Chairman Gao Jianping Talks to Board of Directors about Sustainable Finance and Business Mode Reform

In September 2010, Board of Directors magazine published an article entitled Sustainable Finance: the Business Logic of IB. The article was based on an interview with bank leadership such as Chairman Gao Jianping, who introduced the bank’s concepts in sustainable finance and innovations in business mode.

 

In the interview, Chairman Gao Jianping pointed out the essence behind IB’s exploration of sustainable development: in a society with order, if a company integrates morals into profits, i.e. by providing products and services that meet social demands and thereby fulfilling its social responsibilities, it will not only contribute to social sustainable development, but will also create commercial value and secure its own sustainable development. When talking about the value proposition of sustainable development, Mr. Gao holds that green finance opens new avenues of business, brings about high quality assets and presents new sources of income without increasing the financial burden of a bank. By delving into the essence of green finance, the concept of sustainable development concept, which is embodied therein, has become a core concept that is influencing bank management and the reconstruction of business processes. As a core value of IB, the concept of green finance came into being gradually and has deepened along with the growth of IB. It did come over night or by accident. In the twenty years since its establishment, IB has realized a four-step leapfrog from a local bank to a regional bank, again to a national bank, and finally to a listed bank. Its governing concept has also undergone three-stage progression, from caring only for shareholder interests through considering all stake holders and finally to fulfilling social responsibilities and promoting the sustainable development of economy, environment and society in various ways. 

 

Also taking part in the interview, President Li Renjie pointed out that IB has a sharp market sense and a strong market orientation, and that it is good at seizing market opportunities and going with the market. Mr. Gao Jianping also emphasized that at present the commercial banks are confronted with great challenges, such as the marketization of interest rates, homogenization in products and services, and confused risk management systems, and therefore, the question of how adjust and innovate business models to adapt to the trends is a major strategic issue that banks must consider. It may be possible to secure sound development prospects in the period ahead by reviewing and reconstructing traditional commercial modes from the perspective of sustainable development.

 

Vice President of IB Mr. Kang Yukun, who is in charge of implementing the Equator Principles, stated that as a set of risk management tools, the Equator Principles require banks to comply with environmental principles and sustainable development principles in all stages in credit activities. As for IB, implementation of the Equator Principles is a top-down initiative, including the insight into corporate governance, implementation through culture and realization through systems and processes. Mr. Kang has a great deal of insight from the adoption of the Equator Principles over the last two years. He explained that some companies perform better than expected, and they understand and accept this concept. Others may have reservations at the beginning, but are willing to cooperate after persuasion. Of course, some companies are not willing to accept the principles. If the company involved is not willing, then we will not get involved in the project.

 

The report also introduced IB’s first project adopting the Equator Principles, namely the 2×300MW Extension Project of Fujian Huadian Yongan Power Generation Co. Ltd, and reported the project owner’s willingness to accept the Equator Principles. The report also detailed the systems and management processes established by IB in accordance with the requirements of the Equator Principles and how it has overhauled risk management by integrating environmental and social considerations.

 

Board of Directors magazine reported on IB’s practices in sustainable finance in detail from various aspects, such as the implementation of social responsibilities with “responsible profit”, the implementation of the Equator Principles, environmental and social risk management, resource sharing on the bank-to-bank platform, business mode innovation and cash management business. This has allowed the IB to share its experiences in sustainable development with other banks and is likely to strike a chord with other financial institutions by spurring them on to engage in further reflection of their current business concepts and business modes.

 

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