ESG Practice and Reflection from Ping An

Based on a deep understanding and recognition of sustainable development, Ping An has been a leader in ESG practices. The company has released annual sustainability reports for 14 consecutive years and three climate risk management reports. Its related practices have been recognized by professional organizations such as MSCI, Morningstar, and the Carbon Disclosure Project (CDP) and a range of awards. The company continues to explore sustainable development strategy management, sustainable business development, sustainable operations and communities, and sustainable governance and environment. By the end of 2022, Ping An had achieved responsible investment and financing of RMB1.79 trillion, including green investment and financing of RMB282.36 billion, inclusive investment and financing of RMB33.44 billion, and social investment and financing of RMB1.48 trillion. Ping An is dedicated to deepening innovation and exploration in sustainable insurance, responsible banking, and responsible products.

Based on our long-term and continuous exploration, we have summarized two aspects of experience in the development of our corporate ESG strategy.

First, the ESG philosophy must be internalized as a driving force.

In light of the differences between domestic and foreign ESG standards, enterprises must internalize the ESG philosophy as a driving force to organically integrate external standards with their own development strategy and business planning to achieve sustainable development. If a company blindly adheres to foreign ESG standards, it may not only fail to achieve its work plans but also hamper its ability to maintain sustainable operations. Take the development of a roadmap for "dual carbon targets" (to achieve carbon peak and carbon neutrality) as an example: if the plan is overambitious, the company will not only need to achieve operational carbon neutrality at a higher cost compared to foreign counterparts but will also suffer investment losses and missed market opportunities due to inconsistent fund allocation and an inadequate industrial structure to achieve the dual carbon targets. It may even result in regulatory penalties. ESG planning must fully consider the similarities and differences between domestic and foreign standards, considering the legal, economic, and cultural factors behind them, identifying boundaries, and establishing a solid foundation in its business operations. Otherwise, it will become a tree without roots, or water without a source -- unsustainable.

In practice, Ping An combines external factors – including disclosure requirements, investor expectations, standards of rating agencies and international initiatives – with its development strategies and business objectives, corporate governance, green finance initiatives, charitable education and rural revitalization initiatives. Combining the experience from domestic CSR communication and a standard-driven management model of ESG compliance, Ping An's distinctive ESG approach stems from internal motivation for the company's sustainable development.

Ping An has established sustainable development as the company’s development strategy, defining it as the foundation to ensure the pursuit of the maximization of long-term value and focusing on enhanced implementation in the areas of environment, society, and corporate governance. We are clear that the objectives of sustainable development are to fulfil people's aspirations for a better life, supporting the transformation of the economy and society towards sustainability, and achieving the company's long-term, balanced, and high-quality sustainable development. Under the premise of pursuing economic benefits, it continues to create value for customers, employees, shareholders and society, and seeks to achieve a balance and maximization of value for all parties through effective communication and collaboration with stakeholders.

Ping An formulated its 2023-2027 Sustainable Development Plan with a  focus on 13 core topics including: sustainable insurance; responsible banking; responsible investment; responsible products; consumer protection and experience; corporate governance; climate change and carbon neutrality; rural revitalization and community impact. Clear objectives have been set for implementing sustainable development initiatives and creating value for all stakeholders over the next five years.

To ensure the execution of the strategy, Ping An has established a sound ESG governance structure and formed a closed loop of communication, analysis, action and disclosure. In 2022, Ping An further improved its ESG governance structure by upgrading the Green Finance Committee to the Sustainable Development Committee, which coordinates the practice and management in areas such as green finance, green operations, and rural revitalization.

It is important to fully understand the differences in orientations on ESG issues.

In the past two years, some overseas NGOs have jointly compiled reports on global financial institutions' financing of fossil fuel industries, accusing major global banks and investment institutions, including more than 10 large financial institutions in China, of supporting the fossil fuel industry and having a negative attitude towards climate change.

Chinese financial companies, including Ping An, are actively involved in transition finance, which aims to facilitate the low-carbon transformation of high-carbon-emitting industries through financial means. For example, in 2022, Ping An helped issue the first low-carbon transition corporate bond in the national coal industry and implemented the first carbon capture, utilization and storage (CCUS) loan project in the domestic steel industry. Currently, the mainstream opinion in the international community supports transformative finance. For instance, the G20 Sustainable Finance Working Group, jointly led by China and the US, released the G20 Transition Finance Framework in November 2022, signifying the international consensus among G20 member countries on developing transformative finance. This consensus is of great significance for promoting financial support for low-carbon-emitting industries and facilitating the green and low-carbon transformation of enterprises.

As the old saying goes, many little drops make an ocean. The development of ESG, both internationally and domestically, has encountered challenges, but it has also gained tremendous momentum. With the essence and core values of ESG as the starting point, enterprises can seek common ground while reserving differences and advancing in the same direction, to pursue a balance of values among all parties. Together, we can promote a future where humankind can achieve long-term prosperity and harmoniously coexist with nature.

- Part 1: Richard Sheng, Ping An Secretary of the Board of Directors: The "Global Perspectives, Chinese Approach" to ESG

- Part 2: Recognizing the Difference in ESG Regulations Around the World

- Part 3: Identifying Commonalities in ESG Values