International Finance Corporation
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.
With the rapid growth of its economy, China has overtaken the US in greenhouse gas emissions. It is now responsible for up to 30% of the annual total GHS emissions globally. In 2006, the IFC set out to halt and reverse the trend, launching the China Energy Efficiency Finance Programme.
This includes the use of risk-sharing facilities; by offering to share risks with participating Chinese banks, the IFC has worked with seven Chinese banks to deliver financing for energy efficiency and renewable energy development projects. These banks now have a combined green-finance portfolio of more than $100 billion.
While encouraging Chinese banks to expand their operations in green finance, the IFC, whose East Asia and Pacific director is Vivek Pathak, has also made continuous efforts to help them with innovation, talent development and adoption of international best practices.
With the IFC’s technical support, Agricultural Bank of China became a market leader in green asset-backed securities in 2016. Last year, it also launched its Green Finance Certificate Programme and completed the programme for Bank of Beijing. Forty trainees from the bank completed a three-tier training course on green finance.
The Equator Principles, recognized by financial institutions globally as the best practice in dealing with environmental and social risk management, are based on the IFC’s Performance Standards on Environmental and Social Sustainability. The principles are gaining followers in China. Industrial Bank was the first Chinese financial institution to adopt these principles; in January of this year, Bank of Jiangsu became the first Chinese city commercial bank to adopt the Equator Principles thanks to the coaching it received from the IFC.
To help China’s commercial banking sector create a sustainable green-financing model, the IFC has also advised the China Banking Regulatory Commission on guidelines on green credit and helped the People’s Bank of China to identify key barriers to green finance.