“Green finance”, a word with a sense of mission, inevitably gives people a sense of suspension when reported.
But it is extremely important. At the recent press conference of the State Council, the central bank made an attractive statement: “the financial sector should not only welcome customers to the door, but also take the initiative to find good projects, make effective addition and optimize the economic structure according to the requirements of the new development concept”.
What is the new development concept? Scientific and technological innovation, high and new technology, digital transformation, specialization and innovation and other concepts close to hot trends may still have room for discussion, but “double carbon” is undoubtedly listed.
It can be predicted that “green finance” will be raised to an unprecedented height this year. Banks will formulate green credit principles that can effectively reduce the risk exposure to high carbon emission industries, and develop green finance with franchise departments, special lines and special assessment.
In this important process of turning assets “green”, some banks have taken a step first.
take the lead in systematic engineering with primary franchise Department
Some commercial banks with a keen sense of smell can make forward-looking strategic and tactical deployment before the latest policy guidance is launched – Ping An Bank Co.Ltd(000001) setting up a first-class Department “green finance division” in the head office to specialize in green finance business is a convincing example.
In September 2020, China first proposed the dual carbon goal (to achieve carbon peak by 2030 and carbon neutralization by 2060); In December of the same year, the central economic work conference listed double carbon work as one of the eight key tasks in 2021. After paying attention to the overall arrangement of national policies, Ping An Bank Co.Ltd(000001) chairman Xie Yonglin soon realized that this may not only mean that there are more words describing political positions in the work report for the banking industry, but a new round of huge industrial opportunities, which need to be supplemented by the adjustment of system and mechanism and the investment of business resources.
How can green finance be implemented at the practical level? Xie Yonglin held a joint meeting of the Executive Committee of the Party committee at the Ping An Bank Co.Ltd(000001) highest level for discussion. With 20 years of professional consulting experience in the energy field, Zhu Yuqiang, President of Ping An Bank Co.Ltd(000001) Green Finance Division, attended the Executive Committee six times with his own understanding. Xie Yonglin and his team members have become more and more confident about the top-level design of green finance in the business reports they have been listening to.
In May 2021, Ping An Bank Co.Ltd(000001) established the Green Finance Office of the head office, with President Hu Yuefei as the director, vice president Guo Shibang and Secretary of the board of directors Zhou Qiang as the deputy directors respectively. According to the resolution of the Executive Committee, the top-level design program of Ping An Bank Co.Ltd(000001) green finance was finalized, under which the “three modes” of green finance development and the service strategy of “seven steps into poetry and green into gold” were under the jurisdiction. At the same time, the first level Department of the Green Finance Division was established as the Secretariat of the green finance office, which is responsible for coordinating, promoting and coordinating the green finance work of the whole bank, giving full play to the cross departmental agile cooperation mechanism led by the PMO of Ping An Bank Co.Ltd(000001) industrial banks, and comprehensively establishing a green financial service system within the bank.
Green finance is a systematic project. In Zhu Yuqiang’s view, “systematicness” is reflected in its wide range of business models and cross sectoral operations. Firstly, energy production is the core foundation of green industry, and energy consumption covers many industries such as real estate, automobile, infrastructure, electrical appliances and manufacturing. In order to meet the needs of “double carbon”, the business model of thermal power and clean energy will be transformed, which will change the cost consideration, operation management and cash flow calculation of all energy users; Secondly, the development of the whole process business of green finance, such as risk policy formulation, business approval, green identification and carbon emission reduction calculation, needs the professional support of the risk line; Thirdly, to carry out green finance, in addition to coordinating corporate credit covering the field of energy production and consumption through industrial banks, it also needs efficient linkage with retail lines responsible for green consumption, asset liability and investment banking departments responsible for investing and issuing bonds, investment banks and trading banks responsible for promoting product innovation.
“When we were founded in May last year, the first sentence asked by the president of a branch was’ where is my organization ‘. This question is actually difficult to answer, because it involves a lot of linkage of various departments of the head office. Green identification, pressure testing, external disclosure, clarifying the concept of green and environment, and combining with the trading banking department and investment banking department.” Zhu Yuqiang told reporters.
The cognition of the top leader plays a decisive role in the establishment of the organization. Before Ping An Bank Co.Ltd(000001) , Industrial Bank Co.Ltd(601166) established a first-class franchise Department of green finance earlier, and other first-class franchise cases are rare. In some banks, the corporate finance department and risk department set up special teams across departments, some set up secondary departments under the corporate finance department, and some just set up a non exclusive team within the corporate department.
“It’s not an indicator but an industry”. In the logic of Ping An’s leading group led by Xie Yonglin, green finance is not only a regulatory indicator to be met, but a business focus direction in line with long-term development. It must appear in a high enough specification form to ensure that it can take the lead in coordinating such a complex project.
carrots and sticks
How to identify the “green” color? How is the track subdivided? How can we compete with big banks when capital is not dominant? How to maximize the enthusiasm of branches that have the inertia of thinking about old projects? After the establishment of the first level department, the problems to be solved by Zhu Yuqiang came one after another.
at present, there are many sets of standards for the definition of green economic activities outside China. China’s green classification standards are mainly based on three sets:
First, the national development and Reform Commission and other seven ministries and commissions jointly issued the green industry guidance catalogue in 2019, which defines the boundary of green industry and defines it as six industries, including energy conservation and environmental protection, cleaner production, clean energy, ecological environment, infrastructure upgrading and green services.
Second, the catalogue of green bond support projects (2021 version) jointly issued by the people’s Bank of China and other three ministries and commissions in 2021, which unifies the definition standards of green projects by relevant management departments of green bonds for the first time, adopts the internationally accepted “principle of no major damage”, and no longer includes high carbon emission projects such as clean utilization of fossil energy such as coal into the scope of support.
Third, the notice on the work related to the statistical system of green financing issued by the CBRC in 2020, which divides the green industry into nine dimensions, including energy conservation and environmental protection, cleaner production, clean energy, ecological environment, green upgrading of infrastructure, green services, overseas projects adopting international practices or international standards, green trade and green consumption business.
at present Bank Of China Limited(601988) the basic principles for the identification of green industry are to refer to the above three sets of principles. Different from most peers, because Ping An Bank Co.Ltd(000001) regarded green finance as an industry earlier, it set up a separate risk policy for green finance earlier, set up a green channel at the level of green finance business approval, and the risk line checked and guided the identification of green business.
“After the establishment of the branch’s green risk ranking system, we will quickly submit all the risk ranking data to the head office’s financial supervision department to determine whether each branch meets the requirements of the green risk ranking system at the same time.” Zhu Yuqiang told reporters.
The risk department has also been deeply involved in framing the main track of green finance. “After countless rounds of brainstorming, our business and risk finally determined to focus on 15 tracks, spanning six fields: clean energy, green environmental protection, high-carbon transformation, green transportation, green building and green services.” Zhu Yuqiang introduced.
So far, the branch has received a strong signal: in Ping An Bank Co.Ltd(000001) , to carry out business in these 15 fields, the head office will have a “green channel”. Each branch must choose its own focus based on the industrial environment, customer base, horizontal competition and other factors in its jurisdiction.
“We found that basically each branch will focus on three to four industries. For example, Hangzhou may pay more attention to nuclear power and Chengdu may pay more attention to hydropower, because each branch has different regional resource endowments.” Zhu Yuqiang said. More importantly, in the face of competitors such as the five major lines, Ping An Bank Co.Ltd(000001) plays completely differently in different tracks. For example, Ping An Bank Co.Ltd(000001) did not choose to face the five major banks with pure loans for nuclear power and hydropower in popular tracks, but launched a customized financing portfolio for individual cases in cooperation with the group’s brother companies (such as ping an asset management); At the same time, Ping An Bank Co.Ltd(000001) also relies on the deployment of science and technology to make the upstream and downstream financing layout of the industrial chain for some large commercial entities, such as providing supply chain loans.
Another problem facing Ping An Bank Co.Ltd(000001) is that in the face of central state-owned enterprises and private leaders in high-quality industries, Ping An Bank Co.Ltd(000001) the existing price system is difficult to compete with state-owned banks that have more advantages in capital cost and pricing system. “At this time, the asset negative department is particularly important and needs to give some room for the green business department to move. At the same time, the financial department also needs to set some incentive fees to encourage the branches to go out of the comfort zone and do more green projects than learning to catch up.” Zhu Yuqiang spoke frankly to reporters. Ping An Bank Co.Ltd(000001) launched special incentive and special assessment, which is defined by Zhu Yuqiang as “carrot and stick”.
For green loans, Ping An Bank Co.Ltd(000001) green finance department has applied for a special quota to ensure that the green loans can be released smoothly when they are PK with other high-yield loans. At the same time, it has formulated a principle of “making up until there is no loss”, that is, the subsidy is only when there is a loss. Moreover, if the business lower than internal transfer pricing is recognized as green credit, the subsidy this year is higher than last year.
While giving incentives, we should strengthen assessment. Ping An Bank Co.Ltd(000001) the relevant indicators of green financial business have been clearly pulled into the evaluation index system of the branch. Based on the average proportion of the whole bank and the actual situation of each branch, a fixed value index of year-end balance is set.
The combination of “carrot and stick” is working well. Ping An Bank Co.Ltd(000001) the development achievements of green finance have been recognized by the industry. As of September 2021, Ping An Bank Co.Ltd(000001) nearly 50% of corporate business teams have been involved in green finance business, and the scale of green finance business of more than one third of branches has doubled compared with the beginning of 2021.
agile and collaborative financial technology + comprehensive finance is a good card
Ping An Bank Co.Ltd(000001) is exporting its understanding and practical experience of green finance in the form of white papers and seminars. Recently, Ping An Bank Co.Ltd(000001) released the white paper on green finance for high quality (2022), which was jointly written by Ping An Securities Research Institute and Ping An Bank Co.Ltd(000001) various industry divisions. This example itself highlights the comprehensive financial gene that Ping An Group has always been proud of.
Relying on comprehensive finance, under the operation mechanism of the comprehensive financial committee of Ping An Group, it can not only ensure agile coordination, but also ensure that Ping An green gold can be comfortable in the face of large projects. “For projects such as hydropower and nuclear power, we certainly can’t compete with the five major banks directly. Of course, we have policy support, but when we compete with the major banks, our joint-stock banks may not have an advantage. What can I do? Let’s give full play to the advantages of financial technology and comprehensive finance to better meet the needs of enterprises in green transformation and development.” Zhu Yuqiang told reporters. Fintech can cut into the traditional financing business of supply chain, including means such as smart finance department, smart asset pool, satellite and Internet of things, which can generate data assets; At the same time, through the product innovation mode of complex investment and financing, it can provide comprehensive financial solutions for large central state-owned enterprises and private leading listed companies in the construction of renewable energy. The investment banking department can provide services such as bond issuance and M & A, and can also support the interaction between green gold and group finance departments to do complex investment and financing business.
He described an example of technological empowerment: distributed photovoltaic power stations have a wide range of application scenarios and have great advantages in land occupation, consumption and sales price. However, at the same time, there are also problems that the distribution of power stations is relatively scattered, which brings inconvenience to post loan monitoring. After the approval of the total amount of credit granted by Xingyun power station and the establishment of the Internet of things, the total amount of credit granted by Xingyun technology has been simplified. After the approval of the distributed financing, there are 4.4 billion} leading enterprises to build a photovoltaic power station. After the approval of the total amount of credit granted by Xingyun technology, it has solved the problem of 4.5 billion} supporting enterprises.
Ping An Bank Co.Ltd(000001) green finance also gives full play to the business advantages of Ping An Group’s comprehensive financial full license, cooperates with life insurance, property insurance, endowment insurance, wealth management sub, asset management, securities, trust, fund and other parties within the group, and effectively connects and supports the financing needs of green development of key enterprises through investment banks and complex investment and financing businesses. In 2021, Ping An Bank Co.Ltd(000001) green finance not only provided a 2.9 billion yuan project loan for the construction of Baihetan Hydropower Station, a large hydropower central enterprise, but also helped it underwrite 1.5 billion yuan of carbon neutral bonds; It also provided a project loan of 1.22 billion yuan for a large nuclear power group, and jointly invested 2 billion yuan to participate in the group’s wind power introduction war investment project; In addition, it also provided over 5 billion yuan of project construction capital support for a provincial water group in Southwest China through bond protection.
In the logic of Ping An’s senior management, in order to regard green finance as industrial development, there must be coordination and agile coordination between the business departments of the head office and between the head office and the group’s subsidiaries.
By the end of September 2021, Ping An Bank Co.Ltd(000001) green finance business balance was 93.276 billion yuan, an increase of 145.8% over the end of the previous year; The balance of green credit was 53.14 billion yuan, an increase of 134.3% over the end of the previous year. It is worth mentioning that in 2021, Ping An Bank Co.Ltd(000001) issued 213 million yuan of carbon emission reduction loans to three projects, with a weighted average interest rate of 3.54%, driving an annual carbon emission reduction of about 69500 tons of carbon dioxide equivalent.
