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Shinhan Bank (2022)
| Adoption Date: | 09 Sep 2020 |
| Country of Headquarters: | South Korea |
| Region of Headquarters: | Asia-Oceania |
| Current EPFI Reporting Year/Period: | 2022 |
| Institutional Reporting: | Link to Report |
Please read the important notes and disclaimer for further information on ‘EPFI Reporting’, compliance and publication on the Equator Principles Association website.
Further information on this EPFI may be obtained through the Institutional Reporting hyperlink.
Project Finance Advisory Services
Total number mandated in the reporting period: 0
Project Finance Transactions
Total number that reached Financial Close in the reporting period: 9
| Equator Principles Category | A1 | B2 | C3 |
|---|---|---|---|
| Sector | |||
| Mining | |||
| Infrastructure | |||
| Oil & Gas | 1 | 1 | 1 |
| Power | 1 | ||
| Others | 2 | 3 | |
| Region | |||
| Americas | 1 | 1 | 2 |
| Europe, Middle East & Africa | 2 | ||
| Asia Pacific | 3 | ||
| Country Designation | |||
| Designated Country 4 | 1 | 4 | 4 |
| Non Designated Country | |||
| Both | |||
| Independent Review | |||
| Yes | 1 | ||
| No | 4 | 4 | |
| Totals | 1 | 4 | 4 |
1
Category A – Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented.
2
Category B – Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.
3
Category C – Projects with minimal or no adverse environmental and social risks and/or impacts.
4
Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. See list of Designated Countries.
Project-related Refinance & Project-related Acquisition For Project Finance
This information is required under EP4. EP4 applies for those transactions mandated after 1 October 2020 and that have reached Financial Close by the end of the period being reported.
Project Name Reporting For Project Finance (And Project-related Refinance & Project-related Acquisition Finance For Project Finance)
| No. | Project Name | Sector | Country(s) | Year of Financial Close |
|---|---|---|---|---|
| 1 | Innovation Data Center | Others | United States | 2022 |
| 2 | Taean Clean Energy | Power | South Korea | 2022 |
| 3 | Guro Industrial Center | Others | South Korea | 2022 |
| 4 | Venture Global Plaquemines LNG | Oil & Gas | United States | 2022 |
| 5 | Asan Sports Park | Others | South Korea | 2022 |
| 6 | Trumbull Energy Center Project | Oil & Gas | United States | 2022 |
| 7 | Gwangju Central Park | Others | South Korea | 2022 |
Number of projects that were not disclosed as per the disclosure conditions specified in Annex B of the Principles: 2
Under EP4, project name reporting is required for Project Finance transactions that have reached Financial Close and encouraged for Project-Related Corporate Loans that have reached Financial Close.
Project-Related Corporate Loans
Total number that reached Financial Close in the reporting period: 1
| Equator Principles Category | A1 | B2 | C3 |
|---|---|---|---|
| Sector | |||
| Mining | |||
| Infrastructure | 1 | ||
| Oil & Gas | |||
| Power | |||
| Others | |||
| Region | |||
| Americas | |||
| Europe, Middle East & Africa | |||
| Asia Pacific | 1 | ||
| Country Designation | |||
| Designated Country 4 | 1 | ||
| Non Designated Country | |||
| Both | |||
| Independent Review | |||
| Yes | 1 | ||
| No | |||
| Totals | 1 | ||
1
Category A – Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented.
2
Category B – Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.
3
Category C – Projects with minimal or no adverse environmental and social risks and/or impacts.
4
Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. See list of Designated Countries.
Project-related Refinance & Project-related Acquisition For Project-related Corporate Loans
This information is required under EP4. EP4 applies for those transactions mandated after 1 October 2020 and that have reached Financial Close by the end of the period being reported.
Project Name Reporting For Project-related Corporate Loans (And Project-related Refinance & Project-related Acquisition For Project-related Corporate Loans)
Number of projects that were not disclosed as per the disclosure conditions specified in Annex B of the Principles: 1
Under EP4, project name reporting is encouraged for Project-Related Corporate Loans that have reached Financial Close and required for Project Finance transactions that have reached Financial Close.
EP4 applies for those transactions mandated after 1 October 2020 and that have reached Financial Close by the end of the period being reported.
Implementation of the Equator Principles
In 2022, Shinhan Bank provided Equator Principles (EP) trainings to business departments. Since business departments have an ongoing turnover on human resources, it is crucial for ESG Planning Office to emphasize the importance of the Principles and ensure that the participants understand the Principles.
During these trainings provided, the following are some of the topics included in the EP training.
o Key Principles and Objectives – 1o Principles of the EP and the core objectives such as Environmental and Social (E&S) Risk management, Stakeholder engagement.
o Scope and Applicability – Scope of projects covered by the Principles including their application to different financial products and Sectors
o Environmental and Social Risk Assessment – Process of conducting an environmental and social risk assessment including screening, scoping and impact assessment.
Stakeholder Engagement, E&S Management System and Grievance Mechansims were further clarified compared to local law and IFC Performance Standards.
Some of the contents from Implementation Notes, such as Bridge Loans and Project Related Acquisition Finance, were covered in the training. Contents from the Guidance note on applying the EP to real estate transactions were also briefed during the training to provide clarity around Real Estate transactions.
Through the training, importance of EP compliance and role of business departments were explained and emphasized. Consequences of non-compliance and the potential reputational risk for Shinhan Bank was highlighted.
As for ESG Department’s ongoing training, representatives from ESG Planning Office joined several training sessions in 2022. Shinhan Bank joined regional EP meetings and further discussed ‘Scope of Projects’ and guidance note topics such as Biodiversity and Human Rights Assessments. Shinhan participated in E&S Review Seminars which was provided by a consulting firm and discussed the application of EP for Offshore wind farms.
ESG Planning Office is planning to provide various training sessions to different stakeholders in 2023. ESG Planning Office acknowledges the importance of the training and its tailored training program designed for different business departments.
Mandate of the Equator Principles Reviewers – responsibilities and staffing
The Equator Principles are designed to promote responsible practices and ensure that projects adhere to certain environmental and social standards. The Equator Principles reviews fall under the responsibilities of the ESG Planning Office. The following are some of the responsibilities of the EP reviewers: Environmental and Social Project Evaluation, Document Review, Training and Risk Management.
- Environmental and Social Project Evaluation – The department evaluates the potential impacts on environment, communities and other stakeholders.
- Document Review – The department review project documents including environmental and social impact assessment, social management plans and additional due diligence document to ensure they meet Equator Principle requirements and applicable law.
- Training – On a regular basis, the department conducts training to business departments to ensure professionals are familiar with Equator Principles and processes involved in assessing and managing environmental and social risks associated with projects.
- Risk Management – The department works with related stakeholders to identify potential risks related to a project’s environmental and social aspects and formulate recommendations for mitigating those risks.
Respective roles of the Equator Principles Reviewers, business lines, and senior management in the transaction review process; and
The Equator Principle Reviewer’s roles are mentioned above.
Business lines – Front Office – act as intermediaries between the Bank and project developers. They communicate the EP requirements to clients to provide necessary document and/ or take necessary actions to fulfill EP requirements.
Senior management plays a crucial role by playing leadership role as well as decision making. Some key roles are setting the tone for the Bank’s commitment to sustainable financing and communicating to all levels of the organization on the importance of Equator Principles. During the decision-making process of the Project Financing, senior managements are involved by reviewing compliance of environmental and social requirements.
Incorporation of the Equator Principles in the institution´s credit and risk management policies and procedures.
Shinhan established an ´Application Manual for the Equator Principles´. This has been incorporated into Shinhan Bank’s Credit Operation Procedure since 2020.
The application of the Equator Principles is covered under Shinhan Financial Group’s Sustainability Policy Framework.