The Guangzhou Development District recently launched a green finance service platform, as reported by Eastmoney on October 26. The platform is a comprehensive system consisting of green finance-related policy briefings, as well as disclosure of green projects and enterprise applications. The platform aims to facilitate loan supply and demand between companies within its administrative scope and outside financial institutions. A total of nine financial institutions signed agreements with the financial bureau of the Guangzhou Development District, promising to collectively offer green loans worth over RMB35bn to companies and individuals within the area. The first batch of financial institutions participating in the scheme includes five banks and four insurers, such as Bank of China (BoC) [3988:HK], ICBC [1398:HK], CPIC [2601:HK], Ping An [2318:HK], and more.
China has been pushing green finance for years. In an effort to encourage banking institutions to direct more loan resources to the green finance field, this July, China’s central bank published a draft version of plans on assessing green finance performance of commercial banks. Under the proposed rules, PBoC will include commercial banks’ green finance efforts into its macro prudential assessment (MPA), through aspects such as green loans and green bonds. Specifically, the central bank will conduct the assessment based on 80% of quantitative indicators and 20% on qualitative indicators. The quantitative evaluation scope includes a bank’s green finance business deployment, the outstanding balance of green financial instruments, and its asset quality. The qualitative appraisal concentrates on the bank’s green finance policy compliance, strategy implementation and the development prospects of its supported green businesses.
In past years, Chinese state-owned banks have been dominating the country’s green loan market. According to social responsibility reports published by major Chinese banks in 2018, six state-owned banks occupied 53% of China’s green loan balance, while policy banks and joint-stock banks made up the rest of the 28% and 19%, respectively. Despite state dominance, Chinese small and medium-sized banks are also actively exploring applications in the green finance field. For example, Bank of Jiangsu [600919:CH] became the first Chinese commercial city bank adhering to the Equator Principles, which is an international risk management framework for assessing environmental and social risks in projects.