IFC Convenes China Green Credit Policy Delegation Seminar Series

Leveraging IFC sustainability, financial know-how to build sustainability in China's financial sector

During June 23-26, 2008, IFC hosted a high-level delegation on China's Green Credit Policy comprised of representatives from the Ministry of Environmental Protection (MEP), China Banking Regulatory Commission (CBRC), People's Bank of China (PBOC), and a number of Chinese banks in Washington. The delegation's program included seminars and discussions with thought leaders from IFC, the US government, Equator Banks, think-tanks, consulting firms, and non-governmental organizations (NGOs) on international experiences in sustainable finance and implementation of China's Green Credit Policy.

"China's Green Credit Policy plays a vital role in transforming China's financial sector toward sustainability. IFC will continue to make contributions to this transformation through our partnership with the Chinese government and financial institutions" said Rachel Kyte, Vice President of Business Advisory Services in IFC.

"We are immensely impressed by IFC's leadership and expertise in sustainable finance. This ground-breaking seminar series created a multi-dimensional platform and not only deepened our partnership with international stakeholders, but also strengthened the collaboration among Chinese government agencies and banks" said Mr. Chao-Fei Yang, Director-General of MEP.

During this four-day seminar series, the Chinese delegation and international experts discussed the challenges and opportunities in implementing environmental and social standards in investment projects and exchanged ideas and concepts on practical tools and mechanisms to assist banks in integrating green credit policies into their credit review processes. "This is an extremely productive high-level exchange between China and the international sustainable finance community. As an immediate result, IFC and the delegation have outlined the priorities for the next phase of cooperation" said Motoko Aizawa, Head of the Policy and Standards Unit in IFC's Environment and Social Development Department.

IFC and China Green Credit Policy — A brief background

IFC is the first international organization to assist the Chinese government in developing and strengthening its Green Credit Policy which was jointly launched one year ago by the MEP, CBRC and PBOC. The policy aims to improve compliance with environmental regulations by restricting access to commercial credit of Chinese companies that bypass environmental assessments or fail pollution checks. In January 2008, IFC signed a cooperation agreement with MEP to introduce the Equator Principles, IFC's environmental and social performance standards and its expertise in sustainable finance to China.

Based on the recent fruitful collaboration with the Chinese authorities, the Equator Principles and IFC standards and guidelines have been accepted by the Chinese government as an example of international best practice along which the Green Credit Policy will be modeled during the next phase of implementation. On the individual bank level, a number of Chinese banks have taken concrete steps to prepare for the Equator Principles adoption, as a result of IFC's outreach program that focuses on sustainability in the financial market.

In the near term, a broader agenda for cooperation is likely to emerge as the MEP is also tasked to develop a comprehensive Green Policy Framework that will include elements of "Green Insurance", "Green Securities" and "Green Taxation". The Green Credit Policy is the first step, and subsequently its success become crucial to the development and the implementation of a comprehensive Green Policy Framework.