OREANDA-NEWS. November 28, 2012. As the first Equator bank in China, Industrial Bank (IB) has exerted great efforts to develop green finance and perform the responsibilities as a corporate citizen for years. From the launching the first energy-efficient financing program, carbon finance, and low-carbon theme credit card, to taking the lead in promising to follow the Equator Principles and to setting up a specialized institution, IB has promoted green finance in a course of over six years, taking a leading position in the industry in the such aspects as market concept, social influence, product development, technical regulations, service fields and organizational guarantee, and building a “green-to-gold” sustainable finance road through exploration, reported the press-centre of IB. 

Boosting the large-scale development of green finance with specialized operation
Since the first energy-efficient financing project was implemented in 2006, IB has accumulatively extended RMB 129.008 billion green financing products to around a thousand enterprises by the end of the first quarter of 2012. The balance of the financing balance reached RMB 84.731 billion, of which the credit balance hit RMB 65.037 billion and the non-credit financing balance amounted to RMB 19.694 billion, growing at a rate of over 200% on average each year.

At present, IB has 37 branches providing green finance businesses. It has formed a group of key branches with a financing balance over RMB 2 billion, whose green finance business covers three major fields of low-carbon economy, recycling economy and ecological economy, supporting a variety of projects in the mainstream economic zones such as Yangtze River Delta, Pearl River Delta, Bohai Economic Rim, Northeast China, Central China, West China and the Western Taiwan Straits. These projects involve improvement of energy efficiency, development and utilization of new energy and renewable energy, carbon emission reduction, sewage treatment and water area control, reduction of sulfur dioxide emission, recycling of solid wastes, and national key energy conservation program.

By the end of the first quarter of 2012, the projects supported by green finance program of the bank have saved 61.1227 million tons of standard coal within China, reduced 179.9542 million tons of carbon dioxide, 2.2579 million tons of chemical oxygen demand (COD), 14,700 tons of ammonia nitrogen, 74,600 tons of sulfur dioxide, and 8,600 tons of oxynitride, utilized 17.4134 million tons of solid waste in an integrated manner, and saved 173.8180 million tons of water. The emission reduced is equivalent to shutting off 412 thermal power plants of 100 MW or stopping running 70,000 taxis in Beijing for 124 years.

IB has kept pushing forward the specialized operation of green finance, established a special energy-efficient financing team in 2005, set up a sustainable finance center in 2009, and upgraded the sustainable finance center into sustainable finance department, a Class I department, in 2012. By now, the bank has established five specialized teams including project financing, carbon finance, market research, technical services, and Equator Principles review, endeavoring to build an assets operation platform integrating six functions: product design, technical support, assets management, marketing operation, trading service and business cooperation. Meanwhile, IB has, according to the subdivisions, formulated the technical admittance criteria, established a green finance certification system by refining and elevating its understanding to different industries and business knowledge and standardizing them one by one, and carried out “measurable, reportable and examinable” environmental benefits calculation. The bank has improved the credit management system. Each green credit passing the green finance certification is labeled in the credit system. In this way, the green finance businesses are under unified management and analysis.

Intensifying process reform with the Equator Principles
On October 31, 2010, IB officially announced to the public to adopt the Equator Principles, becoming the 63rd “Equator bank” around the world and the first and only one in China up to now. Apart from carrying out review over the financing business of any project with a total investment exceeding USD 10 million in line with the requirements of the Equator Principles and identifying the environmental and social risks of the financing project, IB has also provided a complete set of concepts, methods and tools for green finance in reference to the Equator Principles and established all-sided management regulations and system for environmental and social risks from decision-making to implementation, from regulations to flow, and from capacity building to information disclosure.

From the end of 2009 when first project compliant with “Equator Principles”-2?300MW expansion project of Fujian Huadian Yongan Power Plant – was launched officially, to the end of the first quarter of 2012; IB has examined the applicability of 673 loan projects according to the Equator Principles, with a total amount of project investment up to RMB 910.6 billion. Specifically, 127 of them were approved as projects applicable to the Equator Principles, with a total investment of RMB 163.1 billion involving 126 customers. In addition, the first project supported by the bank in which the enterprise followed the Equator Principles voluntarily was implemented successfully in Xi'an, with a total investment of RMB 320 million. It marks that the Equator Principles which have been observed extensively in the world have gained wider recognition in China, and it also indicates the change that Chinese enterprises seek to control risks with the Equator Principles rather than by following the principles in a passive way.

In order to promote and regulate the development of energy conservation and emission reduction business, IB has, in succession, released a series of rules and regulations, such as the “Measures on Management of Energy Conservation and Emission Reduction Business”, the “Detailed Admittance Criteria for Energy Conservation and Emission Reduction Projects”, the “Criteria for Identifying the Property of Energy Conservation and Emission Reduction Projects in the Field of Environment”, and business marketing instruction, specified the types of supported projects and admittance criteria, thus providing institutional guarantee for the flourishing of energy conservation and emission reduction business.

The sustainable development model of “obtaining reasonable profits while bringing benefits to the stakeholders”
IB has conducted a range of explorations in the aspects of maximizing the interests of shareholders and giving consideration to the interests of stakeholders, and pursuing harmonious development of environment, society, economy, enterprises and banks, proposing the way to perform corporate social responsibilities through “obtaining reasonable profits while bringing benefits to the stakeholders”. Under the guiding of such social responsibility concept, IB, in collaboration with its partner–International Finance Corporation (IFC), designed the energy conservation and emission reduction financing program and released the innovative energy-efficient financing product in May 2006. This is starting point of green finance service in China.

IB has elevated the sustainable finance theory of “obtaining reasonable profits while bringing benefits to the stakeholders” to a strategic level of corporate governance and corporate culture, and given consideration to the protection of ecological environment and the interests of the general public and the performance of social responsibilities during business operation. This has not only pushed forward the blooming development of green finance, but also boosted the following three transformations in the aspect of business concept.

First, green finance has become a consensus of the bank regarding corporate governance, and it has established the corporate governance philosophy of sustainable development and furthered its understanding to the relationship between its social responsibilities as a bank and its own sustainable development and actively explores different ways to promote the bank to practice social responsibilities. The second transformation is to seeking commercial opportunities proactively instead of accepting restriction passively. And by serving energy conservation and emission reduction program and observing the Equator Principles, it has acquired favorable tools to create differentiated competitiveness and explore new commercial opportunities. The third transformation is the process from the development and promotion of single green finance product to overall reconstruction of commercial models and business flow.