On November 17, 2012, at the Fifth World Economic and Environmental Conference jointly sponsored by United Nations Industrial Development Organization (UNIDO), United Nations Educational, Scientific and Cultural Organization (UNESCO) and International Energy Conservation Environmental Protection Association (IEEPA), Industrial Bank (IB) became the only winner of “Carbon-value Social Citizen Award” with its outstanding achievements in practicing the sustainable development strategy, performing its social responsibilities in an active way, and promoting green finance vigorously.
“In recent years, IB has, with a variety of financial tools, provided green finance based financing loans of nearly RMB 200 billion to around 1,000 enterprises. At the end of October, the financing balance was over RMB 110 billion, of which the balance of green finance based loans account for 10% of the corporate credit balance", President Li Renjie of IB, as a special guest of the Conference, said to the reporters.
Forerunner in the practice of green finance
In recent years, some commercial banks at home gradually accepted the concept of green finance. Responding to and implementing the national policies, they had active performance in the implementation of green credit policies. Some banks, including IB, Industrial and Commercial Bank of China (ICBC), China Merchants Bank (CMB), China Construction Bank (CCB), Bank of Communications (BOCOM), and Shanghai Pudong Development Bank (SPDB), have made innovations based on the national policies, establishing certain green credit policies and criteria respectively. For instance, the specific measures established for industries of high energy consumption and heavy pollution, one-vote-down system of environmental protection, list-based management of enterprises, control, reduction or non-provision of loan; intensified post-loan management, track monitoring and control of post-loan environmental and social risks.
Boasting an outstanding performance in the field of green finance, IB is the forerunner and advocator of green finance practice in China. IB has incorporated the pursuit of harmonious unification of economy, society and environment into its own development objectives on its own initiative, established the corporate governance philosophy of sustainable development to “explore different ways to promote the bank to practice social responsibilities and construct a good relationship where human being coexists with the nature, environment and society harmoniously”. Moreover, it has incorporated the philosophy into its business management concept and innovatively put forward the social responsibility concept of “obtaining reasonable profits while bringing benefits to the stakeholders”, exploring the performance of social responsibilities in a commercial model. Under the guidance of the social responsibility concept of “obtaining reasonable profits while bringing benefits to the stakeholders”, the bank has established the green finance strategies and carried out a range of explorations and practices.
When China promoted energy conservation and emission reduction in 2005, IB began to design the energy conservation and emission reduction financing products in collaboration with our partner IFC. In 2006, the bank released the first energy-efficient financing product at home, initiating its path of green finance service. In 2007, with the understanding of the international carbon market in greater depth, the bank began to design carbon finance products, becoming the first one releasing the integrated carbon finance services covering the front, middle and back stages of carbon trading. In 2008, it announced to the public to adopt the Equator Principles in Beijing, becoming the first Chinese “Equator bank”. In 2009, it established the institution specialized in sustainable finance at its Head Office. In 2010, it issued the first low-carbon credit card in China, extending the green finance from the field of corporate project to personal consumption. In 2011, it innovatively released such green finance products as emission rights pledged credit and carbon assets pledged credit. Now, IB has formed two product families including green finance based financing service and emission right finance service, taking a leading position in the industry in such aspects as market concept, social influence, product development, technical regulations, and service fields and accumulating rich experience in the field of localized sustainable finance.
By the end of October of 2012, the green finance projects of IB has saved 23.0554 million tons of standard coal across China each year, reduced 66.1855 million tons of carbon dioxide, 879,400 tons of chemical oxygen demand (COD), 14,500 tons of ammonia nitrogen, 43,600 tons of sulfur dioxide, and 6,900 tons of oxynitride, utilized 14.6629 million tons of solid waste in an integrated manner, and saved 255.7906 million tons of water.
Propeller in the field of green finance
In 2002, some mainstream banks and financial institutions in the world discussed, in Greenwich, about how to pay attention to environmental and social problems and which principles to follow in the process of project financing, and reached certain consensuses, which were then called the “Greenwich Principles”. Later, some non-governmental organizations believed that these principles should not only be adopted in the rich developed countries, but also be followed by the developing countries. Most of the developed countries situate in the northern hemisphere and many developing countries are located in the southern hemisphere, considering the division of the earth, the principles were placed in the middle and named the Equator Principles as the common principles around the world. Specifically, the Equator Principles consist of the statement of ten principles, eight performance standards, and eight categories of 62 industry-specific environmental, health and safety guidelines. The whole set of well-established principles and standards are implemented in specific coverage, business flow and operation method. At present, 76 financial institutions including Citibank and Standard Chartered Bank have adopted the Equator Principles around the world. Nonetheless, IB is the first and the only “Equator bank” in China up till now. The bank committed to adopt the Equator Principles to the public on October 31, 2008, becoming the 63 rd financial institution adopting the principles around the world.
As the first “Equator Bank” in China, apart from carrying out review over the financing of any project with a total investment exceeding USD 10 million in line with the requirements of the Equator Principles and identifying the environmental and social risks of the financing project, IB has also provided a complete set of concepts, methods and tools for green finance in reference to the Equator Principles and established all-sided management regulations and system for environmental and social risks from decision-making to implementation, from regulations to flow, and from capacity building to information disclosure. By the end of October 2012, the bank has examined the applicability of 718 loan projects according to the Equator Principles, with a total amount of project investment up to RMB 988.4 billion. Specifically, 150 of them were approved as projects applicable to the Equator Principles, with a total investment of RMB 206.8 billion involving 147 customers. Forty-three loans have been extended by 21 branches of IB. In addition, 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 at the end of 2011, 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 the change that Chinese enterprises seek to control risks with the Equator Principles rather than by following the principles in a passive way, a sign that the practice of sustainable finance has been further deepened in China.
Meanwhile, IB has kept intensifying its international and domestic communication and cooperation in the field of green finance. It has carried out extensive and in-depth exchange and cooperation in adopting the Equator Principles and promoting green financing with international organizations and financial institutions, such as World Bank (WB), International Finance Corporation (IFC), World Wide Fund for Nature (WWF) and the Climate Group, and a number of domestic ministries and commissions, such as the National Development and Reform Commission (NDRC), the Ministry of Environmental Protection and China Banking Regulatory Commission (CBRC), local governments, academic institutions and non-governmental organizations as well as financial institutions, such as ICBC and China Minsheng Banking Corporation (CMBC).
Thanks to its unremitting efforts in the field of green finance, IB has won the high recognition of different stakeholders both at home and abroad. In recent years, the bank has won a series of awards both at abroad and home, including Sustainable Banking Award, Award for the Best Green Finance, Best Corporate Social Responsibility Financial Institution Award, Best Corporate Citizen Prize and Low-carbon Pioneer Enterprise Award. In September 2012, the bank ranked No. 1 in both the ranking of “2012 China Green Credit Report” released by the Ministry of Environmental Protection and the “Green Credit Performance Ranking of Listed Chinese-funded Banks (2008-2011) released by Green Watershed and other seven NGOs.
IB indicates that, in the future, it will adhere to the strategy of green finance strategy, attract professionals and focus on special fields based on the established competitive edged in green finance, and continue innovating in green finance products and services, thus becoming the “practice forerunner, industrial integrator and rule formulator” of the Chinese green finance and an all-sided “green bank".