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.

Hengfeng Bank attaches great importance to stakeholder communication, has actively expanded communication channels, and fully listens to the opinions and suggestions from its stakeholders. The bank’s major stakeholders include governments and regulators, shareholders and investors, customers and employees, suppliers and partners, the environment, and society. In response to different stakeholder expectations and demands, Hengfeng Bank has effective communication channels, so as to provide timely response and measures.

During the 2024 reporting period, Hengfeng Bank’s stakeholder communication initiatives could be summarized as follows:

With the government and regulatory agencies: Hengfeng Bank maintains close communication with the government and regulatory agencies through daily approval and supervision, regular statistical reporting, and the release of regular reports and information announcements. This ensures that the bank remains aligned with regulatory requirements and can respond promptly to any changes in the regulatory environment. In support of national strategies and regional development, Hengfeng Bank actively studies and implements work instructions and, Internally, implements regulatory policies and supports the formulation of industry policies. Hengfeng Bank continues to strengthen internal control and compliance management, implement comprehensive risk management, and reinforce anti-corruption and anti- money laundering measures. These initiatives mentioned above help ensure stability and integrity in the bank’s operations.

With shareholders and investors: Hengfeng Bank is dedicated to providing timely, accurate, and comprehensive information disclosures. The bank maintains good relations with investors and protect shareholders’ rights and interests through different activities, including shareholder meetings, roadshows, and investor exchanges. These efforts ensure that shareholders and investors remain well-informed and engaged in the bank’s operations. At the same time, Hengfeng Bank during the 2024 reporting period continued to promote sound operations and improve its corporate governance system, also strengthening information disclosure to meet investor demand and maintain good relations. By doing so, Hengfeng Bank has ensured transparency and has built trust with its stakeholders, contributing to long-term stability and growth.

Customers: Hengfeng Bank maintains close contact with customers through a variety of channels, which include daily service communication, customer satisfaction surveys, the 95395-customer service platform, offline customer theme activities, and a customer complaint handling mechanism. The bank actively communicates with customers and consumers, proceeding with green financial product and mode innovation. Hengfeng Bank seeks to provide agile and efficient services, improve service capabilities through innovative products, and protect consumer rights at the same time. Additionally, it has focused on the needs of special groups such as private enterprises and the elderly, and improved the customer service experience and safeguarded the legitimate rights and interests of customers by strengthening the standardization of outlets, improving the level of intelligent services at outlets, creating “Hengai Home,” and optimizing online services such as remote banking services.

Employees: Hengfeng Bank effectively engages its employees through various channels such as staff congresses, regular training sessions, cultural and sports events, brainstorming platforms, and support systems for those in need. The bank has prioritized employees’ needs by protecting their legitimate rights and interests, strengthening talent development programs, establishing a fair promotion process, and paying close attention to their work, life, and physical and mental well-being. Additionally, Hengfeng Bank actively promotes a green office culture by encouraging employees to voluntarily conserve resources like food, paper, electricity, and water, thus reducing energy use and waste. These efforts have cultivated a strong environment of energy conservation and carbon reduction within the organization. Key initiatives include optimizing energy management, adopting paperless digital workflows, promoting waste sorting and recycling, advocating food-saving practices, and ensuring environmentally friendly management of official vehicles.

Supplier management: Hengfeng Bank fosters strong collaboration with its suppliers and partners through business cooperation, industry seminars, supply-and-demand matchmaking discussions, and bidding and tendering activities. Additionally, the bank has established a fair, transparent, and open procurement process to ensure procurement activities are conducted with integrity. Hengfeng Bank is committed to continuously improving its procurement system and strengthening supplier management. Regarding green and low-carbon initiatives, the bank’s “Procurement Management Measures” and “Supplier Management Measures” explicitly promote the concept of green procurement. Hengfeng Bank encourages the sourcing of domestic products and prioritizes purchasing environmentally friendly, energy-efficient, and sustainable products, provided they meet the necessary performance and quality standards.

Environment: Hengfeng Bank recognizes the importance of addressing environmental needs and fulfilling corporate responsibilities by focusing on climate change, advancing green finance, practicing sustainable operations, and supporting the national development of a green, low-carbon economy. To achieve these goals, the banks employs a dual approach in both external and internal communications. Externally, Hengfeng Bank engages stakeholders through environmental information disclosure, strategic business pricing, green public welfare initiatives, and promotion of green finance. The bank also actively participates in relevant meetings and forums to foster dialogue and collaboration. Internally, Hengfeng Bank has strengthened ESG management, expanded green financial products and services, implemented green office practices and sustainable operations, and elevated green finance to a strategic priority to support the growth of green industries.

Community: Hengfeng Bank actively engages with the community through participation in community development projects, public welfare, charitable activities, volunteer services, and financial literacy initiatives. The bank regularly organizes financial education campaigns, volunteer events, and other activities aimed at supporting vulnerable groups, enhancing people’s livelihoods and welfare, and fostering strong community relations with all stakeholders.

Hengfeng Bank recognizes the importance of maintaining open communication with its stakeholders. Using various channels and methods, the bank actively listens to and addresses their expectations and needs. Hengfeng Ban’s goal is to ensure that the interests of all stakeholders are fully considered in its ESG (environmental, social, and corporate governance) efforts, thereby supporting sustainable development.

How did Hengfeng Bank identify and work on strategic business opportunities to increase positive and reduce negative impacts?

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

At the strategic level, Hengfeng Bank actively embraces the directives of the Central Financial Work Conference. The bank has integrated green finance into its overall development strategy and developed the “Implementation Plan for the High-Quality Development of Green Finance.” This plan outlines Hengfeng Bank’s development roadmap for the next five years, including specific goals and measures to achieve them. In response to shifts in the macroeconomic environment, the push toward carbon neutrality, and increasing customer demand for diversified low-carbon services, the bank continuously refined its green finance management structure. This dynamic optimization ensures that Hengfeng Bank remains agile and capable of effectively addressing emerging challenges and opportunities within the green finance sector.

During the reporting period, Hengfeng Bank implemented an intelligent green credit identification system, improving the efficiency of recognizing green businesses and strengthening the overall capacity of green financial services. Capitalizing on the opportunities presented by the growth of the national carbon trading market, the bank concentrated on carbon trading activities and offered financing products tied to carbon emissions, carbon trading, or energy efficiency. Additionally, Hengfeng Bank introduced carbon finance solutions to promote and steer the targeted allocation of limited resources toward green and low-carbon sectors.

Regarding product innovation, Hengfeng Bank consistently pursued advancements in green and sustainable finance. For instance, during the reporting period, the bank facilitated the country’s first water-saving loan linked to intellectual property and launched the inaugural green financial project loan for charging stations. Additionally, Hengfeng Bank developed the “Hengrong E” series of digital supply chain financial products and supported a high-quality state-owned enterprise in Shenzhen in successfully issuing the first green offshore bond listed on both the Hong Kong Stock Exchange and the Shenzhen Stock Exchange.

While emphasizing green finance, Hengfeng Bank also capitalized on opportunities in blue finance by establishing a “blue finance” engine to promote the transformation of “green shipping.” In 2024, the bank’s Fuzhou Branch issued a US$20.72 million guarantee to Xiamen Shipbuilding Heavy Industry Co., Ltd. for green shipping projects. This initiative created new integration channels for Hengfeng Bank’s corporate clients in both domestic and international shipbuilding sectors and offered distinctive financing options for the domestic equipment manufacturing industry to expand globally. Additionally, the bank actively engaged in the coordinated development of the Guangdong-Hong Kong-Macao region. Hengfeng Bank continued to increase resource allocation and provide tailored policy support to foster high-quality growth in the Guangdong-Hong Kong-Macao Greater Bay Area. Through bond investments, Hengfeng Bank’s Shenzhen Branch assisted Maoming Port Group Co., Ltd. in successfully issuing the 2024 offshore RMB bonds—marking the first corporate offshore blue bond in Guangdong Province and the first offshore RMB green bond in Maoming City. The proceeds are primarily designated for port infrastructure development and will support the high-quality advancement of clean energy and green transportation.

Finally, at the private sector level, Hengfeng Bank introduced the “Hengyin E-Chain” supply chain financial product. This innovative solution allows supply chain enterprises to access financing easily without requiring mortgages or guarantees. The process, from online and intelligent financing applications to credit approval and disbursement, is designed to be seamless and efficient. During the reporting period, Hengfeng Bank extended financing to 3,895 private enterprises, totaling 6.7 billion yuan. This initiative has effectively supported the growth of private businesses by offering them accessible and streamlined financial services.

 

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 Hengfeng Bank, 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://hfbank.com.cn/upload/attach/Hengfeng Bank Reporting and Self-Assessment for Principles for Responsible Banking (PRB) in 2024.pdf

Note to Hengfeng Bank: 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.

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.

Hengfeng Bank places significant emphasis on stakeholder engagement, continuously expanding communication channels and actively listening to the views and suggestions of its stakeholders. Hengfeng Bank’s key stakeholders include governments and regulators, shareholders and investors, customers and consumers, employees, suppliers and partners, the environment and society. To address the diverse expectations and needs of these stakeholders, the bank maintains effective communication methods and ensures prompt responses and appropriate actions.

During the 2023 reporting period, Hengfeng Bank’s stakeholder consultation efforts can be summarized as follows:

With the government and regulatory agencies: Hengfeng Bank actively participated in the development of the Enterprise ESG Evaluation System standards led by the China Enterprise Reform and Development Society. Additionally, the bank took part in the climate stress test organized by the People’s Bank of China. In the green bank assessment conducted by the China Banking Association, Hengfeng Bank’s scores in areas such as centralized management, policy and system development, capacity building, due diligence, post-loan management, and information disclosure significantly improved—an increase of 1.76 points compared to the previous evaluation. As a result, Hengfeng Bank was honoured with the title of “Advanced Unit of Green Bank Evaluation” among other recognitions.

With shareholders and investors: Hengfeng Bank has integrated green finance into its governance framework. The board of directors is responsible for formulating the green finance strategy annually, while senior management sets yearly targets on key sustainable development issues related to green finance in accordance with this strategy. The Board of Supervisors oversees the implementation of these initiatives. During the reporting period, the Board of Directors reviewed or considered four ESG-related matters and reported on relevant issues at the general meeting of shareholders.

Customers and consumers: Hengfeng Bank actively engages in communication with customers and consumers, developing green financial products and innovating based on their needs. For example, during the reporting period, the bank launched a digital platform to facilitate accurate identification of green projects and green companies. Through a digitized and standardized review process, Hengfeng Bank effectively identified environmentally friendly initiatives, minimized errors caused by human differences, enhanced identification efficiency, and shortened review periods. Additionally, its operations promote a paperless, digital, and intelligent model to reduce energy consumption and resource waste. In its private banking division, Hengfeng Bank advanced charitable donation initiatives within the family trust business, implementing a new “finance + charity” model that connects financial services with charitable activities to generate additional positive impacts.

Supplier Management: In accordance with the “Hengfeng Bank Centralized Procurement Management Measures” and the “Hengfeng Bank Supplier Management Measures (2020 Edition),” Hengfeng Bank adheres to the principles of fairness, transparency, competition, and efficiency in supplier selection and management. Hengfeng Bank actively promotes green procurement, implementing dynamic, classified, and scientifically-based supplier management practices. To extend its green principles throughout the supply chain and support sustainable operations, Hengfeng Bank prioritizes suppliers who demonstrate sustainable management, energy efficiency, environmental friendliness, and social responsibility when all other conditions are equal.

Partners: Hengfeng Bank capitalizes on opportunities to participate in industry forums to share its practices in green finance, gather insights from experts, and learn from the experiences of other financial institutions. Additionally, Hengfeng Bank engages in international sustainable development initiatives and fulfills its social responsibilities.

Employees: During the reporting period, Hengfeng Bank concentrated on two key areas. The first is energy conservation, reducing consumption, emissions, and waste within the bank’s operations. Hengfeng Bank actively encourages all employees to join in this effort. Furthermore, Hengfeng Bank enhanced the recovery and recycling of harmful substances, guided employees to reduce food waste, promoted green business travel, practiced green office management and digital workflows, established green data centres, and improved its overall energy efficiency. The second area focuses on staff training, internal capacity building, and related initiatives to strengthen its team’s capabilities.

How did Hengfeng Bank work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 PRB Reporting and Self-Assessment Template Hengfeng Bank reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Hengfeng Bank has a a green finance credit products system, with eight basic products (working capital loans, project financing, pre-project loans, merger and acquisition loans, debt financing instruments, debt financing, equity financing services, trade financing), eight featured products (carbon asset pledge financing, pollution rights pledge financing, contract energy management financing, energy conservation and emission reduction financing, clean energy financing, environmental governance financing, environmental facility financing, structured financing), and five dedicated financial service solutions (county photovoltaic financing service solution, new energy vehicle financial service solution, waste and sewage treatment industry financial service solution, rail transit financial service solution, and carbon trading financial services scheme). By establishing a special approval channel and providing a series of beneficial measures such as allocating dedicated capital and providing internal interest rate reductions, the supporting system for the bank’s green finance system has been significantly strengthened. By the end of the supporting period, the balance of Hengfeng Bank’s green credit reached 60.84 billion yuan, with a growth rate of 36.35%, higher than the 31.7% growth rate of average of twenty-one major banks in China disclosed by the Financial Supervision Administration.

Actions to encourage customers to implement sustainable measures during the 2023 reporting period can be summarized as follows:

1. Together with Weihai City, Hengfeng Bank held a green finance exchange forum and engaged with more than 100 stakeholders, including regulators, industry experts, scientific research institutions, well- known enterprises and others, to jointly help Weihai City, Shandong Province, to participate in the China green finance reform and innovation pilot (GFRIP) program, and also announced its carbon neural sub-branch project in Weihai.
2. Promoted credit granting policies in key identified green areas. Focusing on clean energy, environmental protection, green building, green transportation and other dedicated subdivide industries and markets, Hengfeng Bank formulated comprehensive financial service guidelines and clarified the focus of each branch, enhancing targeted support. The bank also actively explored innovative business models and financial instruments to drive sustainable development. For example, it developed a digital identification system for green credit, actively implemented the application of CERF, issued sustainable linked medium-term notes, and explored green supply chain finance, which won the “Best Supply chain Finance Bank” award of the 13th most trusted financial Service provider of Chinese economic and trade enterprises (Golden Trade Award).
3. Hengfeng Bank established a List of Key Enterprises in Green Finance, encompassing supply chain clients in sectors such as photovoltaic, wind power, energy storage, and other related segments. This guidance helps branches deliver targeted and precise services. Hengfeng Bank also strengthened the construction of the “dedicated service team mechanism” to improve service quality and efficiency. Additionally, over ten industry-specific green financial product guidelines were developed, covering areas like electrochemical energy storage, charging stations, and waste-to-energy plants. These guidelines include insights into market development trends, target customer groups, and key project delivery considerations.
4. Simultaneously, Hengfeng Bank actively engaged in communication and collaboration with its clients, launching innovative products such as Service-Level Banking (SLB), “Forest Rights + Carbon Sink” initiatives, green loans tailored for the agricultural industry, collateral financing through “Hong Kong Cloud Warehouse,” “Hengrong E,” and other financial solutions.

Financial Inclusion

1. Hengfeng Bank adhered to and implemented national policies prioritizing “agriculture, rural areas, and farmers.” The bank actively expanded services to rural regions and utilized its “one circle, one chain, and one platform” approach as a foundation to promote inclusive agricultural loans. By the end of the reporting period, the total balance of all types of agriculture-related loans reached 159.48 billion yuan, representing a 19.48% increase compared to the beginning of the year. Inclusive agricultural loans grew by 2.48 billion yuan compared to the beginning of the year, reflecting a growth rate of 28.71%.
2. Hengfeng Bank enhanced lending support for county-level urbanization. In 2023, the bank developed a list of twenty-seven pilot counties, focusing on their resource endowments and functional positioning to provide targeted financial support. By the end of the reporting period, Hengfeng Bank’s county-level urbanization financing balance increased by 163.94% compared to the previous year.

 

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 Hengfeng Bank, 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://hfbank.com.cn/upload/attach/Hengfeng%20Bank%20Reporting%20and%20Self-Assessment%20for%20Principles%20for%20Responsible%20Banking%20(PRB)%20in%202023.pdf

Note to Hengfeng Bank: 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.