Finance, Environment & Development Forum Held in Beijing

The “Finance, Environment & Development Forum” was held in Beijing on May 19-20, 2009. The event was jointly organized by the Policy Research Center for Environment and Economy of the Chinese Ministry of Environmental Protection, the Energy Research Institute of the National Development and Reform Commission, the Finance Research Institute of the People’s Bank of China and the Beijing Representative Office of the World Wide Fund for Nature (Switzerland).Two parallel sub-forums were held during the forum, namely the “Sustainable Banking & Finance Sub-forum” and “Energy & Sustainable Development Sub-forum”. Participants at the forum included governments, banking institutions, enterprises, national policy research departments and finance and environment experts from China and abroad. This forum aimed to facilitate the sharing of global experiences in finance and environmental management. In-depth discussions into China’s current environmental and economic policies were held so as to offer insight and solutions that can be used by the banking industry to formulate environmental and sustainable development strategies that better suit China.

Yang Chaofei, Policy and Regulations Department Chief of the Chinese Ministry of Environmental Protection, pointed out at the forum that the Ministry is collaborating with the IFC in an effort to introduce the green credit standard the “Equator Principles”. The ministry is also working on relevant domestic policies. Mr. Yuan Qingdan, Chief of the Environment Policy Division of the Policy and Regulations Department under the Chinese Ministry of Environmental Protection said that the environmental protection departments and tax departments are currently in the process of formulating independent environmental taxes. Moreover, tax departments are implementing favorable income tax policies for enterprises that meet certain conditions, and have already acted on the advise of the environmental protection department by offering favorable policies for professional and market-oriented sewage and garbage treatment companies as well as desulfuration companies. Feng Dongfang, Director of the Policy Research Center for Environment and Economy under the Chinese Ministry of Environmental Protection gave an overview of international experiences in green credit. He placed an emphasis on discussing how the Equator Banks implement the Equator Principles and emphasized that that the spread of the Equator Principles will be the future trend of green credit in China.

Han Wenke, Director of the Energy Research Institute of the National Development and Reform Commission stated that against the backdrop of the international financial crisis, developing clean energies is a key measure in resolving energy problems, boosting investment and mitigating the negative impacts of economic development.

Ye Yanpei, Vice Inspector of the Statistics Department of the Banking Supervision Commission stated that banks should approach energy-saving and emissions-reduction from a strategic perspective and formulate relevant credit policies, operation rules as well as the criteria for the assessment of client environment social risk management. He also pointed out that the Banking Supervision Commission asks institutions under supervision to give regular reports on work conducted in credit for energy saving and emissions reduction and analyze loan structure and layout. He also stated that the commission will strengthen its ties with banks and other stakeholders. Ye Yanpei praised the Industrial Bank for its achievements in the management of environmental and social risks since adopting the Equator Principles in an overview of the experiences and achievements of green credit in China.

Liu Ping, Deputy Director of the Finance Research Institute under the Central Bank stated that new finance tools and systems are required in order to evade the risks involved in the provision of loans. He also said that the provision of loans alone is unable to effectively allocate resources to those industries with genuine value and market prospects. Currently, the Central Bank is researching financial innovation and systems.

The GM of the Department of Law and Compliance of the Industrial Bank Head Office introduced the motives and background behind the bank’s adoption of the Equator Principles as well as progress so far; Mr. Zhang Lei, Vice President of Finance & Market Investment in the Asia-pacific division of UniCredit SpA detailed the bank’s implementation of the Equator Principles from the perspective of risk management. Moreover, a number of representatives from domestic and overseas financial institutions delivered speeches at the forum. Organizations such as the Import and Export Bank of China, Industrial and Commercial Bank of China, the IFC and KfW-Kreditanstalt fur Wiederaufbau engaged in in-depth discussions into the sustainable development of banking.

This forum provided a platform for communication and exchanges between banks, financial institutions, government regulators, companies, research institutes and non-governmental organizations from both China and overseas. In the past decade, the Chinese government has made great efforts to protect natural resources and control pollution. It has established clear environmental targets for the eleventh “Five-year” plan. The government understands that the key roles that banks and finance play as investors and a driving force behind economic development. Banks support the transformation of industry from “high pollution, high energy consumption and low efficiency” to “low pollution, low energy consumption and high efficiency” through the implementation of environmental regulations the likes of “green credit, green insurance and green securities”. Moreover, China is facing the same environmental issues that other nations have faced or are facing. Therefore, drawing from the experiences and success of foreign nations is a wise move. For example, in the Equator Principles, the solutions given for the environmental and social issues that banks face in project financing is of great referential value. The forum was held against such a backdrop. The forum demonstrates the resolution and efforts of the Chinese government and financial regulators in implementing green credit policy.