In the latest ESG ratings released by Huazheng Index (January 31, 2026), Lufax Holding Ltd (06623.HK, referred to as "Lufax") maintained its 'C' rating, ranking 33rd out of 33 companies in the GICS Financial Services sub-industry, with its overall ESG performance positioned in the lower tier of the overall market.

After being suspended from trading on the Hong Kong Stock Exchange for over a year, Lufax centrally disclosed a series of announcements on February 15, 2026, including its 2024 Annual Report and its 2024 ESG Report, drawing a conclusion to the previously escalating audit controversy.

As a leading institution focused on empowering small and micro enterprises with financial services in China, Lufax's operations encompass retail credit empowerment and consumer finance.

Based on Lufax's 2024 ESG Report, the report was prepared with reference to the HKEX's ESG Reporting Code and structured around four themes: "Finance with a Human Touch," "Finance with Higher Efficiency," "Finance with Greater Reliability," and "Finance for Greater Sustainability." However, the report has not yet undergone external assurance. During the reporting period, the company identified 19 material topics. Topics deemed most material include: Information and Data Security, Financial Product Safety and Risk Control, Customer Service, Consumer Privacy Protection, Inclusive Finance, and Responsible Marketing.

Regarding the Governance dimension, the report emphasizes "Consolidating the Governance Foundation," "Compliance Management," and "Risk Management," showcasing the company's continued investment in ESG governance. Although the company has established an ESG governance structure and continuously improves its risk management system, the issues exposed by the recent audit controversy also suggest that the company still has room for improvement in information disclosure transparency, related party transaction management, and the effectiveness of internal controls. The stability of its governance requires further enhancement.

According to the company's disclosure of the main findings from a supplementary investigation, between June 2017 and January 2023, Lufax provided loans totaling approximately RMB 3.84 billion to Shenzhen DeCheng Investment and Development Co., Ltd. (“DeCheng Investment”). Decheng Investment subsequently used part of these loan funds to acquire underlying assets of certain risk products or portfolios of risky assets related to investment products issued by Lufax's related parties. This was aimed at compensating retail investors who had purchased loss-making financial products through relevant platforms.

The announcement stated that the accounting treatment of the loan transactions used for compensation purposes did not reflect the economic substance of the loan transactions. In essence, Decheng Investment acted as a conduit, undertaking the underlying assets of the relevant risky assets or wealth management products on behalf of Lufax, paying the consideration to compensate investors. As of the end of 2024, the outstanding loan principal was approximately RMB 1.50 billion, and the total outstanding principal and interest amounted to approximately RMB 1.69 billion.

The supplementary investigation also found that three entities (including two held by Decheng Investment) were effectively controlled by Lufax but were not included in Lufax's scope of consolidated financial statements.

Furthermore, the company disclosed that between 2023 and 2025, it subscribed to a total of 59 wealth management products. Among these, four wealth management product subscriptions, involving a total amount of RMB 2.1 billion, were not approved by shareholders in advance.

Lufax stated that the company's former Co-Chief Executive Officer and former Chief Financial Officer (who left the company at the end of 2024 and early 2024, respectively) bore primary responsibility for designing and implementing the compensation transactions. Regarding the relevant responsible personnel, including those who assisted in the mentioned transactions and/or the compensation transactions and knew or should have known about the improper accounting treatment and related compliance issues, the company is assessing the disciplinary procedures to be taken and will disclose them in due course in accordance with applicable regulations.

Lufax has restated its financial data for 2022 and 2023. Following the restatement and re-audit, for the fiscal year 2022, the company's total consolidated assets at year-end increased by approximately 0.5% (RMB 1.70 billion), while consolidated net profit decreased by approximately 10.4% (RMB 917 million). For the fiscal year 2023, the company's total consolidated assets at year-end decreased by approximately 1.1% (RMB 2.64 billion), and consolidated net profit decreased by approximately 7.9% (RMB 81 million).

Facing a suspension crisis lasting a year, Lufax has also initiated a series of governance rectification measures, including completing a board restructuring and appointing Deloitte Consulting (Shanghai) Co., Ltd. as an Independent Internal Control Consultant to conduct a comprehensive review of the Group's internal control policies and procedures.

The scope of the internal control review covers entity-level internal controls (risk assessment, control activities, information and communication, monitoring), business process-level internal controls (wealth management business processes), and management process-level internal controls (financial reporting and information disclosure, related party and related transaction management processes, cash and fund management processes, investment and valuation processes). The review period involves relevant business occurring between January 1, 2022, and December 31, 2025. Among these, business and management functions directly related to the transactions covered by the independent investigation are key review areas, primarily including entity level, wealth management business, related party and related transaction management, financial reporting and information disclosure, cash and fund management, investment and valuation, and consolidation and subsidiary management.

Compared to the governance-level turmoil, Lufax's performance in the Environmental dimension appears relatively stable. The report discloses data on energy usage and carbon emissions at the company's operational level and commits to achieving carbon neutrality by 2060. However, the report has yet to disclose more substantive indicators such as carbon emissions from financing activities, the scale of green finance business, or climate risk scenario analysis. Compared to the trend of financial institutions gradually strengthening climate information disclosure, the depth of its environmental information disclosure still has room for improvement.

In the Social dimension, Lufax positions "Inclusive Finance" as a core ESG narrative. The report discloses that as of the end of 2024, the company's consumer finance services covered major regions across the country, serving nearly 10 million customers, with users in third-tier cities and below accounting for nearly 82%.

In terms of serving rural revitalization, as of the end of 2024, the company had served over 480,000 small and micro-sized agricultural clients; assisted nearly 300 leaders of rural cooperatives and agricultural innovators in obtaining over RMB 160 million in support funds; directly supported over 800 registered impoverished households; and drove development for over 15,000 people in surrounding areas, covering 14 provinces and 40 counties, encompassing various agricultural types such as crop farming, animal husbandry, forestry, and fishery.

Regarding customer service, the report disclosed that the company received 164 customer complaints in 2024, resulting in a customer complaint rate of 0.001% and a 100% response rate to customer complaints. However, the report did not further disclose the main types of complaints and their handling status.

Concerning information security, the company is actively committed to advancing external information security system certification work. Its information security management system has successfully obtained ISO/IEC 27001:2022 certification for all operations, achieving 100% business certification coverage.

Overall, Lufax's 2024 ESG Report generally meets regulatory requirements in terms of structure and disclosure framework, demonstrating a certain practical foundation on topics such as inclusive finance, information and data security, and rural revitalization. However, there is still room for improvement in data depth, indicator comparability, and environmental information disclosure. Concurrently, the governance issues exposed by the audit controversy place higher demands on the transparency and credibility of the company's ESG information disclosure.

Author：Qinger