About SUSBA

Sustainable Banking Assessment (SUSBA) is a tool developed by WWF in collaboration with the Centre for Governance, Institutions & Organisations (CGIO) at the National University of Singapore (NUS) to assess banks' performances on corporate governance (CG) and environment, social and governance (ESG) integration.

"I urge all my friends in the banking industry in this region to be part of this ASEAN sustainable growth story and ensure that the activities of their clients fully support the Paris Agreement on climate change and the UN's Sustainable Development Goals. Together, I believe we can create great businesses and prosperous economies that do good for people - and the planet."
Tommy Koh, Ambassador-At-Large, Ministry of Foreign Affairs, Singapore

Objectives of SUSBA

Objectives of SUSBA
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  • Highlight the potential for the finance sector to drive sustainable development in ASEAN with positive environmental, social and governance outcomes.
  • Provide a useful assessment framework that incorporates environmental and social issues most relevant to ASEAN.
  • Help stakeholders assess banks’ management of climate risk amid strong global support for the Task Force on Climate-Related Financial Disclosures (TCFD) framework and related initiatives.
  • Help stakeholders (shareholders, regulators and other stakeholders) track banks’ progress and performance on CG and ESG integration by comparing this year’s results against last year’s.
  • Present the results in an online interactive platform that allows users to compare selected banks and indicators based on their preferences.

Who should use this tool?

Who should use this tool?
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Banking regulators and associations

  • Use the bank-level assessments to monitor the level of CG and ESG integration
  • Evaluate policy effectiveness including the need for further regulations and guidelines

Banks (board members; C-suite; and credit, risk and sustainability teams)

  • Use the assessment results to understand and improve their level of ESG integration and disclosure against objectively-defined indicators
  • Identify more progressive peers who have taken steps to improve (e.g. through working with NGOs), allowing for peer-to-peer learning and knowledge sharing opportunities

Investors (CIOs, risk officers, portfolio managers, banking sector analysts, ESG analysts)

  • Use the report to gain insights into the CG and ESG performance of ASEAN banks already in their portfolios or under consideration for investment
  • Understand if these banks have ESG policies aligned with their own ESG commitments
  • Where misaligned, use the results to engage with portfolio banks to support and drive progress on ESG integration

Methodology

Assessment framework

SUSBA assesses the disclosures of 34 listed banks across six ASEAN countries - Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The assessment framework comprises four key aspects of good corporate governance and six pillars of robust ESG integration. Underlying these are 11 indicators each for CG and ESG integration. Disclosure against each indicator is assessed using between 2 – 13 sub-indicators (a total of 51 for CG and 57 for ESG) in the form of “yes or no” questions where we gave 1 for “yes” answers and 0 for “no” answers. We developed this framework with reference to

a) Existing international frameworks, standards and initiatives, including:

  • G20/OECD Principles of Corporate Governance
  • GRI Sustainability Reporting Guidelines
  • International Integrated Reporting Council (IIRC)'s International Integrated Reporting Framework
  • TCFD recommendations
  • Sustainability Accounting Standards Board (SASB)

b) Relevant national principles and guidelines on CG and sustainability reporting.

c) Specific environmental and social issues most relevant to Southeast Asia.

d) Deep science-based insights rooted in our global network of sustainability experts.

To illustrate how banks progress annually in their CG and ESG integration performances, the assessment also compares this year’s results against last year’s. Improvements or regressions are indicated in green and red, respectively. ASEAN banks may log in to assess and benchmark their performance against all sub-indicators.

Methodology pillars

Scope

The corporate governance assessment applies to the entire bank.

The assessment of ESG integration focuses only on the banks' external or indirect ESG footprint, i.e. client activities financed, as opposed to the bank's direct footprint (e.g. building energy consumption and staff), as the former is overwhelmingly larger in magnitude and impact and also the key focus of both investors and TCFD guidelines.

The assessment focuses only on the banks' corporate/wholesale lending divisions. Retail banking, private banking, investment banking and asset management divisions are excluded given the significantly greater contribution and vulnerability to climate change other ESG risks posed by the wholesale banking divisions.

Scope covered
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Information used

Bank information reviewed for the assessment included only publicly available, English-language disclosures in the form of 2017 annual reports, 2017 sustainability or corporate social responsibility reports released before 30 June 2018, as well as information posted on corporate websites such as company policies, statements, investor presentations and press releases (last accessed on 3rd July 2018). These public disclosures represent what is available to international investors and stakeholders looking to develop an understanding of how banks are managing climate and ESG risks and opportunities so as to contribute to sustainable development. The banks were not interviewed and have not verified the information contained in this report.

Information used
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Corporate Governance framework

In order to achieve their long-term goals and strategy, banks should have an independent, diversified and competent board to guide senior management and monitor the implementation of strategic plans. Shareholders and other stakeholders should also be valued: banks need to clearly set out policies to ensure the rights of their shareholders and communication channels to engage stakeholders. Once the policies are in place, banks should provide transparency and disclosure via their reports and corporate websites in a timely and reliable manner. Last, to increase credibility and effectiveness, banks need to make ongoing efforts on audit and risk management.

Board

Board
  1. Independence and qualifications of the board
  2. Clearly stated roles and monitoring the implementation of corporate strategy
  3. Appointment, selection, training and re-election
  4. Remuneration and appraisal

Shareholders and stakeholders

Shareholders and stakeholders
  1. Rights of shareholders
  2. Policies on stakeholder engagement and list of stakeholder groups engaged
  3. Stakeholder reporting and communicating mechanisms

Disclosure and transparency

Disclosure and transparency
  1. Release of reports and disclosure on ESG issues
  2. Corporate website

Audit and risks

Audit and risks
  1. General audit function and audit on sustainability
  2. Risk management frameworks and ESG-related risks

ESG integration framework

Banks need to recognize that sustainability is a necessary condition for long-term growth and they have a crucial role to play in financing sustainable development. This is their purpose and link to the real economy. They need to set policies to guide the integration of E&S principles into internal processes and engagement with clients. To do so, they need to have well trained people in place with clear roles and responsibilities and senior level oversight. ESG integration is not just about management of E&S risks: it is also about translating the banks' knowledge and purpose into sustainable banking products to capitalise on opportunities. In order to manage enterprise-level risks and opportunities and ensure that the bank's business model properly embraces sustainability, a strategic overview and science-based target setting at portfolio level are crucial.

Purpose

Purpose
  1. Relevance of sustainability to the organization and its strategy for addressing sustainability
  2. Participation in commitment-based sustainable finance initiatives and policy advocacy with regulators

Policies

Policies
  1. Public statements on principles and risk appetite and aspects of ESG
  2. Sector-specific policies

Processes

Processes
  1. Processes for assessing ESG risks in client and transactional approvals
  2. Procedures for client monitoring and engagement

People

People
  1. Responsibilities for ESG
  2. E&S staff competency and performance evaluation

Products

Products
  1. ESG integration in products and services

Portfolio

Portfolio
  1. ESG risk assessment and mitigation at portfolio level
  2. Disclosure of ESG risk exposure and targets

Assessed banks

The major publicly listed banks headquartered in each country were included to best represent the regional banking industry upon which most local businesses rely.

Flag of Indonesia

1. Indonesia

  • Bank Central Asia Tbk (BCA)
  • Bank Mandiri (Persero) Tbk (Mandiri)
  • Bank Negara Indonesia Tbk (BNI)
  • Bank Panin Tbk (Panin)
  • Bank Permata Tbk (Permata)
  • Bank Rakyat Indonesia Tbk (BRI)
  • Bank Victoria International Tbk (Victoria)
Flag of Malaysia

2. Malaysia

  • AMMB Holdings Berhad (Ambank)
  • CIMB Group Holdings Berhad (CIMB)
  • Hong Leong Bank Berhad (Hong Leong)
  • Malaysian Banking Berhad (Maybank)
  • Public Bank Berhad (Public Bank)
  • RHB Bank Berhad (RHB)
Flag of The Philippines

3. Philippines

  • BDO Unibank, Inc (BDO)
  • Bank of the Philippine Islands (BPI)
  • China Banking Corporation (CBC)
  • Metropolitan Bank & Trust Company (Metrobank)
  • Philippine National Bank (PNB)
  • Security Bank Corporation (SBC)
Flag of Singapore

4. Singapore

  • DBS Group Holdings Limited (DBS)
  • Oversea-Chinese Banking Corporation Limited (OCBC)
  • United Overseas Bank Limited (UOB)
Flag of Thailand

5. Thailand

  • Bangkok Bank (BBL)
  • Bank of Ayudhya (Krungsri)
  • Kasikorn Bank (KBank)
  • Krung Thai Bank (KTB)
  • Siam Commercial Bank (SCB)
  • Thanachart Bank (TBank)
  • TMB Bank (TMB)
Flag of Vietnam

6. Vietnam

  • Bank for Investment and Development of Vietnam (BIDV)
  • Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB)
  • Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank)
  • Vietnam Export-Import Commercial Joint Stock Bank (Eximbank)
  • Vietnam Prosperity Bank (VPBank)

About WWF

WWF montage
© WWF

WWF has worked with the finance sector for more than a decade via innovative collaborations that strive to integrate ESG risks and opportunities into mainstream finance so as to redirect financial flows to support the Paris Agreement and the SDGs. Our approach to sustainable finance leverages:

  • Our conservation experience on the ground across WWF’s global practices.
  • Our partnerships with companies on key issues such as climate, energy, food and water to drive sustainability.
  • Our participation in cutting-edge sustainable finance initiatives (e.g. Science Based Targets initiative and the European Commission’s Technical Expert Group on Sustainable Finance).

This has allowed us to strengthen lending and investment criteria for key industry sectors, provide insights and data on environmental and social risks, fulfil critical research gaps, help unlock innovations in sustainable finance products and convene key stakeholders to progress the sustainable finance agenda.

Partner

NUS logo

Centre for Governance, Institutions and Organisations

CGIO was established by the NUS Business School to spearhead relevant and high-impact research on governance and sustainability issues that are pertinent to Asia and the world. Two of CGIO’s flagship projects on CG are the Singapore Transparency and Governance Index (SGTI) and the ASEAN Corporate Governance Scorecard (ACGS). The SGTI is the leading index for assessing CG performances of Singapore-listed companies. Each company’s score and ranking are reflected on the Singapore Exchange’s website. The ACGS evaluates the top 100 listed companies by market capitalization on their corporate governance performances in each of six ASEAN countries covered in this report.

CGIO’s and Singapore Institute of Directors were jointly appointed by the Monetary Authority of Singapore (MAS) as Singapore’s domestic ranking body for ACGS. The ACGS instrument further underscores its importance to the ASEAN community in spearheading best CG practices. More information about CGIO can be accessed at: http://bschool.nus.edu.sg/cgio

NUS is currently ranked number 1 in Asia according to Quacquarelli Symonds (QS) World University Rankings.

National University of Singapore
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