China EPA, IFC to Develop Guidelines for Groundbreaking National Green Credit Policy

January 26, 2008 — China's State Environmental Protection Agency (SEPA) signed a formal cooperation agreement with IFC this week to develop environmental guidelines for the country's Green Credit Policy. Director Rachel Kyte of IFC's Environment and Social Development Department said the guidelines would largely be based on IFC's Performance Standards, as well as the World Bank Group's Environmental, Health, and Safety (EHS) Guidelines.

"This is an important partnership. IFC is committed to helping Chinese regulators and Chinese financial institutions adopt international environmental and social good practices in the Chinese market," Ms. Kyte said.

The Green Credit Policy developed by SEPA, the People's Bank of China (PBOC) and the Chinese Banking Regulatory Committee (CBRC) in July 2007 is a ground-breaking initiative, mandating financial institutions assess environmental risks and integrate environmental considerations in their investment choices. The policy is intended to reduce environmental and social risks borne by commercial banks and may be a model for regulators in other countries.

IFC's Global Expertise Sought

"IFC's global expertise and experience in developing and implementing environmental standards makes IFC a unique partner for China. We hope to build a long-term partnership with IFC to tackle China's most pressing environmental challenges," said Vice Minister Pan Yue of SEPA.

Under the agreement, SEPA will first translate 51 of the EHS guidelines into Chinese, and then develop of a series of green credit guidelines for a number of key polluting industries, allowing commercial banks to be able to identify environmental risks associated with different industries in their credit review process. In addition, SEPA and other government agencies will jointly study and promote the Performance Standards and Equator Principles and develop tools and guidance for local implementation.

The signing ceremony was attended by representatives from the PBOC, CBRC, and commercial banks, as well as academia and the media. They welcomed SEPA/IFC partnership agreement as an integral part of the efforts to build a "Greener China."

CCTV, China's largest national television network, has also reported the news of IFC/SEPA Cooperation Framework Signing Ceremony.