Aerial photo taken on May 18, 2020 shows a view of Xihu Park in Fuzhou, southeast China's Fujian Province. (Xinhua/Jiang Kehong)
BEIJING, July 1 (Xinhua) -- The green finance evaluation scheme for financial institutions in banking industry issued by the People's Bank of China (PBOC) in early June officially goes into effect on July 1, furthering the development of the green financial system in the country.
In order to create a more favorable institutional and market environment for the development of green finance, more measures will be rolled out in the future.
-- Green bonds included in the evaluation scheme
Apart from green loans, the evaluation scheme has included more finance businesses such as green bonds in the scope of evaluation.
According to the scheme, the evaluation, involving quantitative and qualitative indicators, will be carried out quarterly.
Quantitative indicators will evaluate a banking institution from the proportions of its total domestic green finance business respectively in its total domestic assets and in such businesses of all banking institutions included in the evaluation, the year-on-year growth of its green finance business scale, and the proportion of the total risks in its green finance businesses.
Qualitative indicators will evaluate banking institutions from the implementation of national and local green financial policies, the formulation and assessment of individual green financial evaluation scheme, and financial support for the development of green industries, which respectively takes a share of 30 percent, 40 percent and 30 percent in the qualitative evaluation.
The evaluation scheme will promote financial institutions to better develop green finance, and help achieve the goals of the national green development strategy, as it makes up for the weak links in related rules and systems, and poses restraints on the behaviors of financial institutions, noted Dong Ximiao, chief researcher with Merchants Union Consumer Finance Co., Ltd., a company jointly established by China Merchants Bank (CMB, 600036.SH) and China Unicom (600050.SH).
The green investment in China is in its infancy, and the inclusion of green bonds in the evaluation system will help encourage banking institutions to further increase investment in green bonds, bringing incremental capital to the green bond market, and promoting the expansion of domestic bond market, said Gao Huike, a researcher with CSCI Pengyuan Credit Rating Co., Ltd., a rating agency headquartered in Shenzhen of south China's Guangdong Province.
-- Related businesses expanded
To be ready for the implementation of the evaluation scheme, many banks have recently accelerated layouts in green finance businesses and rolled out "carbon neutrality" bonds and other green finance products.
The Agricultural Bank of China (ABC, 601288.SH) recently issued a guideline which proposes to support the development of clean energy, green upgrading of infrastructure, energy conservation and environmental protection, clean production, ecological environment, and green services, and continue to expand green finance businesses.
Since the beginning of this year, the green loans of ABC kept growing rapidly, and as of the end of the first quarter, the growth rate of its green loans registered 11.59 percent, 6.03 percentage points higher than that of its total loans.
The Bank of Beijing (BOB, 601169.SH) on June 24 issued an action plan for developing green finance, saying that in the next five years, it will provide green financing of over 300 billion yuan to the real economy, explore carbon asset financing modes, enrich the guarantee methods for green rights and interests, and build a comprehensive green loan support platform to serve green enterprises and upstream and downstream enterprises in the green supply chain.
It will also explore integrated promotion modes for the issuance, investment and financing of green bonds, promote the issuance of "carbon neutrality" financial bonds as well as green financial bonds for small- and micro-sized enterprises (SMEs), and lead the continuous growth of green bond investment.
Previously, BOB has successfully issued the first "carbon neutrality" financial bonds for SMEs in the inter-bank market in China, with an amount of 2 billion yuan.
These bonds will be invested in projects in clean transportation, clean energy, and resource conservation and recycling, etc., which are expected to save consumption of 145,400 metric tons(tonnes)of standard coal and reduce 348,000 tonnes of carbon dioxide emissions annually.
PBOC deputy governor Liu Guiping introduced at the 13th Lujiazui Forum 2021 kicked off June 10 in Shanghai that PBOC has launched carbon neutrality bond financing tools and carbon neutrality financial bonds in the inter-bank market with focus on supporting green and low-carbon projects that meet the criteria of the catalogue of projects supported by green bonds jointly issued by PBOC, the National Development and Reform Commission (NDRC), and the China Securities Regulatory Commission (CSRC) and have significant carbon emission reduction effects.
According to Liu, by the end of the first quarter of this year, a total of 65.62 billion yuan of carbon neutrality bonds had been issued in the inter-bank market, and the balance of green loans in domestic and foreign currencies exceeded 13 trillion yuan, up 24.6 percent year on year, which is 12.3 percentage points higher than the growth rate of all loans in the same period.
-- Policy supports to be further improved
Developing green loans and improving green loan standards, statistics, and performance evaluation remains important tasks for the construction of China's green financial system, and related government authorities will continue to improve the incentive and restraint mechanism for green finance businesses to create a more favorable institutional and market environment for the development of green finance.
Efforts would be made to improve the institutional framework for green and low-carbon development and green finance, in a bid to form a financial policy arrangement that matches the dual control targets for carbon emission intensity and total carbon emission, said Zhou Liang, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC) and a member of the CPC CBIRC Committee, at a promotion meeting on the development of green finance held recently in Hangzhou of east China's Zhejiang Province.
Efforts would also be made to establish a statistical monitoring and evaluation system for green finance, and formulate information disclosure standards for green finance, so as to provide guidance for financial institutions to comprehensively measure their carbon footprint and strengthen climate and environmental risk management, added Zhou.
The PBOC Research Bureau recently noted in an article that China would strengthen coordination to establish a unified and complete green loan standard as soon as possible, and based on this, efforts would be made to further study the unification of standards for green loans and green bonds, so as to make the connection of various green funds smoother and facilitate the financing for green projects.
In the next step, China will also strengthen financial support for the construction of the national carbon market.
In the latest regular meeting of its monetary policy committee, PBOC has proposed to study and set up a carbon emission reduction support tool to promote the realization of peaking carbon emissions and carbon neutrality and improve the green financial system.
Liu Guiping has also said at the 13th Lujiazui Forum 2021 that PBOC is speeding up the study of setting up a carbon emission reduction support tool, and by providing low-cost funds to qualified financial institutions, the tool will support financial institutions to provide preferential interest rate financing for projects with significant carbon emission reduction effect.
(Edited by Gu Shanshan with Xinhua Silk Road, gushanshan.1987@163.com)
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