Date: January 2, 2014 Source: Economic Daily
In December 2013, the “2013 Beautiful China Tour • Green Finance” of Industrial Bank (IB) finished its last stop after a journey of 224 days. The bank entered into agreement with the development and reform commissions, environmental protection departments or leading energy conservation and emission reduction enterprises of 12 provinces and municipalities including Hebei, Shandong and Chongqing, promising to offer green financing support totaling more than RMB 300 billion to the above regions during the “12 th Five-year Planning” period.
“It is a responsibility for a bank to boost the building of Beautiful China, and the key lies in action.” What IB has always adhered to is its practical attitude.
As early as 2006, IB began to practice green finance and pushed the cause forward all the way: The bank released the energy conservation and emission reduction loan in 2006, became the first bank adopting the Equator Principles in China in 2008, set up the first institution specialized in green finance in China in 2009, issued the first low-carbon credit card and thus extended the business of green finance from the field of enterprise project to personal consumption in 2010, granted China's first carbon assets pledged loan, and released other innovative green credit products like emission rights pledged credit in succession in 2011, and won the honor of “National Collective Role Model for Emission Reduction” for the “11th Five-year Planning” period…
Now, “Equator Bank” and “green finance” have become the most eye-catching business card of IB.
Flourishing development of green credit based on the concept of “obtaining reasonable profits while bringing benefits to the stakeholders”
As the first and only “Equator Bank” in China now, IB has also established all-sided management regulations and system for environmental and social risks from decision-making to implementation, from rules to flow, and from capacity building to information disclosure.
“Then, we had a project of 1 million t/a synthetic ammonia and 1.75 million t/a carbamide, which required investing RMB 10 billion in infrastructure construction. However, we only had the capital funds of RMB 3 billion. Where could we have the financial gap of RMB 7 billion filled? It is the matter that made us anxious”. Huang Zhijun, Vice President of Finance of China Coal Eerduosi Energy Chemical Co., Ltd., signed with emotion in recollecting the situation when the company started cooperation with IB at the earliest time.
Later, China Coal Eerduosi Energy Chemical Co., Ltd. received the loan of which it was in urgent need. Of the RMB 10 billion to be invested in infrastructure construction, 700 million was sheer used for “green” construction, thus reducing environmental pollution.
This is IB's social responsibility philosophy of “obtaining reasonable profits while bringing benefits to the stakeholders”, namely to perform social responsibilities in the process of providing products and services so as to achieve the commercial interests of the bank and social environment benefits in a harmonious way.
On this basis, the Board of Directors of IB has carried the philosophy of sustainable development through all aspects of operation and management and gradually established the organizational structure and professional team system: it established the work leading group for social responsibilities headed by board chairman of the bank and the work leading group for equator principles led by president of the bank to strengthen organizational coordination across the entire bank and promote green credit; it set up the Environment Finance Department at the head office, and established management departments and professional teams for green credit at the branches, devoting itself to building an all-course professional financial service supplier covering a wide range and an all-sided “green” bank.
The philosophy of sustainable development has become the corporate culture and business standard of IB. “When working on internal projects and conducting examination and approval, we take environmental and social issues as an important standard. If any project fails to reach the standard, it will be rejected with one vote”, said President Li Renjie of IB when accepting the interview of the media.
As the first and only “Equator Bank” in China now, IB has also established all-sided management regulations and system for environmental and social risks from decision-making to implementation, from rules to flow, and from capacity building to information disclosure, improving its capacity to manage environmental and social risks vigorously.
In the opinion of Huang Zhijun, a remarkable feature of an “Equator Bank” is what can be invested and what cannot, and this is also embodiment of social responsibility. By the end of November 2013, IB has examined the applicability of 783 projects to the Equator Principles altogether. Of them, 180 were applicable to the financing based on the Equator Principles, involving a total project investment of RMB 270.9 billion.
Over years, IB has always followed the progress of the cause of energy conservation and emission reduction in China, taking green credit as an important measure to push the development of sustainable finance and practice social responsibilities. It has, in succession, released a series of rules and regulations, such as the “Measures on Management of Energy Conservation and Emission Reduction Business”, the “Detailed Admittance Criteria for Energy Conservation and Emission Reduction Projects”, the “Criteria for Identifying the Property of Energy Conservation and Emission Reduction Projects in the Field of Environment”, and business marketing instruction, witnessing flourishing development of green credit business.
According to statistics, by the end of November 2013, IB has granted green finance based financing of RMB 333.1 billion to over 1,000 enterprises across China accumulatively, with the financing balance hitting RMB 174.6 billion, reducing the emission of CO2, SO2 and chemical oxygen demand (COD) by 686.775 million tons, 901,200 tons, and 43,600 tons respectively.
The financing of RMB 60 billion to boost the “Clean Water” Program
Up to now, IB has provided financing support of RMB 61.1 billion for the utilization and protection of water resource in China, which are estimated to reduce the emission of chemical oxygen demand (COD) by 901,200 tons and save water by 255.7906 million tons.
In 2013, the green finance of IB focused on the utilization and protection of water resource to boost the “Clean Water” Program.
IB provided Shuangliu County of Sichuan Province with financing of RMB 2 billion to support the construction of the comprehensive control project for water environment; it granted loans of RMB 1.6 billion to Hefei of Anhui Province, to support the riverway regulation; and it provided Wujin County of Jiangsu Province with credit funds of RMB 150 million for the transformation project of rainwater and sewage pipe networks of an industrial park to support the construction of works including sewage pipeline, sewage pumping station and rainwater pipeline, and such projects are just an epitome of IB's Clean Water Program.
Up to now, IB has provided financing support of RMB 61.1 billion for the utilization and protection of water resource in China, which are estimated to reduce the emission of chemical oxygen demand (COD) by 901,200 tons and save water by 255.7906 million tons.
In recent years, it has become a general consensus of all social circles in China to promote energy conservation, emission reduction, and sustainable development, and the state has attached increasing importance to the utilization and protection of water resources. In 2011, it was put forward in the national “12th Five-year Planning” to enforce the strictest regulations on the management of water resources; in 2012, the state successively issued a range of policies and plans for intensifying the utilization and protection of water resources in China. Based on estimation, during the “12 th Five-year Planning” period, the total investment in the utilization and protection of water resources will exceed RMB 1700 billion.
As the forerunner of green finance in China, IB has always paid constant attention to the utilization and protection of water resources, and in 2013, it proposed to “study and innovate in financial service products in the area of utilization and protection of water resources in particular”. The person-in-charge of the Environment Finance Department of IB introduced: “We have worked out more detailed comprehensive solutions in utilization and protection of water resources, namely to release comprehensive service programs integrating characteristic products (model), including contract environmental service based financing and franchise and business right pledged financing, through basic product combination and innovation, so as to provide integrated solutions for the development and protection of water resources, water conservation, and construction and operation comprehensive facilities.”
It is said that in its business of green finance regarding the utilization and protection of water resources in recent years, IB has not only lent support with many financing methods including fixed asset loan, project loan, working capital loan, financing lease, and consignment loan, but also developed characteristic products including emission right pledge-based financing, facilitating the emission reduction of chemical oxygen demand (COD).
Starting from the utilization and protection of water resources, IB has kept making innovation, taking the lead to release the integrated solutions for emission rights trading. By now, IB has signed all-round cooperation agreement with 9 (Hunan, Hubei, Tianjin, Shanxi, Zhejiang, Jiangsu, Chongqing, Shaanxi and Hebei) of the 11 pilot provinces and municipalities for emission rights trading at home to provide professional financial services such as consulting for the design of emission right trading regulations, development of emission right trading and settlement systems, emission rights pledged credit, and financing for projects reducing the emission of pollutants, actively pushing forward the construction of domestic emission rights trading market.
A strong green finance wind blowing through 12 provinces and municipalities
The green finance tidal wave of IB, lasting for 224 days and reaching 12 provinces and municipalities, swept half China by providing green financial support of nearly RMB 300 billion.
On December 6, 2013, the “2013 Beautiful China Tour • Green Finance” of IB came to a perfect conclusion at Huhhot. Previously, the campaign commenced in Shijiazhuang on April 26. In the whole course, IB has signed strategic cooperation agreement with local development and reform commissions or environmental protection authorities, and major environmental protection enterprises to provide financing support and customized green financial products and services, giving top priority to key low-carbon, energy conservation and environmental protection projects with preferential loan terms.
As indicated by the person-in-charge of the Environment Finance Department of IB, it is the responsibility of commercial banks, as the most important pivot for the distribution of resources in modern economic system, to lend vigorous support for energy conservation, emission reduction, and the development of low-carbon economy, push the transformation of economic development model and industrial conversion and upgrading in an active way, facilitate the sustainable development of economy and society, and accelerate the construction of “Beautiful China”.
At home, nevertheless, now it still remains at the initial stage for financial innovation to support green transformation. Meanwhile, the demands of green finance vary from area to area due to different regional characteristics and unbalanced development. This requires banks to get to the root of market needs and carry out innovation in green finance.
To break through the financing predicament with innovation, “IB has explored a brand-new financing solution for ‘green freight' ”, the relevant person-in-charge of the Green Freight Project Office of Guangdong Provincial Department of Transport said.
Guangdong Green Freight Demonstration Project was the first energy conservation and emission reduction demonstration project implemented in the global road freight industry by World Bank. Because it was hard to see economic benefits soon in a short time and China's freight industry was characterized by the “small, scattered and disordered” features, most enterprises could hardly receive financing for technical transformation from commercial banks, which making the project difficult to implement.
With the participation of IB in September 2013, technical service suppliers were introduced to function as the intermediate agencies by resorting to the energy performance contracting (EPC) model in the industrial field. The problem of implementation encountered by the “Green Freight Project” was solved effectively through innovation in financing model.
It is said that, targeting at the diversified financial needs of corporate customers in the field of energy conservation and environmental protection, IB has kept making innovation and upgrading, gradually building a multi-layered and integrated system of products and services, which covers financial products, service models and solutions, and mainly includes ten general-purpose products, seven characteristic products, five financing models and seven kinds of solutions.
“Going closer to the regional markets across China, making in-depth industrial survey, listening to the opinions of government agencies and enterprises, serving industrial development, giving ideas on regional transformation”, and boosting the emission rights trading market in Southwest China, the “Resource-conserving and Environment-friendly Society” of Hubei, pollution control of drainage area of Xiangjiang River in Hunan, and the ecological barrier of North China in Inner Mongolia…, with such actions, IB has driven forward local energy conservation, emission reduction, and green development, and sung “Beautiful China” loudly.
The “2013 Beautiful China Tour • Green Finance” of IB
In 2013, IB celebrated the 25th anniversary of its founding and the 5th anniversary of becoming the first Equator bank in China. In order to further support the development of energy conservation and environmental protection in China and boost the building of “Beautiful China”, IB has launched the serial campaign of “2013 Beautiful China Tour • Green Finance” across the country. With the campaign, IB went closer to the regional markets across China, made in-depth industrial survey, listened to the opinions of government agencies and enterprises, served industrial development and gave ideas on regional transformation.
The 12th stop: Beautiful Prairie
On December 6, IB held the “Beautiful China Tour • Beautiful Prairie – Inner Mongolia Government-Banking-Enterprise Conference on Green Finance” in Huhhot. IB indicated that it would, during the “12th Five-year Planning” period, offer special green financing of RMB 20 billion to the energy conservation and environmental protection industry of Inner Mongolia, and based on the economic and ecological features of different regions and cities across the region, design individualized financial service solutions conforming to local conditions, and build a green channel for green finance related businesses.
The 11th stop: Beautiful Jiangsu
On November 6, IB held the “Beautiful Jiangsu – Green Finance Promotion” in Nanjing, at which IB Nanjing Branch entered into the strategic cooperation agreement with the Environmental Protection Department of Jiangsu Province and other organizations. According the agreement, IB will, in the coming three years, provide the province with special green financing of not less than RMB 50 billion, focusing on support for the construction of key environmental protection works across the province, such as desulfurization and denitration and control of drainage area, give priority to arranging the loan scale for key green projects meeting the given requirements and give preferential loan conditions.
The 10th stop: Beautiful Huxiang
On October 29, the “Beautiful China Tour • Beautiful Huxiang – Promotion Conference of Hunan Province for Green Finance” was held in Changsha. IB made the commitment that in the coming three years, Hunan Province would again receive special green financing not less than RMB 20 billion for the development of green economy, of which the financing scale in the field of water resource would not be less than RMB 10 billion.
The 9th stop: Green Jingchu
On October 25, IB held the “Green Jingchu – Hubei Finance Expo Green Finance Forum” in Wuhan. IB made the promise: to extend new green finance based loans not less than RMB 30 billion to support the province to build the “Ecological Hubei” and “Resource-conserving and Environment-friendly Society” in the coming three years.
The 8th stop: Beautiful Corps
On October 11, IB held the “Beautiful China Tour · Beautiful Corps – Pushing the Construction of Ecological Civilization of Xinjiang Production and Construction Corps with Finance” in Urumchi. IB Urumchi Branch signed a cooperation agreement with the Development and Reform Commission of Xinjiang Production and Construction Corps, promising to lend full boost for the Corps' construction of ecological civilization during the “12th Five-year Planning” period and giving the financing support of not less than RMB 10 billion.
The 7th stop: Beautiful Bashu
On September 29, IB held the “Beautiful China Tour • Beautiful Bashu – Sichuan Government-Banking-Enterprise Conference on Green Finance” in Chengdu. IB Chengdu Branch entered into a strategic cooperation agreement with the Development and Reform Commission of Sichuan Province and Sichuan United Environment Exchange respectively, indicating to arrange a financing scale of not less than RMB 30 billion to support the projects in the field of energy conservation and emission reduction across the province.
The 6th stop: Green Freight
On September 27, the thematic forum “Green Freight Starting from Guangdong” was held in Guangzhou. IB Guangzhou Branch and the Green Freight Project Office of Guangdong Provincial Department of Transport signed the “Green Freight Cooperation Agreement”, indicating to provide the energy conservation and environmental protection industry of Guangdong Province with special green financing up to RMB 20 billion.
The 5th stop: Beautiful Mingzhou
On September 24, IB held the promotion meeting on the theme of green finance “Beautiful China Tour · Beautiful Mingzhou” in Ningbo. IB indicated to provide the municipality with special green financing up to RMB 5 billion for energy conservation and environmental protection during the “12th Five-year Planning” period.
The 4th stop: Beautiful Longjiang
On September 6, the “Beautiful China Tour • Beautiful Ice City – Heilongjiang Government-Banking-Enterprise Conference on Green Finance” was held under the joint sponsorship of IB and the Environmental Protection Department of Heilongjiang. Both parties signed the “Strategic Cooperation Agreement on Boosting the Environmental Protection Cause of Heilongjiang Province with Finance”. IB indicated that, during the “12th Five-year Planning” period, it would provide the energy conservation and environmental protection industry of Heilongjiang Province with special green financing up to RMB 20 billion.
The 3rd stop: Beautiful Mountain City
On August 21, IB and the Development and Reform Commission of Chongqing jointly held the “Chongqing Government-Banking-Enterprise Conference on Green Finance”. IB indicated that, during the “12th Five-year Planning” period, it would provide the energy conservation and environmental protection industry of Chongqing Municipality with special green financing up to RMB 30 billion.
The 2nd stop: Beautiful Qilu
On May 30, IB held the “Beautiful Qilu – Shandong Government-Banking-Enterprise Conference on Green Finance” in Jinan. IB Jinan Branch signed “Strategic Cooperation Agreement” with three key energy conservation and emission reduction enterprises in Shandong Province.
The 1st stop: Beautiful Yanzhao
The “Beautiful China Tour • Beautiful Yanzhao – Hebei Government-Banking-Enterprise Conference on Green Finance” was held under the joint sponsorship of IB and the Environmental Protection Department of Hebei on April 26. To build a banking-government cooperation platform for environmental protection hand-in-hand, IB promised to offer green financing support of RMB 50 billion within the coming three years to lend full support for the construction of “Beautiful Yangzhao”.