ESG

After embracing green finance with great enthusiasm a few years ago, Agricultural Bank of China, a 65-year-old state-owned bank in China, has emerged as a big green-credit provider in the domestic market. What is equally impressive is that ABC has also become a leader among Chinese banks to tap the global financial market to support its green lending at home and to establish cross-border green investment funds with international financial institutions.

In recent years, green lending has not only been embraced by national banks in China, but also gained traction with socially responsible and environmentally conscious regional commercial banks. Bank of Jiangsu, which operates in the eponymous eastern province, has emerged as a leader among regional commercial banks in both green-credit provision and the adoption of international green-lending best practices.

Along with other Chinese banks, Industrial Bank recorded robust growth in green-finance provision in 2016. But while its peers have been busy pursuing strong growth in the provision of green finance, Industrial Bank was sober enough to stay alert to the risks associated with its green lending activities.

No other international organization can match the IFC in contributing to the advance of green finance in China. The whole idea of green finance was brought in by the IFC, an affiliate of the World Bank. In the last decade, it has encouraged and advised a slew of Chinese banks, big and small, to provide green finance and embrace global standards in their practices.

In terms of green finance, Agricultural Bank of China was the least advanced of China’s four state-owned commercial banks until relatively recently. But thanks to some nimble steps taken in the last two years, the world’s third-largest bank by assets has not only gained access to the international green-bond market, but has also emerged as a big green-credit provider in China.

China Development Bank was set up by the central Chinese government in 1994 with a mandate to fund domestic infrastructure and other strategic social and economic development projects. In recent years, it has also evolved into a leading green-credit provider in China and a key player in helping government agencies to institute a proper regulatory framework for the rapidly growing domestic green-finance sector.

Industrial Bank, headquartered in the eastern city of Fuzhou, had nothing special to set itself apart from other domestic commercial banks a decade ago. But that started to change in 2008 when it became the first Chinese bank to adopt the Equator Principles, the internationally recognized risk management framework for green finance projects.