Green credit criteria taking shape

China is working on criteria with which to evaluate the implementation of its green credit policy by banks and enterprises, according to the China Banking Regulatory Commission.

A green credit policy means using loans as a stimulus for green industries and projects, while it also requires banks to deny loans to energy inefficient and polluting enterprises. It has been advocated by international organizations like the International Finance Corporation of the World Bank Group for years.

Enforcement of the policy will be tied to restrictions on doing business in certain areas, and the commission can deny promotions to top executives for failing to carry it out.

Bad performers might even be identified on a black list, a senior official of China's top banking regulator said on May 16.

Wang Zhaoxing, vice-chairman of the commission, said that China will issue an evaluation and system of rewards and punishments when the time is right.

"We will evaluate the enforcement of the green credit policy by China's financial institutions and use it as a reference for regulatory rating, institutional access, business access and the promotion of top executives," Wang said.

This February, the commission issued its first guidelines for green credit, which encouraged commercial lenders to evaluate, classify and rate the environmental and social risks inherent in their clients' businesses and take the results as a key reference in their ratings and access to credit.

Though the industry still awaits detailed technical standards, many Chinese banks have already taken the initiative to implement their own green credit strategy.

For example, by the end of the first quarter of 2012, Industrial Bank Co. Ltd had offered 2,857 green credits with a total value of 129 billion yuan ($20.3 billion).

"The projects we supported have an effect equivalent to shutting down 146 thermal power stations that produce 100 trillion watts or halting the service of 70,000 taxis for 44 years," said Li Renjie, CEO of Industrial Bank.

zhangyanpeng@chinadaily.com.cn