On November 4, the Conference of Chinese Banking Industry on Settlement of Excessive Capacities and Practice of Green Credit, sponsored by China Banking Association (CBA) and undertaken by Industrial Bank (IB), was held in Fuzhou, provincial capital of Fujian, a big ecological province. A total of 29 financial institutions in the banking industry including Industrial and Commercial Bank of China (ICBC) and IB signed the Common Commitment of Chinese Banking on Green Credit, making solemn promises in the following aspects: intensifying credit management over industries with seriously excessive capacities, practicing green credit actively, and improving self environmental and social performance, etc.
At the conference, Chairman Shang Fulin of China Banking Regulatory Commission (CBRC) delivered a speech on the banking industry to support the settlement of excessive capacities, practice green credit, and promote transformation and upgrading of real economy. He proposed to solve the problem of excessive capacities by making full use of the market mechanism, and required commercial banks to improve the differentiated credit policies for classified implementation, under which different measures can be taken for different situations, as soon as possible in accordance with the requirements of “Four Batches”. He proposed to establish a post-regulation evaluation system to assess the performance of banks in enforcing the differentiated credit policies and implementing green credit, and to explore applying, in a reasonable way, the evaluation results in the areas including the assessment of performance for executives, business admittance, and regulation rating. He also proposed to intensify punishment and accountability over behaviors to grant credit to industries with seriously excessive capacities in violation of relevant provisions.
During the conference, the main principals of 29 banking institutions including China Development Bank (CDB), ICBC and IB exchanged and summarized good experience and practices of the banking industry in solving the problem of excessive capacities and carrying out green credit, and discussing and studying the approaches and methods to promote the sustained and sound development of the banking industry. Experts from the Ministry of Environmental Protection and other departments gave introductions on the current environmental situation and policies, and experts from international organizations including the World Bank Group, International Finance Corporation (IFC) and the World Wide Fund for Nature (WWF) gave introductions to the latest information on the practice experience and regulatory policies of banks around the world.
President Li Renjie of IB, the undertaker of the conference and the first and only “Equator Bank” in China, indicated at the conference that, for enterprises belonging to the category to be eliminated for backward production capacities, the bank would work out specific plans one by one, and exit decidedly by way of asset preservation, transfer of non-performing loans, and writing off loan losses, so as to lend full support compressing production or exiting out-of-date capacities. Meanwhile, the bank would prohibit granting new credit and direct financing in any form to the noncompliant construction projects in the industries with seriously excessive capacities and prevent exaggerating the problem of excessive capacities due to blind investment.
In the meantime, Li Renjie also proposed some policy-related suggestions on settling the problem of excessive capacities and practicing green credit, for instance, to further demarcate the responsibilities of the government from those of the market, to accelerate the reform of tax and finance systems, to enforce differentiated regulation over the finance industry in providing services to the industries featuring “heavy pollution, high energy consumption and excess production capacity”, and to increase policy-related support to the development of green credit.
The development of green finance, he indicated, has brought a range of profound changes to IB. In terms of corporate governance concept, the bank has put forward the new social responsibility philosophy of “obtaining reasonable profits while bringing benefits to the stakeholders”, and taken the philosophy as the basic idea and rule of conduct. The green and sustainable development concept has become deeply rooted among all the employees of the bank and their self-conscious acts. In terms of organizational structure, the bank's board of directors and management team has established the work leading group for social responsibilities, getting fully involved in the implementation of sustainable development and the Equator Principles. It has also established functional departments and specialized teams for green finance both at the head office and branches. In terms of business pattern, the bank has developed a blue sea of business, and green finance has become an important characteristic business and new growth point of the bank. By the end of September 2013, it has handled green finance based financing of RMB 320.1 billion, with the balance hitting RMB 169.3 billion, witnessing both significant economic and social benefits. In terms of brand image, green finance has improved the brand image and connotation of the bank, and a good image of “green bank” and “low-carbon bank” has been established in the market.
Li believed that the development of green finance in China would have a broad space. As the 18 th CPC National Congress has specified the general requirements to push the construction of ecological civilization and Beautiful China vigorously, it has a national strategy and basic state policy to conserve resources and protect environment. Thus, the development of green finance at home will expect unparalleled opportunities. As the pioneer and forerunner of the green finance market in China, IB will grasp such opportunities, pay great attention and increase input at the strategic level, and continue pushing the development of green finance to consolidate and reinforce its advantages in the business of green finance.
The Common Commitment on Green Credit, Vice Chairman Wang Zhaoxing of CBRC indicated, is of no legal effect to all banks, but it embodies the honesty of all banks to the society, which is of critical importance to every bank. He believed that all banks would, no doubt, fulfill their promises and drive the development of green credit in an active way.