Summary:
What would happen to our increasingly warm earth if two million tons carbon dioxide was pumped out into the atmosphere over the next three years? The consequences are something that most people would rather not imagine. However, now that the Industrial Bank is vigorously promoting its “Green Credit” products, we can all sleep a little easier at night!
The Industrial Bank, which has long been dedicated a sustainable development, is developing its own unique social responsibility system in which multiple interested parties are catered for, including shareholders, staff members, clients, partners, the environment, natural resources and society in general. Under this system, the Bank innovatively launched a scheme to finance projects that will conserve energy and cut emissions in order to fulfill its responsibilities to the environment and promote harmony between man and nature. This scheme is like non other seen before in China's banking industry.
Toward An “Equator Bank”
In July, an announcement made by the Industrial Bank caught the attention of a number of investors. The BOD of the Industrial Bank had passed a motion regarding application for entry into the equator principles that gave senior management the green light to proceed with the entry process. With this, it became the first Chinese-funded bank to publicly declare that it will seek admission into the principles.
“Many people didn't know what the “equator principles” were and thought that we were just hyping a new concept on the capital market. But that was not the truth. We are engaging in something that is truly meaningful!” According to personnel in charge of related tasks at the Industrial Bank, the equator principles denote a voluntary benchmark for the banking industry established by major global financial institutions in reference to the sustainable development policies and guidelines stipulated by the IFC. They are designed to judge, evaluate and manage the environmental and social risks in project financings. The principles advocate that financial institutions should prudently fulfill their obligation of weighing up the environmental and social issues involved in project financing and grant loans only when the applicant has proven that the project in question will be accountable to both the environment and society when implemented. These principles are of landmark significance in the history of international finance. They constitute an action guide for the sustainable financing of banks in all countries and a specific way for financial institutions to fulfill their social responsibilities. So far, over 60 financial institutions worldwide have announced their entry into the principles, but none of them are found in China.
In the eyes of outsiders, the Industrial Bank's application for entry into the principles is an unprecedented dare. However, in the eyes of the Industrial Bank this couldn't be further from the truth. The Bank sees it as a natural progression, “the Industrial Bank has long been dedicated to sustainable development. Our business philosophy matches the objectives of the equator principles perfectly!”
In May 2006, the Industrial Bank joined forces with the IFC to launch project financing for energy conservation and emission reduction. This was a first for China.
On October 2007, Li Renjie, the president of the Industrial Bank, was invited to participate in a global roundtable organized by the United Nations Environment Programme in Melbourne, Australia. At the conference, Li announced that the Industrial Bank would formally participate in the UNEP Finance Initiative and solemnly promised that the Bank would take environmental factors into consideration during its commercial decision-making in order to support sustainable development.
One month later, the 2007 Energy-Saving China High-Level Forum & Green Credit Innovation Symposium was held in Beijing, which was co-sponsored by the Industrial Bank, the IFC, the Resources Conservation and Environmental Protection Department of the National Development and Reform Commission, the Energy Research Institute of the National Development and Reform Commission and the Financial Times. Following this, the Bank organized a “Social Responsibilities & Sustainable Financing Seminar” in Shenzhen to promote the concept of sustainable finance.
At the end of that year, the Industrial Bank and the IFC held the “Energy Conservation and Emission Reduction Roundtable" in Guangzhou. At the conference, Mr. Robert Zoellick, the president of the World Bank, exchanged views with Gao Jianping, the Bank's BOD chairman. Mr Zoellick spoke highly of the results that the Industrial Bank has achieved in finance for energy conservation and emission reduction as well as the Bank's plans for this in the future.
“To earnestly implement scientific concepts of development and deepen the understanding of the relationship between the social responsibility assumed by a bank and its individual sustainable development, a variety of modes shall be actively sought to urge the bank to practice its social responsibilities and to achieve harmony between human beings and nature” This is the concept of corporate governance put forward by chairman Gao Jianping. Better fulfilling its environmental and social responsibilities has become an important part of the Bank's development strategies.
RMB 10 Billion within 3 Years to Support Energy Efficiency
In fact, as early as May 2006, the Industrial Bank began to cooperate with the IFC. Based on China's needs for financing in the areas of energy-saving technology and circular economy, it creatively introduced risk-sharing mechanisms and became the first domestic bank to provide loans for projects aimed at energy conservation and emission reduction. The Bank assisted domestic enterprises in the renovation of energy-consuming equipment, the launch of energy-saving and environmentally-friendly projects, the promotion of the use of clean energy and the reduction of poisonous gas emissions. According to the agreement between the Industrial Bank and IFC, the loan amount for the first phase of cooperation totaled at RMB 460 million Yuan. The reaction to the scheme in the market was intense right from the start. In less than a year, loans for energy conservation and emission reduction projects issued by the Bank had already amounted to RMB 900 million Yuan. In February 2008, The Industrial Bank signed the phase II cooperative agreement with the IFC. The loan amount was increased to RMB 1.5 billion Yuan and the financing scope was also further expanded.
By the end of June this year, the Bank had supported 69energy conservation and emission reduction projects in total, the financing capital standing at RMB 2.15 billion Yuan. These projects can save 2.36 million tons of standard coal and cut the emission of greenhouse gases, including carbon dioxide, by 6.5 million tons per year, which is the equivalent of closing down thirteen 100-megawatt heat power stations.
The effective promotion of these financing projects has established the Bank's image as a pioneer and advocate of “Green Credit" in Chinese banking. The Bank has also been praised by related government departments, international organizations and various circles of society. Last June, in the Sustainable Banking Awards jointly held by the Financial Times and the International Finance Corporation, the Bank obtained two nominations: “Sustainable Banking Award in an Emerging Market” and “Sustainable Transaction Award”. It was eventually awarded the “Sustainable Transaction Award” for the year, becoming the first financial institution in China to win this honor. Just two weeks ago, eight domestic NGOs awarded the Industrial Bank with the “2007 Innovation Award for Green Banking in China”.
The Bank is planning to commit over RMB 10 billion Yuan in loans over the next three years to support the cause of energy conservation and emission reduction in China. However, considering the RMB 600 billion investment made by the State in energy conservation and emission reduction projects during the “11 th Five-year Plan” period, a principal from the Bank said that there will be tremendous space to expand in this field. If all banks did their bit in this regard, our home might well become a cleaner place in the future.
A General Sense of Responsibility
As well as being accountable to the environment, the Industrial Bank, as an enterprise with a strong sense of social responsibility, believes it necessary to build up a harmonious, win-win relationship with all interested parties. Thus, the Bank, based on its attributes, operating characteristics and cultural connotations, developed a unique social responsibility system that caters to multiple interested parties. This has been integrated into all aspects of the Bank, including its business model, prospective plans, basic values, corporate mission and code of conduct for staff.
In August 2007, the Industrial Bank called on listed companies in Fujian Province to place a greater emphasis on social responsibility. The initiative proposed that these companies should actively get involved into the development of the western side of the Taiwan Strait and bring their influence as listed companies into play. Moreover, they were called on to improve their corporate governance structures and enhance their abilities in governance, make efforts to conserve energy, cut emissions and protect the environment and practice their social responsibilities while exploring business opportunities presented by innovation in public welfare. The initiative gained positive responses from the province's listed companies.
In terms of social welfare undertakings, the Bank has grounded its development on welfare undertakings, and provided intellectual, material and financial support for medical care, education, culture and other areas of public service. Furthermore, it has been keen to repay society though a number of initiatives, such as poverty alleviation, charitable donations, blood donation, charity events, its charitable foundation, student loans and art and forum sponsorship.
After the catastrophic earthquake in Sichuan, the Bank offered a series of donations totaling at RMB 22.94 million Yuan. A total of 2,555 bank employees donated blood for the victims. In order to support the victims of the earthquake in rebuilding their homes, it took the initiative among domestic joint-stock banks by offering RMB 200-million in loans for post-disaster reconstruction. Following the devastating Typhoon Long Wang (Dragon King) that battered Fujian Province, the Bank donated RMB 200,000 Yuan around 2,000 items of clothing within 2 days of the event. The Bank subsequently donated approximately RMB 2 million Yuan for disaster relief.
The Industrial Bank is also a keen supporter of education. It set up the “Care for the Next Generation Industrial Bank Scholarship” in conjunction with the Fujian Youth Concern Committee, providing scholarships for excellent students. On June 7, 2007, through Fujian Charity, it founded “The Industrial Bank Charitable Foundation” with a donated fund of RMB 100 million Yuan. Branches in different regions support local education by various means. For example, the Hangzhou Branch donated RMB 250,000 Yuan to establish a primary school, the Nanjing Branch fund a post-doctoral scholarship with RMB 200,000 Yuan, and the Shanghai Branch donated RMB 600,000 Yuan to the Shanghai Jiao Tong University.
(Fang Chuangliu, Straits Metropolitan News, Aug 15, 2008)