“How HCOB manages ESG risks in the lending business“
It is important for HCOB to support the sustainable transformation of the economy and society through its business. Therefore, the Bank has developed a comprehensive evaluation system based on three core elements – the Black List, the ESG decision matrix and ESG Scoring. With the help of these comprehensive and forward looking ESG risk management instruments, the Bank aims to contribute to the long-term sustainability and performance of its loan book.
1. Black List: As a first step in HCOB’s decision process in loan origination, the Black List must be used as a basis for classifying new transactions. It consists of the following three levels: country, industry and company.
2. ESG Decision Matrix: In a second step, the ESG decision matrix is used to guide the lending process, allowing for an efficient pre-selection of new business opportunities also from a sustainability perspective.
3. ESG Scoring: HCOB’s ESG Scoring approach is based on the EBA Action Plan for Sustainable Financing and the BaFin Guideline on Dealing with Sustainability Risks, published end of 2019. It encompasses a thorough analysis of climate, environmental, social and governance risk factors for every financing.
ESG Scoring Results of Credit and Investment Portfolio
1
0%
2
0%
3
0%
4
0%
5
0%
6
0%
n.a.
0%
ESG Scoring Results per business sector
Renewable Energy
0.9
Infrastructure
0.1
Real Estate
0.6
Treasury & Group Functions
0.4
Corporates Germany
0.8
Corporates International & Specialised Lending
0.1
Shipping
0.4