Resolved clauseShareholders request EWBC’s Board of Directors issue a report describing the strategies, initiatives, and metrics it utilizes to manage and assess material environmental and social risks and opportunities. The report should be updated annually, prepared at reasonable cost, and omit proprietary information.
Whereas clauseFinancial disclosure requirements play a crucial role in capital markets, and reporting on management of material environmental and social risks and opportunities can better inform investors of company strategies for enhancing corporate value. When this reporting aligns with standardized frameworks, it can help deliver data to investors that is consistent and relevant, allowing them to more easily compare companies within industry sectors.
The Sustainability Accounting Standards Board (SASB) Standards framework systematizes corporate disclosures by industry sector and helps identify the sustainability issues most likely to be financially material to a company. The Standards cover 77 different industries, including specific banking industries, such as mortgage financing and commercial banking.[1]
Over 3,200 companies in more than 80 jurisdictions around the world use the Standards, including 75 percent of the S & P Global 1200 Index.[2] Institutional investors - representing $87 trillion in assets under management - support and/or use the SASB Standards to inform their investment decision-making.[3] Despite this, it is unclear to what extent East West Bancorp (“EWBC” or “the Company”) adheres to sustainability reporting frameworks in its disclosures.[4],[5] Although EWBC states in its 2023 Environmental, Social, and Governance report that its “long-standing lending and investment policies comply with today’s Environmental, Social and Governance (ESG) and Sustainability Accounting Standards Board (SASB) criteria,” it does not identify which criteria, metrics, or targets it uses to assess compliance.
By responding to the appropriate industry-based SASB Standards, EWBC could provide investors more robust information on material considerations including its:
Approach to environmental and social factors in its credit analysis
Approach to business ethics and avoiding conflicts of interest
Portfolio-level climate risk scenario analysis (or modelling) of commercial and industrial credit exposure.
Incorporation of climate change and other environmental risks into its mortgage origination and underwriting processes.
Further, EWBC would join peers already reporting to the Standards, including Comerica,[6] First Horizon,[7] and Webster Bank.[8]
Supporting statementIn determining relevant content for the report, we recommend, at management’s discretion, consideration of the following:
Using recognized frameworks, such as the appropriate industry-based SASB Standards.
Disclosure of quantitative, timebound metrics for improvement against baseline performance; and
Discussion of if, and how, sustainability considerations are integrated into corporate governance, business strategies, and operational decisions.
[1] https://sasb.ifrs.org/standards/
[2] https://help.sasb.org/hc/en-us/articles/17085666792596-Are-the-SASB-Standards-relevant-globally#:~:text=The%20SASB%20Standards%20are%20used,and%20decision%2Duseful%20for%20investors
[3] https://sasb.ifrs.org/about/global-use/
[4] https://www.eastwestbank.com/content/dam/ewb-dotcom/docs/company/EastWestBank-2023-ESG-Report.pdf
[5] https://s23.q4cdn.com/205723478/files/doc_downloads/other_governance/2024/04/environmental-and-social-policy-framework-march-2024.pdf
[6] https://www.comerica.com/content/dam/comerica/en/documents/resources/about/sustainability/2023-Comerica-Corporate-Responsibility-Report.pdf#page=134
[7] https://www.firsthorizon.com/-/media/Files/First-Horizon-National-Corporation/First-Horizon-Here-for-Good.pdf. Pg 88.
[8] https://s201.q4cdn.com/793791972/files/doc_downloads/esg_reports/2023/webster_2023-corporate-responsibility-report_42924.pdf#page=41