Recently, Industrial Bank (IB) won the title of “Green Bond Award - The Largest Issuer of Green Financial Bond” granted by Environmental-Finance, a professional British environmental protection website, making it the only Chinese financial institution winning this honor.
Environmental-Finance was established in 1999 in London, Britain and is a professional media institution specializing in reporting sustainable investment, green finance and environmental market. Its focus lies on green bond, renewable energy, carbon trading, water and etc. The “Green Bond Award” is an annual award appraised by the world’s largest green bond investors. In 2017, this award sets totally 25 sub items. By virtue of its outstanding performance in green bond business, IB became the only Chinese financial institution that win the title.
In December 2015, the Chinese central government officially launched the green bond market. Driven by the policy, our green bond market witnessed skyrocketing development and soon became the largest green bond issuing market in the world. In January 2016, IB issued the first domestic green financial bond, symbolizing the official productization of green financial bonds. Last year, IB issued RMB 50 billion of green financial bonds, accounting for nearly one thirds of the total amount of green financial bonds issued in China in 2016, which is RMB 155 billion.
In order to ensure that the fund raised from green financial bonds can be actually used in green projects and products, IB spares no effort to realize that.
“We have set up a sophisticated system to control the investment direction of raised fund, the project screening and evaluation process, the tracking and management of fund use and information disclosure so as to achieve full-process and normative management of green financial bonds. The purpose is to make sure that all funds raised by green financial bonds are actually used to promote the development of green industry.” Luo Shiyi, GM of Green Finance Dept, IB, said.
According to the introduction of Luo Shiyi, IB set up identification standards and operation process of green finance projects that could identify green credits one by one, and performed “measurable, reportable and verifiable” environmental performance measurement and statistics as early as in 2012. Meanwhile, as for the use of funds from green financial bonds, IB has set up a special green financial bond management system and standing book system.
Although current policies do not compulsorily require third party certification for evaluating the performance of green financial bonds, however, IB, as the first issuer of green financial bonds, has actively engaged a third-party institution to evaluate and audit the green financial bonds so as to increase the transparency of fun use. Before issuance, IB engages a third-party institution to evaluate the green financial bond; after issuance, IB engages a third party to follow up and evaluate the development of and environmental benefits brought by the products and projects supported by the green financial bonds issued. IB also engages a professional accounting firm to audit the green projects and assets invested by the fund raised from green financial bonds as well as the use of raised fund, so as to ensure effective use and standardized management of fund raised by green financial bonds.
By the end of the third quarter of 2016, the two phases of green financial bonds have accumulatively raised RMB 20.498 billion. The supported projects cover all the projects listed in the Catalog of Green Bond Supporting Projects, including six sectors such as energy conservation, pollution control and prevention, resource conservation and recycling, clean transportation, clean energy, ecological protection and adaption to climate changes. 741,200 tons of standard coal was saved, 1,695,200 tons of CO2 emission was reduced and 13,800 tons of sulfur dioxide emission was reduced each year.
As the pioneer of green finance in China, IB has achieved many No. 1 in the green bond industry: underwriting and issuing the first green PPN in the market; the first long term cum rights medium-term notes; the first green bond involving “green investors” and the first green bond in biomass power generation. Meanwhile, IB also cooperated with China Central Depository & Clearing Co., Ltd. to formulate the China Bond - Industrial Bank Green Bond Index which was published in January 2017. This publication reflects the market trend of green bonds from many perspectives and offers investors multi-facet performance comparison benchmarks and investment subjects.
According to the estimation made by the medium- and long-term growth research team of the Development Research Center of the State Council, the newly generated demands for green finance is RMB 2 trillion each year from 2015 to 2020. The market is broad enough for financial institutions to fulfill their potential. Report has it that IB has 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.