Banks' critical role in advancing low-carbon, high-quality green development emphasized at COP28 side event

(Ecns) -- Xing Wei, executive president of of China Banking Association (CBA), delivered a speech via video at a side event on Banks’ Critical Role to Advance Low-Carbon and High-Quality Green Development during the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) held in Dubai on Tuesday.

Citing the 2023 Central Financial Work Conference which pointed out that more financial resources should be allocated to promote green development and green finance needs to be further scaled up, Xing emphasized banks’ critical role in advancing low-carbon and high-quality green development.

According to Xing, guided by the former China Banking and Insurance Regulatory Commission, the CBA established the Green Credit Committee as early as 2014. CBA has organized green banking evaluations for banks to guide banking financial institutions to implement green credit policies on the ground level. This has increased banks effective implementation of green credit guidelines and created positive impact among banks, he added.

In terms of green credit, as of June 2023, the outstanding balance of green loans from 21 major banks stood at RMB 25 trillion , with a year-on-year growth of 33%. China’s size of green loans ranks first globally, with solid assets quality. Forecasts show that the projects supported by the 21 major banks will save over four hundred million tons of standard coal and reduce over 1 billion tons of carbon dioxide emissions.

In supporting the green and low-carbon transition, as of June 2023, the accumulated outstanding balance from 21 major banks were RMB three trillion to environmental industries, with a 53% increase from last year; RMB five trillion to clean energy industry, with a 34% increase compared to the previous year; and RMB three trillion to green buildings, with an 84% increase over the previous year.

Beyond banking, other segments of the green finance system have also grown. Through collaborative promotion with other industry associations, by June 2023, green insurance premium reached RMB115.9 billion million. Insurance investment in green economic activities reached RMB1.67 trillion, with a 36% growth over the previous year. Green trust funds have grown to RMB 291.6 billion. The outstanding balance of green finance from financial leasing companies have grown to RMB 850 billion .

He also said the Paris Agreement has set the direction for global efforts to address climate change, and transition to a green and low-carbon economy.

He suggested that under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, the banking industry still need to make efforts in the following areas:

First, the CBA will provide guidance to banks to set the Carbon Emission Peak and the Carbon Neutrality strategy. Secondly, CBA will explore innovation of green finance products. Thirdly, CBA will strengthen work programs on climate risk management. Fourthly, CBA will support banks to improve governance process on carbon related data and improve information disclosure. Fifthly, CBA will strengthen international cooperation.

Looking ahead, the CBA will continue to convene banks as a self-regulatory organization, to serve the national strategy, support implementation of regulatory requirements and act as a spokesperson for China’s banking industry, he said.