Date: Apr. 13, 2017 Source: China Business News
Developing green finance has now become an important national strategy of our nation. As the presidency of 2016, our nation advocated to take green finance as one of the core subjects in the G20 Summit for the first time, which raised wide attention from the globe. With many joint efforts, the development of green finance in China is now leading the world and a relatively sophisticated green finance system has been established. During recent years, the China Banking Regulatory Commission (CBRC) has enacted the Green Credit Guidance, set up a statistical system and an evaluation system for green credit, thus fueling the development of green finance in terms of policies. In August 2016, the People’s Bank of China, together with other six departments and commissions, jointly released the Guiding Opinions on Constructing the Green Finance System, which has defined the systematic arrangement and development path for green finance from the perspective of top design.
As the leader of green finance in China, the Industrial Bank (IB) has further proposed a strategy to build a first-ranking green finance group in recent years. What are the considerations for this action? What are the major sectors that need the support of green finance? With these questions, the reporter of China Business News interviewed Luo Shiyi, the general manager of the Green Finance Department of IB.
China Business News: In September 2015, IB further confirmed its intention of developing green finance, and established a system for coordinating and facilitating green finance throughout the group. What are the considerations does IB have to upgrade the green bank to the green finance group? How does the group define green finance strategically?
Luo Shiyi: Since 2006 when we opened up the domestic market of green finance, we have been developing this field for 11 years. We go ahead of other competitors because of our early layout, multiple innovations and great performance, and now we have become a leader of green finance in China.
As one of the mainstream banks in China, we have been thinking how to proceed with green finance in a better way since 2015. We proposed the strategy of building a green finance group. We made this decision based on two factors:
Firstly, the green finance is now embracing great external environment and desirable development opportunities. Since the 18th National Congress, the state has underlined the construction of ecological civilization with the top design and overall deployment already in place. In the Fifth Plenary Session of the 18th CPC Central Committee, the five development concepts of “innovation, coordination, green, open and share” were put forward to act as the guidance for development in the economic New Normal of China. A series of policies and measures have been developed, such as the optimization of industrial structure, the construction of low-carbon energy system, the development of green architectures and low-carbon transportation, and the establishment of a nation-wide carbon emission trading market. Green finance is indispensable for building a new and modernized construction layout that features harmonious development of people and the nature. With the enactment of new environmental protection laws, the “Ten Measures for Water”, the “Ten Measures for Air”, the “Ten Measures for Earth”, as well as the Opinions on Accelerating the Construction of Ecological Civilization, the Guiding Opinions on Constructing the Green Finance System and other favorable policies for green finance, a promising policy environment and system guarantee has been provided for the fast development of energy-saving and environment-protecting industries and the supporting green finance. On the other hand, the green finance that serves ecological civilization, energy conservation and environmental protection will enjoy broad market space and fine asset quality for a future period of time. It will become an important facilitator of operational transformation and expected business growth points for commercial banks, and is also practically significant for enhancing their international competitiveness and image of social responsibilities.
Secondly, the purpose of developing green finance throughout the group is to meet the ever increasing demands of clients for green finance services that are comprehensive and diversified. During the past ten-odd years of practicing green finance, we have listened to the demands of clients, adapted ourselves to the changed and upgraded demands of clients and kept improving the product and service system of green finance so as to meet the diversified needs of clients. For example, we provided green credit service for energy-saving enterprises in early days. As the financing methods and demands of enterprises are changing, we notice that different clients have different and individual requirements on investment, financing, wealth management and risk management in different stages of development. Based on the needs of clients, we set about integrating green finance products and services of IB group to construct a group-wide green product and service system that covers green financing, green leasing, green trust, green fund and green bond. As the market keeps growing, we also notice that individual clients also have demands for green finance services. So we launched a credit card themed with low carbon, green loan, green consumption loan, green wealth management and other green finance services for retail clients.
In the beginning of 2015, we listed the green finance business as one of our core strategic businesses. We will give full rein to our collectivized and multi-licensed operation advantages to make unremitting innovation and communicate the sustainable concept of green finance throughout the entire group, so as to achieve the coordinative connection and rapid growth of green finance business throughout the group, keep raising the share of green finance in all sectors of the group and truly create a brand of “market-leading group of green finance”. Regarding the market, we will root on green credit and comprehensively utilize diversified products of the group to continuously extend the business line of green finance. Our purpose is to become an excellent “supplier of comprehensive services in green finance”, and maintain our leadership and competitive advantages in green finance.
China Business News: What are the achievements of IB group and its subsidiaries in green finance currently? What is your development goal in the future? What are the key sectors will you focus on?
Luo Shiyi: After years of exploring and practicing, our bank now performs well in economic ecology and social ecology. By the end of February 2017, the group has providing green financing, totaling RMB 1 trillion, for over 10,000 enterprises and projects with the balance of green finance exceeding RMB 520 billion. IB Financial Leasing, IB Trust and other subsidiaries of the group also witness stable growth of green financing, which have formed distinctive brand features in the industry. The balance of green financing provided by IB Financial Leasing has exceeded RMB 40 billion, accounting for one third of the balance of lease financing. Six green leasing products have been generated, including green traveling, green energy, energy conservation, water harnessing, soil harnessing and resource recycling, which define a clear business mode in the field of green leasing.
We have developed the mid-term development goal of “Two Ten Thousands”. In 2020, the financing balance of green finance will reach RMB one trillion, and the number of green finance clients (number of projects) will reach ten thousand. The amount of green leasing, green trust, green fund and green investment will reach RMB 100 billion respectively; the amount of green consumption loan and green mortgage will reach RMB 10 billion respectively.
Considering the current environmental protection conditions and the development of green industries, the focus of green finance will be put on water resource utilization and protection, atmospheric pollution harnessing, soil pollution harnessing (solid waste treatment), clean energy & renewable energy, as well as park & attraction management for some time in the future. In combination with the construction and development of environmental right and interest trading market in China, featured trading markets, such as carbon trading market, will be deployed and offered.
China Business News: We learned that IB has launched a new round of systematic reform and accelerated the upgrading and transformation to “light capital and high efficiency”. Is there any adjustment to green finance sector to better support the sustainable and fast development of green finance business?
Luo Shiyi: Yes, we are now undertaking a new round of reform on systems and organizational structure. The purpose lies on further improving our professional competency, market response and service efficiency.
As for the business sector of green finance, in order to assist the nation to construct a green finance system and fit into the strategic positioning of our green finance, we have renamed the Environmental Finance Department in the headquarters into Green Finance Department, and redefined its functions to facilitate the rapid development of green finance business throughout the group. Qualified branch operations may set up green finance departments as first-tier department to drive the development of green finance and construct a well-developed and professional operation system for green finance.
As the green finance business grows and evolves, we are also improving the organizational structure of green finance. In terms of the board of directors, a Steering Group of Equator Principles has been formed by the chairman of the board, presidents of banks, vice presidents and the secretary of the board. In terms of the group, a special facilitating group, composed of each business line of the headquarters, relevant departments and subsidiaries, designated steering departments, and specially designated personnel in charge of green finance, has been formed to drive the development of green finance. The headquarters has set up the Green Finance Department in charge of product innovation, marketing promotion and brand building. 6 professional teams have been set up, including professional study, product innovation, marketing management, project evaluation, operation management and brand building. Meanwhile, more than 30 branch operations have set up their green finance departments equipped with full-time product managers. We have the largest professional team of green finance in China.
China Business News: IB is always leading the market in terms of financial technologies and has combined technologies with business development. Recently, IB has launched the first independently developed professional supporting system for green finance. How can this system support the development of green finance for your bank?
Luo Shiyi: Technologies keep upgrading every day. For a long time, we have held an open mindset for technologies and applied technologies in the development of business so as to increase our service level and make us more competitive in the market. We will do the same to green finance.
Our first-of-its-kind professional supporting system for green finance, that is independently developed and has been launched, will meet the demand for collectivized management of green finance business. In particular, systematic supports are provided for client management, business management, risk management, statement summarization, information management and comprehensive management, so as to achieve refined management required by green finance.
On one hand, this system can help green finance clients better manage their marketing activities. With this system and through client classification management, sand table client tracking, tapping and analysis of business data, we can analyze and dig out individual demands of clients, so as to realize customized service for green finance clients and further enhance efficiency and capacity of our services for green finance clients.
On the other hand, we also meet more demanding supervision requirements. In recent years, China’s central bank, CBRC and other authorities continue to improve policy system of green finance, and set higher requirements on the development of green finance, for instance, classifying client environment and social risks for management, drawing up name lists of clients that break laws and regulations on environmental protection and offering warnings, conducting reviews of environmental and social risks as well as green credit statistics, etc. Our green finance professional supporting system was born for this reason. I believe that as the technology-oriented development strategy of IB is deepened, the green finance business will also be powered up by a new force and keep going ahead of the industry.