Chinese commercial banks should establish environmental reporting, assessment, management, and risk evaluation systems to promote sustainable development in China, according to a new report today from WWF and the People’s Bank of China (PBoC), the country’s financial and monetary regulatory agency.
Towards Sustainable Development: Reform and (the) Future of China’s Banking Industry from WWF and the central bank’s Financial Research Institute is the first high-level report on sustainable development in China’s banking sector.
The report stresses the growing importance of commercial banks in China’s effort to realize its national sustainable development strategy and provides specific recommendations on environmental policy changes.
It draws lessons from international standards in the finance industry such as Equator Principles (EPs), as well as the experience of international banks including Citi, Deutsch Bank and HSBC. Although there are a few national pioneers and many Chinese commercial banks have established their own environmental policies, the report concludes that most have failed to take concrete action.
While the banking industry is beginning to pay attention to sustainable development, the report calls on governments, non-government organizations, and the finance sector to drive commercial banks’ commitment into action.
Over the past few years, PBoC has been driving sustainable banking through its monetary, interest rate and credit policies.
In 2007, the central bank consolidated an environmental database of Chinese companies, requiring commercial banks to review and weigh each applicant’s environmental history before granting their credit applications.
In the same year, PBoC along with the Ministry of Environmental Protection (MEP) and the China Banking and Regulatory Commission (CBRC) established a green credit system. This regulated the availability of credit to companies in violation of environmental laws.
“People’s Bank of China is moving along the track set by international experience, while taking into account China’s own development strategies,” said WWF-China’s Country Representative Dermot O’Gorman.
“WWF will continue to learn from, and provide our expertise to, China’s central bank to promote sustainable development and green banking policies in China.”
