Key ESG Compliance Attentions for Bank Credit m88 casino review Investment Business

Sustainable development has become a key global concern in recent years m88 casino review countries are introducing new policies m88 casino review regulations in response to the call for more sustainable development. At a global level, some initiatives m88 casino review voluntary stm88 casino reviewards related to environment, social m88 casino review governance (ESG) have gradually been incorporated into regulatory policies, guidelines m88 casino review requirements. For example, on June 1, 2022, in order to promote the development of green finance in China, the China Banking m88 casino review Insurance Regulatory Commission ("CBIRC") issued the Circular on the Guidelines for Green Finance for Banking m88 casino review Insurance Institutions (the "Circular"). The Circular incorporated the core concepts of sustainable development into regulations for the business of banks m88 casino review insurance institutions, requiring them to integrate ESG concepts into their credit m88 casino review investment business process m88 casino review risk management systems. It ensures ESG compliance for credit m88 casino review investment businesses, with aims of “carbon peaking m88 casino review carbon neutrality” alongside high-quality development.

1. Why should m88 casino review factors be considered when conducting banking business?

For banks, achieving ESG compliance in investment m88 casino review financing is a mm88 casino reviewatory requirement set forth in Chapter IV of the Circular. From a systemic risk control perspective, if banks, as major financial institutions, do not take into consideration the ESG concerns of proposed credit clients or proposed investment projects while in the process of granting credit m88 casino review making investment, the future occurrence of major ESG events may affect the client’s solvency or project development. This may result in the lending funds or investment funds of banks going to waste.

2. How should banking businesses integrate m88 casino review factors?

According to the Circular, to achieve m88 casino review compliance, banks should consider the following :

(1)Before granting credit to or making investment, banks should conduct ESG due diligence or ESG compliance reviews for the client or project, based on the industrial m88 casino review regional characteristics. It is therefore necessary to establish an ESG risk assessment mechanism, m88 casino review it is important to develop a checklist for due diligence in respect to ESG, a checklist for compliance documents m88 casino review a checklist for compliance risk reviews considering the characteristics of clients in different industries.

(2)When deciding to grant credit to or make investment in certain projects, banks should strengthen their ESG due diligence, fully identify the ESG risk level, m88 casino review determine the reasonable credit granting m88 casino review investment authority as well as the examination m88 casino review approval processes. Credit granting m88 casino review investment in clients with serious legal violations m88 casino review material risks in ESG should be restricted. Therefore, it is necessary to ensure that the appropriate internal or external personnel conduct due diligence, fully identify the material risks, m88 casino review set up corresponding approval m88 casino review reporting systems. Approval by higher level personnel is required for particular credit or investment projects, depending on the ESG risk level.

(3)When entering into relevant agreements with clients in connection with credit facilities or investments, banks should incorporate ESG compliance requirements into the relevant provisions of the agreement m88 casino review incorporate ESG into the sections of representations m88 casino review warranties, conditions precedent, covenants m88 casino review liability for breach of contract. For credit clients m88 casino review investments involving material ESG risks, they shall require the client to provide ESG risk reports in the text or annexes of the contract m88 casino review enter the representation m88 casino review undertaking provisions regarding strengthening the ESG risk management by the client m88 casino review the remedies in the event of default by the client in the management of ESG.

(4)After providing the loans or investment funds, banks shall continuously supervise the ESG management of the investee enterprises or projects. For banks, they shall pay close attention to the impact of the internal m88 casino review external environment on the client's operating conditions m88 casino review industry development, strengthen dynamic analysis, conduct scenario analysis m88 casino review stress testing, m88 casino review make timely adjustments in terms of asset risk classifications, preparation m88 casino review other aspects. They shall also establish a reporting system for the occurrence of major ESG risks m88 casino review link the results of such supervision with the allocation of credit or investment funds. For clients with potentially major environmental, social m88 casino review governance risks, targeted improvement management measures shall be formulated m88 casino review implemented.

3. Suggestions

Given that the Circular requires banks to establish m88 casino review optimize their internal ESG management systems m88 casino review processes by May 31, 2023, we recommend that relevant institutions take action to establish relevant internal ESG policies m88 casino review systems as soon as possible. Banks should begin to implement the requirements of the Circular as soon as possible while granting credit m88 casino review making investments. Banks may also seek assistance from ESG lawyers or consultants to deal with relevant matters. Please contact your ESG attorney to make amendments to the template agreement/commercial agreement of the relevant parts of the transaction documents to complete the integration of ESG elements.

If you have any questions regarding the Circular or need assistance in preparing m88 casino review due diligence checklists, compliance document checklists, compliance risk review checklists, updating transaction documents or agreements, or carrying out m88 casino review due diligence, please contact us at ecoenvpro@junhe.com.

JunHe’s EHS m88 casino review ESG Team

JunHe, with over 1,000 professionals, is one of China’s largest full-service law firms with a recognized international reputation for providing high quality legal services. As one of the pioneers in the practice area of ESG in China m88 casino review with one of the largest teams of EHS lawyers in the country, JunHe provides clients with a full range of EHS m88 casino review ESG legal services. JunHe is sustainability-oriented m88 casino review provides EHS compliance audit services to enterprises across different industries. JunHe relies on different legal m88 casino review professional compliance teams (including ESG, EHS, antitrust, labor m88 casino review employment, intellectual property, trade m88 casino review data, finance m88 casino review tax, business, criminal compliance m88 casino review other professional teams related to ESG) to provide ESG due diligence services in supply chain management m88 casino review M&A matters m88 casino review assists companies or third-party agencies in drafting ESG reports. Based on our experience in serving clients from different industries, we can provide specialized services for the daily operations of enterprises. These include specialized ESG-related legal m88 casino review compliance m88 casino review, as well as drafting m88 casino review reviewing ESG-related terms m88 casino review clauses in contracts with business partners, establishing m88 casino review improving ESG systems, identifying ESG disclosure requirements, green finance, m88 casino review ESG training.