Preview: Green Credit to Bring International Regulators, Central Bankers to Beijing
More than 200 regulators, commercial bankers, and representatives of non-governmental organizations will gather next month in Beijing to discuss ways of enabling and scaling up lending to environmentally friendly projects. The International Green Credit Forum, organized by IFC and the China Banking Regulatory Commission, offers a rare opportunity for senior central bank representatives from a number of emerging economies, including Bangladesh, Mongolia, Korea, and Vietnam, to come together to discuss sustainable banking regulations and learn from China’s experience.
While China may be one of the world’s largest emitters of greenhouse-gas emissions, it has taken a landmark step toward addressing the problem. In 2007, the China Banking Regulatory Commission, the Ministry of Environmental Protection, and China’s central bank launched the Green Credit Policy to encourage banks to lend more to energy efficient and climate-friendly projects, while lending less to highly polluting and energy-consuming projects. IFC has collaborated in the initiative, helping regulators and banks devise and implement the policy by sharing our experience as well as international best practices.
“Through credit controls, banks can have an influence on businesses’ awareness of energy savings, emissions-reduction, and the benefits to the public,” Yan Yanfei, Deputy Director-General of the Statistics Department of the China Banking Regulatory Commission told China Daily.
China’s Pioneering Green Credit Policy IFC’s partnership with the Chinese authorities has proven that the financial sector plays an important role in mitigating the impact of climate change. In 2009, green credit loans reached 860 billion Chinese yuan (about $125 billion), more than double its level in 2008 and accounting for around 9 percent of total bank lending in China.
In February this year, the China Banking Regulatory Commission launched the Green Credit Guidelines, specifying how to integrate sustainability practices into the lending cycle and directing banks to apply them to both domestic and overseas financing. The guidelines are benchmarked against IFC’s Performance Standards.
China’s progress on green credit has been closely watched for valuable lessons by regulators and bankers from other emerging markets, especially Vietnam, Bangladesh, Thailand, Indonesia, and Nigeria.
“As a global standard setter, IFC is uniquely positioned to advise financial institutions and regulators on how to address social and environmental risks,” says Zhang Rong, IFC Program Manager of Environment and Social Standards Program for the East Asia and the Pacific Region. “By bringing together top regulators and bankers at the International Green Credit Forum, we are promoting knowledge-sharing for a more sustainable future.”