Recently, under the active promotion of Industrial Bank (IB)–the first “Equator Bank” in China, the first Chinese project to voluntarily apply the Equator Principles was implemented successfully in Xi'an. The success serves as a sign that the Equator Principles, which are widely recognized across the world, have now gained more extensive recognition in China. It also signifies that Chinese enterprises are shifting from following the Equator Principles passively to seeking risk management based on the principles actively, and thus the practice of sustainable finance makes further progress in China.
It is reported that the first project to apply the Equator Principles voluntarily was the Jingbian Xilan Liquefied Natural Gas (LNG) Integrated Utilization Project, which was built by China Natural Gas, Inc. and operated by its fully-owned subsidiary, Jingbian County Xilan Natural Gas Liquefaction Limited Liability Company. The first phase of the project has an investment of RMB 300 million and is located at the south ern edge of the Mu Us Desert in Jingbian County, Yulin, Shaanxi. The area of the plant was formerly a plot of barren desert, covering 100,000 square meters. The main process of the project is to liquefy natural gas after purification, and key equipment was introduced from abroad. With advanced technology, the project boasts lower energy consumption and fewer emissions of the three wastes (waste gas, waste water, and industrial waste). According to the provisions of the Equator Principles, the Jingbian Xilan LNG Project was formerly not applicable to the project financing scope under the Equator Principles. After discussions with the enterprise, however, IB discovered that China Natural Gas, Inc., as a company listed in the global main board of NASDAQ, has advanced business concepts and international horizons in terms of both development strategy and financing planning and focuses on clean energy and natural gas. China Natural Gas, Inc. also adheres to energy conservation and emissions reduction and has core corporate values consistent with the sustainability concept of IB. Therefore, IB actively promoted the concept of sustainable finance to the company, explaining the great significance of the Equator Principles to an enterprise in sustainable operation s and management of social and environmental risks, and provided a whole set of green-finance service programs to China Natural Gas, Inc. With continuous communication and explanation, China Natural Gas gradually recognized and accepted the sustainable finance concept of IB, and voluntarily accepted the Equator Principles examination to improve its operation and management, thus becoming the first project of IB and of a Chinese bank to apply the Equator Principles voluntarily. IB provided the consulting services on the management of environmental and social risks to the Jingbian Xilan LNG Project, proposing to the company 30 suggestions on the improvement of environmental and social performance across 12 areas: social and environmental evaluation, occupational health and safety, pollution control, treatment of waste and hazardous materials, training of personnel, community communication, environment al monitoring and reporting system, non-employed workers, protection of resources and energy efficiency, and emissions of greenhouse gases, as well as providing a systemic framework for the management of environmental and social risks.
Ji qin an, Board Chairman of China Natural Gas, said: “We thought it was a good thing when we encountered the Equator Principles for the first time, as they advocate green development. If all of us act in this way, our environment will become better, and we can leave our descendants some space. Therefore, China Natural Gas is willing to make a bold attempt to actively explore business cooperation regarding the Equator Principles with IB.”
IB revealed that, since it undertook to adopt the Equator Principles in 2008, it has taken the principles as a breakthrough point to comply with the national macroeconomic control policies, balance its business structure, transform its development mode, and develop green finance and construct a well-established management system for environmental and social risks, in which it has carried out the relevant management of environmental and social risks covering the projects that meet the requirements of the Equator Principles. By the end of November 2011, IB has judged the applicability of 642 projects to the Equator Principles, of which 31 applicable to the principles have been implemented. The Bank revealed that it will continue up holding the concept of sustainability, facilitating the transmission of the Equator Principles and the concept of sustainable finance, and stimulate more enterprises and individuals to pay attention to the management of environmental and social performance, as well as energy conservation and emissions reduction.