Time: June 5, 2016 Source: www.financialnews.com.cn
Beijing (CNFIN.COM /XINHUA08.COM)--Since 2015, the development of green finance in China has accelerated significantly, and achieved innovation and breakthroughs in a number of areas, and its international influence has been remarkably improved. But at the same time, the future sustainable development of green finance still faces some bottlenecks and the establishment of China green finance system still has a long way to go.
“New normal” leads the sustainable development; commercial banks profit by green finance
With the Chinese economy entering the “new normal”, China attaches great importance to green development, which brings significant opportunities and development for the green finance to support the real economy. Commercial banks and other financial institutions actively seize the strategic opportunity, make innovation in green financial products and services, channel efforts into the support for the low-carbon economy, circular economy and ecological economy, establish and continue to improve environmental and social risk management policies, improve its environmental and social service, and promote the transformation and upgrading of the economic development mode.
Take Industrial Bank, the first equator bank in China as an example, at the beginning of the development of green finance business, it puts serving the real economy as a fundamental starting point for business development. For the past ten years since the first energy efficiency financing projects completed in 2006, the bank has provided more than 800 billion yuan green finance financing for over 6000 energy saving and environmental protection enterprises and projects by various financial instruments. The financing balance reached 394.2 billion yuan, accounting for nearly 15% of its enterprise financing balance, with an annual average growth rate of 30% in recent years.
In the key area of water resources utilization and protection, by the end of 2015, the green financing balance of the bank have reached 114.6 billion yuan, of which 49.2 billion yuan green finance was provided for “A Total of Five Water Treatment” and the Taihu Lake treatment; green financing balance of 22.6 billion yuan was provided for energy saving and environmental protection enterprises in environmental infrastructure, industrial chain of energy saving and environmental protection, cyclic utilization of resources, comprehensive ecological improvement and other fields.
Green bond leads the world; future development faces challenges
The year 2015 is known as the first year of China’s development of green finance. In December, the People’s Bank of China and Green Finance Specialized Committee of China Finance Society issued “Announcement of Green Finance Bonds” and “Catalog of Green Bonds-supported Projects”, which marked the official launch of our green bond market. National Development and Reform Commission, Shanghai Stock Exchange and Shenzhen Stock Exchange also issued green bonds-related policies and guidelines. Agricultural Bank of China, Industrial Bank, Shanghai Pudong Development Bank, Qingdao Bank and other commercial banks successfully issued green financial bonds at home and abroad. In the first quarter of 2016, China issued green bonds of about 50 billion yuan, accounting for nearly half of global green bonds issued across the world over the same period.
However, due to the current fragmented policy guidance and the green energy saving and environmental protection projects generally last for a longer period of time and invest a lot in preliminary period, financial institutions are still facing some pressure in issuing green bonds.
To speed up the development of green bonds, Fang Zhiyong, General Manager of the Department of Environmental Finance in Industrial Bank, put forward a number of suggestions from the policy level: first, increase the policies of incentives and benefits for green bond issuers. For example, relieve regulatory indicators including accrual and provisions, give issuers tax preferential treatment of green revenue and encourage issuers to issue vigorously green financial bond. Second, give impetus to investment in green financial bond. For example, making investment in green financial bonds can get tax deduction and exemption, and vigorously publicize its social responsibility and influence to enable the responsible investors to profit spiritually and materially. Third, reduce the cost of green funds for customers and support the development of energy saving and environmental protection enterprises in terms of mechanisms of guarantee and interest discounts.
Green development becomes a consensus; building green financial system has a long way to go
At the Fifth Plenary Session of the 18th Central Committee, green development was elevated as a national strategy, which provides a good environment and atmosphere for the development of green finance. Chen Yulu, Deputy Governor of the people’s Bank of China, stated that the policy framework of the green finance gradually becomes clear, green financial products are increasingly enriched and international cooperation on green finance is deepen continuously.
It can be seen that the vision of green finance has been widely accepted in China and the development of green finance has become an industrial consensus. But the development of green finance in China is still in the initial stage. In the future, it is still challenging in how to realize the sustainable development and the future development of green finance system still has a long way to go.
Financial development always aims to serve the real economy. In the process of putting funds in the market, to identify the green funds and follow-up supervision is even more important. Ma Jun, chief economist of the Research Bureau of the People’s Bank of China and Director of the Green Finance Specialized Committee of China Finance Society, said that the key point is to ensure that green funds are actually invested into the green projects.
It is reported that in the roadshow of issuing green financial bonds by the Industrial Bank, investors have shown a strong interest in the green concept and the later use of funds and information disclosure of the issuers.
The industrial bank believes that the supervision and disclosure of the use of green fund should be done via self-discipline and supervision, combined with self-management and supervision of the third party. Self-management and internal system construction should be realized within the organization. At present China has not yet promulgated the policies on the qualification certification by a third party, so we must actively develop and nurture our local certification body and strive for the right to say in terms of certification of the international green finance.