"China's green finance market will grow bigger and bigger. The development of green finance can cause and lead to the extraordinary development of green cause in the society." said by Tao Yiping, the president of IB, China's first equator bank, in a speech made in the first session of Tianjin Green Finance Forum on August 27.
The first session of Tianjin Green Finance Forum, co-sponsored by CF 40 and the Northern New Finance Institute, took the theme of “building a full-range green finance system” and invited relevant leaders of ministries and party committees of China, personnel in charge of financial institutions and some experts and scholars to discuss suggestions and measures for promoting the development of global green finance and building a full-range green finance system.
As a pioneer of green finance in China, in 2006, IB took energy-saving & emission-reducing finance as the starting point, and was the first to open up green finance market in China. After a decade’s exploration and practice, it finally worked out a characteristic development road of “obtaining reasonable profits while bringing benefits to the stakeholders”. By the end of June, IB has accumulatively granted green finance of nearly RMB 900 billion for over 6000 energy saving & environment protection enterprises and projects, saving 26.29 million tons of coal equivalents and reducing 73.83 million tons of carbon dioxide each year. Data of 2015 CSR Report for Chinese Banking Industry revealed that the balance of green credit of financial institutions in China's banking industry is about RMB 8.1 trillion, occupying 9.68% of loan balance by the end of 2015. IB’s balance of green credit reached over RMB 400 billion, occupying 18% of its loan balance and ranking first in the industry in 2015.
In recent years, IB has vigorously explored and made innovation in emerging business areas, such as green credit asset securitization, PPP financing, industrial fund, green consumption and credit. So far it has issued two stages of green credit asset-backed securities, totaling RMB 6.1 billion, and has participated in initiating “Shanxi province’s PPP investment earmarked fund to improve urban human settlements” with a total size of RMB 12.8 billion. It was also among the first batch to be approved to issue green finance bonds of RMB 50 billion. Now it has formed a group green finance products chain covering green financing, green leasing, green trust, green fund, green investment and green consumption.
Tao Yiping pointed out that China was confronted with a great deal of environmental pressure, providing a broad space for the development of green finance objectively. In recent years, China's green finance products system has been constantly improved, mainly including green credit, green bond, green fund, carbon finance as well as a variety of derivative products and services so far. But further breakthrough and innovation are needed in fields including green securities, green stock index, green consumption and credit, green asset securitization and carbon asset management. Financial institutions should optimize green products structure, expand customer coverage, and follow and support small and micro companies, small and micro projects and individuals. Market space of green finance should be further expanded.
In the following years, IB will intensify efforts into the development of green finance with the medium-term goal of achieving "two 'not less than'" and "two 'ten thousand'", namely the growth rate of green finance business shall not be less than the average growth rate of the whole bank, the increment shall not be less than that of last year; in 2020, the group’s green financing balance shall exceed 1 trillion yuan, and the number of green finance customers shall reach ten thousand during the Thirteenth Five-Year Plan.
For the development of green finance in China, Tao Yiping called on the country to take measures to further strengthen incentives for the development of green finance in financial institutions, such as offer commercial banks green refinance and encourage banks to expand the scale of green credit; preferential risk weight and requirements of capital regulation should be placed upon assets under green finance products; special funds should be arranged to grant partial or 100% of loan interest discounts to banks that issue green finance products; the country should encourage commercial banks to carry out green asset transfer, especially securitization, expand the scope of green finance market and its scale; it should also encourage commercial banks to directly initiated green industrial fund; in the event of contract violations, green finance products can be given priority to receive compensation etc.
IB also appealed for the establishment of a national market of unified emission permits as soon as possible. In 2011, China launched carbon trading pilot work. In the first half year of 2016, seven carbon pilot markets had a total turnover of 30 million tons, representing an increase of 245.0% on a YOY basis. But compared to mature carbon markets, like the European Union, China saw a lower market activity and a lack of carbon finance innovation. It is suggested that China should speed up efforts to establish a national market of unified emission permits on a pilot basis, encourage financial institutions to participate in the carbon market trading and market making, improve market liquidity, strengthen the function of price discovery, so as to form a complete sequence of market system concerning emission permits trading.