Recently, Industrial Bank (IB) presented the certification tablets for the first green finance projects of IB to eight companies including Shenzhen Water (Group) Co., Ltd., Shenzhen Gas Corporation Ltd., and Shenzhen Prosunpro Solar Energy Co., Ltd., to show its recognition and support to the efforts made by relevant enterprises in the aspects of energy conservation, emission reduction, and sustainable development. As indicated by relevant personnel, to promote certification of green finance projects in the name of a bank is helpful to further bring into play the role of finance in boosting China's cause of energy conservation and emission reduction, and it also showcases the professional image of IB as the forerunner and advocator of green finance and participant in standard formulation.
In recent years, energy conservation, emission reduction, and environmental protection have become a general consensus of all social circles. In the field of finance, with the launch of a range of policies, such as the Guiding Opinions on the Credit Extension for Energy Conservation and Emission Reduction and Green Credit Guidelines, green finance has witnessed flourishing development in China. Talking about green finance, what is mentioned first is the first Chinese Equator bank–IB.
As the earliest bank developing the business of green finance at home, green finance has become one of the most eye-catching business cards of IB. Behind the business card are the sustained efforts in the field of green finance made by IB for years. It is reported that IB, which started exploring green finance in 2005, has built up its first-mover advantages in team building, business model and product innovation and established its leading professional technical team in the industry.
It is said that, to push forward the development of green finance business, IB established the Sustainable Finance Center, the first institution specialized in sustainable finance in China, in 2009, and upgraded the center into the Sustainable Finance Department, a Class I department of the Head Office, in 2012. By now, the Sustainable Finance Department has established five specialized teams including project financing, carbon finance, market research, technical services, and Equator Principles review, and built an assets operation platform integrating the six functions: product design, technical support, assets management, marketing operation, trading service, and business cooperation. Meanwhile, at the level of branch, the bank has set up departments in all branches for controlling environmental and social risks in a planned manner and driving forward green finance businesses, and assigned dedicated product managers in charge of green finance. Integrating the head office and branches into a whole, IB has realized specialized operation of green finance.
In the field of business, in collaboration with International Finance Corporation (IFC), IB released the first energy efficiency financing product in China in 2006, taking the lead to enter into the energy conservation and emission reduction financing market at the breakthrough of energy efficiency improvement projects in the low-carbon field. From 2006 to 2008, the financing investment of the bank in green finance was mainly concentrated in the area of low-carbon economy, giving priority to supporting the “10 major energy-conserving projects” which can achieve the effect of carbon emission reduction and new energy and renewable energy projects. In 2009, based on the three-year experience in operating energy-efficient project financing, the bank introduced professionals from the fields of environment, thermal energy and chemical, extending its business coverage from low-carbon economy to recycling economy and ecological economy, and expanding its projects from carbon emission reduction to a big variety of projects such as the reduction of sulfur dioxide, COD, ammonia nitrogen, and oxynitride emission, water conservation, and recycling of solid waste. Now, centering on the three areas of low-carbon economy, recycling economy and ecological economy, IB has, according to the divided segments, formulated the technical admittance criteria and formed the green finance credit admittance. Meanwhile, it has improved the credit management system. Each green credit passing the green finance certification is labeled in the credit system. In this way, the green finance businesses are under unified management. By the end of 2012, IB has invested nearly RMB 200 billion in the above three fields, with the financing balance surpassing RMB 110 billion.
IB has, the reporter noted, not only achieved fast development in the business of green finance with the professional operation of specialized institution by focusing on the three fields, but also established its unique specialized advantages through concentrated research. Holding a scientific and rigorous attitude, the bank has refined and elevated the understanding of the industry and business knowledge, standardized them one by one, and established a green finance certification system, realizing certification over each green finance project. Moreover, we have carried out “measurable, reportable and examinable” environmental benefits calculation. Take an energy conservation and technical transformation project as an example. Setting the energy consumption before the transformation as the baseline, IB calculated the energy-saving rate, amount of coal equivalent saved, and carbon dioxide emission reduced after the completion of the project in a scientific manner. Its professional method to estimate the environmental benefits won the high recognition of professional energy conservation consulting companies. Furthermore, in the compilation of the “Green Credit Guidelines” organized by the regulatory authorities, IB has played an important role. In the meantime, the method to estimate the environmental benefits of energy conservation and emission reduction projects that the bank developed independently has also been promoted and used in the industry.
In terms of products and innovative services, IB has kept improving its green finance product family, now building a relatively well-established and professional service systems including green finance based financing, emission right based financial services, and Equator Principles.
In the aspect of financing service, after releasing “8+1” financing service model considering different demands of energy conservation and emission reduction customers and project types, IB innovatively released the special financing product based on energy performance contracting in 2012, building the authentic rights of non-typical future usufruct of projects into standardized collateral. Meanwhile, with the support of measures for controlling cash flow, the bank alleviated the financing guarantee problem of asset-light energy-saving service companies. By now, the bank has provided green financing service for a group of energy-saving service companies, including Anhui LINTHA and Shenzhen Prosunpro, in the form of pledging the future usufruct. With its outstanding performance in practicing green finance and supporting the industrial development of energy-saving services, IB was appraised as the “2012 Best Financial Investor of Chinese Energy-saving Services" by ESCO Committee of China Energy Conservation Association (EMCA); Liang Pingrui, GM of the Sustainable Finance Department of the bank was honored the “2012 Outstanding Figure of Chinese Energy-saving Services”; and the special financing product based on energy performance contracting was awarded the prize of “2012 Outstanding Energy Performance Contracting Product for Innovation in Green Finance”. Meanwhile, relevant regulatory authorities also invited the bank to take the lead to formulate the operation guidelines for energy performance contracting of the industry, leading the development of green finance services across the whole industry.
In the aspect of emission right finance service, IB has developed special products and services for international carbon trading and pilot domestic carbon trading and emission right trading. In the aspect of pilot emission right trading, for instance, the bank took the lead to release the integrated financial services for emission rights, 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. For example, Hunan Province, as one of the ten provinces for pilot emission rights trading, took the lead to take Changsha, Zhuzhou and Xiangtan as the pilot sites for emission rights, and established Hunan Provincial Trading Center of Emission Right Reserves. With basic policies and laws for the trade and paid use of emission rights, the initial distribution and secondary trading of emission rights have been launched in an all-round way. Grabbing the first chance, IB has visited the emission rights pilot sites in the province for investigation over their development. The bank organized professional service teams both at the levels of head office and branch to provide the Environmental Protection Department of Hunan with capital settlement for incomes from emission rights, payment settlement, trading funds depository, and system development and other trading financial services, and provide enterprises with comprehensive financial service solutions such as initial emission right sale pledge-based credit. Professional services of the bank won the high recognition of the department. In 2012, the bank and the department signed the “Strategic Cooperation Agreement on Boosting the Environmental Protection Cause of Hunan Province with Finance”. Meanwhile, it concluded the agreement on emission right pledged loan with Hunan Valin Xiangtan Iron and Steel Co., Ltd., opening the curtain of the bank to practice comprehensive financial services of emission rights across Hunan in an all-sided manner.
As first and only “Equator bank” in China by now, IB has, in accordance with the requirements of the Equator Principles, appraised and identified environmental and social risks of financing project, and screened out superior projects with the Equator Principles, a risk management tool widely adopted by international finance institutes to improve its capacity to control the environmental and social risks. Meanwhile, the bank has effectively guided domestic enterprises to identify the environmental and social risks that may be involved in projects and helped them to manage and prevent risks, lower operation cost, and enhance corporate competitiveness so that they could obtain not only economic benefits but also social and environmental benefits. In this way, the sustainability of commercial model and the performance of social responsibilities could both be achieved in an organic way. By the end of 2012, the bank has examined the applicability of 727 projects against the Equator Principles, with a total amount of project investment up to RMB 1.0077 trillion. Specifically, 157 of them were approved as projects applicable to the Equator Principles, with a total project investment of RMB 218.9 billion.
Green, energy conservation, environmental protection are the indispensable core ideas for the “Construction of Beautiful China” proposed in the 18th CPC National Congress. The director of the Sustainable Finance Department of IB indicated that, with the support of experienced force specialized in green finance, it would support and cultivate the Chinese green industry, guide the green development of enterprises and lead personal green consumption. It would also keep improving its own management level of environmental and social risks, and build an all-course professional financial service supplier covering a wide range and an all-sided “green bank” in the new vast blue sea of green finance, making contributions for the construction of a “Beautiful China” characterized by the harmonious development of society, economy and environment.