negative impacts as follows:

BNK Financial Group develops and provides sustainable financial products to encourage customers’ sustainable economic activities while simultaneously improving its business structure and portfolio.

• ESG Fund – Climate change mitigation / SDG 7 Affordable and clean energy, SDG 12 Responsible consumption and production, SDG 13 Climate action

The BNK Financial Group is selling ESG fund products to enhance increase positive impact on the environment and society while pursuing stable profits. ESG fund products that comply with responsible investment policies are not only supporting companies with excellent non-financial factors such as environmental, social, and governance but also contributing to securing funding channels for companies that provide products and services related to the transition to a low-carbon society, such as solar power and EVs. In 2023, the Group sold and managed 42 products, including BNK Sustainable ESG Securities Investment Trust No. 1., amounting to 412.5 billion KRW.

• ESG Bonds – Climate change mitigation, Financial inclusion / SDG 1 No poverty, SDG 8 Decent work and economic growth, SDG 7 Affordable and clean energy, SDG 12 Responsible consumption and production, SDG 13 Climate action

The BNK Financial Group has established an ESG bond issuing management system for the systematic management of the entire process from issuance of ESG bonds to follow-up monitoring. This management system is structured to comply with the Green Bond Principle, Social Bond Principle, Sustainability Bond Guidelines of the International Capital Market Association (ICMA), consisting of content related to the use of funds, evaluation and selection of target businesses, fund management, and follow-up reporting. Funds procured are used in producing renewable energy, expanding green transportation, reducing greenhouse gas, supporting basic livelihood for vulnerable groups, and revitalizing local economy. In 2023, ESG bonds of 290 billion KRW were issued, and 3,175.4 billion KRW was invested in ESG bonds.

• Financial products for low-income individuals and financially vulnerable groups – Financial inclusion / SDG 1 No poverty, SDG 8 Decent work and economic growth

The BNK Financial Group provides various products and services to maximize positive impact through coexistence with small business owners and financially vulnerable groups, fulfilling its social responsibility as a regional bank. For loan products, the Group offered loans such as New Hope Spore Loan and Sunshine Loan Bank to improve loan accessibility for customers with low-credit score. For deposit products, the Group sold savings products like BNK Hope Cultivation Savings and Hope-gathering Savings, which provide high interest rates to help vulnerable groups to accumulate their funds. For card products, the Group has launched the specialized products for multi-child families such as the Multi-Children Love Card, the Braille Card for the visually impaired, the Citizen Happiness Card which can be used for various national vouchers, the ‘Happy Tomorrow Card’ to support vocational high school students in preparing for employment, and the youth support cards to provide activity and operation expenses to young people seeking jobs. As of the end of 2023, the balance of mutual benefit loans for low-income individuals was 2.3065 trillion KRW, the deposit balance was 2.0006 trillion KRW, and the card performance was 1.085 trillion KRW. Additionally, the loan balance for local small businesses was 1.0251 trillion KRW, and the deposit balance from local residents was 585.2 billion KRW.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

References:

This case study is based on published information by BNK Financial Group, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://eng.bnkfg.com/05/04.jsp

Note to the BNK Financial Group: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.