The effect of energy conservation and emission reduction is equivalent to shutting down 412 thermal power plants over 100 MWs
“Since the first energy-efficient financing project was implemented in 2006, Industrial Bank (IB) has extended 2,857 green finance based financing loans accumulatively, totaling RMB 129.008 billion, by the end of the first quarter of 2012. The effect of energy conservation and emission reduction in these years is equivalent to shutting down 412 thermal power plants over 100 MWs or stopping running 70,000 taxis in Beijing for 124 years.” Li Renjie, President of IB, said to reporters at the Emerging Market Green Credit Forum organized by China Banking Regulatory Commission (CBRC) on May 16.
As the only “equator bank” of China, IB has taken green finance as a strategic operation model to adapt to the new trend of developing green finance and grasp a new opportunity to develop green economy, exploring a broader path for sustainable finance boldly.
Li Renjie indicated that the bank would further intensify its efforts to develop green finance and build itself into an all-course professional financial service supplier covering a wide range and an all-round “green bank” for China's green finance market.
The Green Finance Strategy Showing Its Effect
Since IB took the lead to release energy-efficient financing products in May 2006, the green finance strategy of the bank has shown obvious effect by now.
By the end of the first quarter of 2012, IB has accumulatively provided the green finance based financing loans worth RMB 129.008 billion to over a thousand enterprises. Since 2007, the projects under the green finance support of IB have saved 61.1227 million tons of standard coal within China, reduced emission of 179.9542 million tons of carbon dioxide, 2.2579 million tons of chemical oxygen demand (COD), 14,700 tons of ammonia nitrogen, 74,600 tons of sulfur dioxide, and 8,600 tons of nitrogen oxide, utilized 17.4134 million tons of solid waste in an integrated manner, and saved 173.8180 million tons of water.
In terms of the implementation of Equator Principles projects, IB has examined the applicability of 673 loan projects to the Equator Principles by the end of the first quarter of this year, with a total amount of project investment up to RMB 910.6 billion. 127 of them were approved as projects applicable to the Equator Principles, with a total investment of RMB 163.1 billion involving 126 customers. 37 loans have been extended by 18 branches of IB. What's worth noting is that the first project supported by the bank in which the enterprise followed the Equator Principles out of its own will was implemented successfully in Xi'an, with a total investment of RMB 320 million. This signifies that the Equator Principles which have been observed extensively in the world have gained wider recognition in China, and it also indicates that Chinese enterprises have chosen to actively seek the help of Equator Principles in control of risks rather than passively follow the principles, a sign that the practice of sustainable finance have been further deepened in China.
UP to now, IB has developed two ranges of products regarding financing service and emission rights finance (including carbon finance and emission rights finance) respectively, establishing a product matrix.
In the aspect of financing service, the bank releases “8+ 1” financing service model, namely, the eight conventional credit modes plus the non-credit financing mode. Specifically, “ 8” includes energy conservation and emission reduction project financing, financing under CDM, energy management company (EMC) financing, credit financing for purchaser of energy-conserving and emission-reducing equipment, financing for the production increase of energy-conserving and emission-reducing equipment manufacturer, financing for utilities service supplier, financing lease, and emission rights pledge-based financing. “1” covers the issuance of debt financing tools including short-term bonds, medium-term notes and SME collection notes, financial lease, structure financing, trust financing, etc.
In the field of emission rights finance, IB has made in-depth efforts in implementing projects in the international market and many provinces and municipalities within China.
Specifically, in the aspect of carbon finance service, the bank has actively participated in the construction of domestic carbon finance cooperation platform and constructed cooperation platforms for carbon finance business, taking the lead to launch cooperation in Guangdong, Hubei, and Shanghai. Internationally, IB has released such products as clean development mechanism (CDM) project development consulting, carbon-purchasing agency, performance guarantee for verified carbon emission reduction (CER) to the international carbon trading market, and innovatively provided the carbon assets pledged credit against the insufficient CDM trading mechanism to offer new methods for the financing guarantees of SMEs. Moreover, it has established extensive cooperation with dozens of overseas carbon traders and domestic mainstream environment benefits and rights exchanges.
In the aspect of emission right finance, following the progress in the national emission rights trading pilots, IB took the lead to release the emission rights based financial service in 2010, providing a package of products and services for governmental agencies and enterprises regarding the consulting for the design of emission rights trading regulations, development of emission rights trading and settlement system, emission rights pledged credit, and financing for projects reducing the emission of pollutants. Moreover, it is the first bank to launch cooperation in Hunan, Hebei, Shanxi, Jiangsu, Zhejiang, and other regions.
Building an All-round “Green Bank”
Behind the above effects stand the strategic conception and implementing path of IB to build an all-round “green bank”.
IB is one of the commercial banks exploring and getting involved in the field of green credit at an early time. Considering its path of green finance, the bank has chained all links well. In collaboration with International Finance Corporation, IB began to get involved in the field of energy-efficient finance formally in 2005, and it innovatively released the first green credit product, energy conservation and emission reduction loan, at home in 2006, establishing its pioneering position in green finance service in China. In 2008, IB openly undertook to adopt the Equator Principles, becoming the first “equator bank” and the only one in China up to now, and it further extended its green credit business into green finance business. In 2009, it established the Sustainable Finance Center in Beijing, the first institution specialized in sustainable finance in China, entering a more specialized stage in developing and exploring green finance business. In 2010, it released the first low-carbon credit card in China, thus extending the green finance business from corporate customers to personal customers.
The energy-efficient financing product was initially released, Li Renjie indicated, against the backdrop that the world responded to climate changes and China pushed forward the course of energy conservation and emission reduction. Proposing the way to perform corporate social responsibilities through “obtaining reasonable profits while bringing benefits to the stakeholders”, the bank explored to perform its social responsibilities through making innovation in the business mode and to integrate the performance of social responsibilities into the process that the bank provides products and services to the outside, so as to achieve the bank's commercial interests and social environment benefits in a harmonious way.
We should note that the key to the above steps is to treat green finance as a strategy and construct a three-dimensional management pattern.
It is reported that, as early as in July 2007, the bank has set up a work leading group for social responsibilities headed by Board Chairman Gao Jianping. Then, the rule–“study and draw out the social responsibility strategies and policies of the bank, and monitor, examine and assess the performance of social responsibilities of the bank”–was written into the Working Rules of the Executive Committee of the Board of Directors, and the bank specified that corporate social responsibility and sustainable finance would be the core concepts and value directions of the bank.
And the bank has guaranteed the execution and favorable development of corresponding businesses in terms of institutional support, business process reform and resource distribution system for the green finance services.
In fact, IB has grown from a practicer into an active advocator of green finance. The bank has become a famous green finance brand both at home and abroad, establishing its own differentiated competitive edges.
Internationally, upon the invitation of China Clean Development Mechanism Fund (CDMF), IB attended the UN Climate Change Conference held in Durban of South Africa in 2011, and gave a keynote speech at the side events held at the Chinese corner as the only banking representative. At home, the bank have actively participated in compiling the key index system for green credit of China Banking Regulatory Commission, held “Energy-conserving China Summit Forum & Green Credit Innovation Symposium” jointly with the National Development and Reform Commission (NDRC), the State Environmental Protection Administration (SEPA), and China Banking Regulatory Commission (CBRC), and organized the “training program for energy conservation and emission reduction credit business” together with CBRC.
Li Renjie indicated that commercial banks were the main body for the distribution of domestic financial resources. To intensify the development of green finance business and to support energy conservation, emission reduction and environmental protection of the state with financial support are not only the unavoidable requirements for performing the corporate social responsibilities, but also positive factors for our banks to push forward our own transformation and reform and keep on improving our own commercial values. The bank would further intensify its efforts to develop green finance, improve the management system and regulations for green finance in a sustained manner, boost innovation in businesses and services consistently by focusing on improving the asset management capability in the professional fields, and endeavor to build itself into an all-course professional financial service supplier covering a wide range and an all-round “green bank” for China's green finance market.