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Environmental Pollution Information Shall Be Incorporated into Banking System

Date: Aug 10, 2010      Source: IEEPA      

Statistics from Intergovernmental Panel on Climate Change showed that: the rising global atmospheric temperature was due to emission of greenhouse gases, and it was inevitable to bring about frequent disasters, in this sense, it is imperative for us to develop economy of low energy consumption, low pollution and low carbon, which has been put on the agenda by world government departments from the original voluntary folk groups. However, economic operation in China currently is confronted with restructuring pressure, especially for expanding industries with high energy consumption and high emission. Therefore, it is paramount that how finance sectors may make contribution to the national adjustment of industrial policy, and industries with high pollution and high emission.  In the last few years,banking sectors have taken various measures to enhance legal construction. At the same time, China Banking Regulatory Commission (CBRC) also attached importance to the national strategy on energy conservation and emission reduction. In 2007, after considerable investigations and studies, CBRC issued guidance on credit extension work of energy conservation and emission reduction, and gave a clear definition on banking sectors’ participation mode and supervision policy on energy conservation, emission reduction, environmental protection. In order to achieve indices, relevant banking regulatory organizations put on strict checking on enterprise information in the course of credit analysis and administration, and afforded no credit support to new projects or projects under construction if such enterprises failed to gain environmental assessment report; if enterprises were required to be registered and urged to handle within a prescribed time limit, regulatory organizations shall closely observe their performance, and withdraw their licenses as soon as possible if said enterprises still failed to meet the environmental protection requirements after rectifying. In the end, regulatory organizations will terminate credit extension on the enterprises which have unstable operation even though they reach the environmental protection standard, or energy conservation emission reduction objectives are incomplete, and adopt corresponding measures to handle according to practical condition of these enterprises.

Cai Esheng, Vice Chairman of China Banking Regulatory Commission

Under the continuous support of regulatory sectors, China's banking is gradually going into orbit, playing leading role in expanding international influence of domestic financial institutions. Domestic banking sectors shall be familiar with international custom as soon as possible, and participate in enactment and amendment of international financial roles. At present, increasing banking sectors began to lay heavy stress on the publicity of the concept of green, environmental protection, energy conservation and emission reduction in the course of their brand promotion, which erected sound social image. Recently, CBRC has carried out complete investigation on the industries with over capacity and outdated capacity. While exercising strict control over enterprises with high energy consumption and high pollution, banking financial institutions shall also lay stress on the demand, constantly develop new products or services, for instance, as for the investigation on the international futures price of carbon dioxide emission quota, Industrial Bank Co., Ltd took the lead in offering the loan on energy efficiency among domestic counterparts, creating a new road. By the end of 2009, its 24 branches all issued pacemaker in the regard of energy conservation emission reduction. However, we shall concede there are many disadvantages to consider while affirming the achievements, for example, talent shortage.

In addition, in consideration of limited awareness and control on risks under current green finance, especially for low carbon industry, we shall make gradual adjustment accordingly by practice. Bank's risk allocation in this respect is far from sound, for the industry involved in is the same as traditional one. Therefore, we shall pay close attention to relevant measures. The information of environmental pollution is not totally incorporated into banking system, and further improvement of the mechanism of information sharing is a must. As for the work in the next, we shall combine our objective with practice, cope with the problems in the process of development as well as international feedbacks.

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