The Bank formulated the China CITIC Bank Environmental, Social, and Governance (ESG) Risk Management Procedures for Credit Business, which defines ESG risk assessment criteria. The Bank integrates ESG risks into the entire credit lifecycle, including due diligence, review and approval, credit utilization checks, and post-loan/post-investment monitoring, thereby strengthening ESG risk oversight in credit activities.

The Bank also established the China CITIC Bank Key Environmental, Social, and Governance (ESG) Evaluation Metrics for Credit Business, comprising 17 critical ESG indicators across environmental, social, and governance dimensions. During the review process, the Bank prioritizes clients’ energy management, pollutant emissions, green industry alignment, safety and quality standards, and equity governance. Evaluation results serve as a key input for credit approvals in sectors such as mining, manufacturing, and utilities including power, heating, gas, and water supply. This framework enhances ESG risk screening and elevates ESG risk management standards. By the end of 2024, these metrics have been implemented across all branches nationwide, covering approximately 70% of the aforementioned industries by transaction volume. The Bank actively monitors emerging sectors like new energy vehicles and advanced materials, while tracking trends in high-pollution, high-energy-consumption industries such as steel, aluminum electrolysis, and cement. By the end of 2024, the Bank had developed over 10 green industry-specific review standards and more than 30 standards for industries closely linked to green sectors.

In the Due Diligence Phase, for credit clients meeting due diligence requirements, the Bank conducts ESG risk assessments. Relationship managers are required to complete the 17 specific indicators outlined in the China CITIC Bank Key Environmental, Social, and Governance (ESG) Evaluation Metrics for Credit Business item by item. A preliminary assessment of the client’s ESG risks is then documented in the Credit Due Diligence Report. In the Review and Approval Phase, the Bank reviews the compliance, validity, and completeness of documents submitted by credit clients, analyzes each ESG-related indicator in the due diligence report, and evaluates ESG risks for each transaction. A formal review opinion on the client’s ESG risk profile is provided in the Credit Review Report.

In the Credit Utilization Review Phase, the client’s ESG risk management status serves as a critical factor in credit utilization reviews. After credit approval is granted, ESG risk assessments are verified against approval conditions during the credit utilization review. If significant ESG risks are identified, credit utilization is suspended as per contractual terms.

In the Post-Loan/Post-Investment Management Phase, the Bank collects, recognizes, categorizes, and dynamically analyzes ESG risk data from clients, assesses the impact of ESG risks on their operations, and adjusts five-category asset classifications and loan loss provisions accordingly.

Enhanced Post-Loan/Post-Investment ESG Monitoring and Early Warning: The Bank expands its post-loan/post-investment inspection indicators and early warning signals by incorporating ESG metrics. A Dynamic ESG Risk Assessment Table is maintained to provide real-time data for post-loan/post-investment management.

Enhanced Closed-Loop Management of “Review, Monitor, Re-Evaluate” (review and approval, monitoring and re-inspection): For critical ESG-related risks, the Bank’s Review and Approval, Monitoring, and Re-Evaluation teams jointly analyze issues, formulate mitigation strategies, and track outcomes. Policies, standards, rules and operational procedures are revised to ensure ESG risk information is fully integrated across all stages, achieving closed-loop management.

 *The English version were translated based on the Simplified Chinese version. In case of any discrepancies among the versions, the Simplified Chinese version shall prevail.