The reporter of Huaxia times learned from ant group that recently, BNP Paribas signed a sustainable development linked loan with ant group, which is the first sustainable development linked loan invested in Chinese science and technology enterprises. On May 16, the wechat official account on the official website of BNP Paribas revealed that the loan will be used to promote the ESG strategy of ant group and the goals related to the carbon neutral route.
The launch of the sustainable development linked loan is a product innovation worthy of attention. There is a lot of room for further improvement of China’s green financial products. For example, the standards of green financial products need to be improved and unified, so as to establish a green financial standard with Chinese characteristics in line with international standards.
sustainable development linked loan
Our reporter learned from insiders of ant group that, different from general loans, sustainability linked loan (SLL) adopts the “linked” mode to link the loan with the sustainable development performance objectives jointly agreed by both parties, set the graded interest rate, and implement the interest rate preference for the loan interest rate when the sustainable development performance objectives are achieved, otherwise increase the loan interest rate, In order to encourage enterprises to actively implement their commitments in sustainable development, so as to better serve the “double carbon” goal.
The performance objectives set by the sustainable development linked loan include: ant group will adhere to green and sustainable development, and promise to achieve carbon neutrality (scope I and II) from 2021 and net zero emission (scope I, II and III) by 2030; The proportion of renewable energy used by ant group shall not be less than the proportion of total energy consumption; Ensure that the group’s public welfare fund investment in biodiversity and ecological protection is not less than the agreed proportion of operating income in the current year.
Moreover, the sustainable development performance objectives are evaluated once a year, all of which are calculated through the carbon matrix of ant group blockchain digital carbon neutralization management platform, and verified by the authorization of the blockchain to the bank.
According to the carbon neutralization roadmap released by ant group in March 2021, scope I and II refer to the group’s own operation emission reduction, and scope III refers to the supply chain emission reduction. In April this year, ant group announced that, according to the evaluation of central United (Beijing) Certification Center Co., Ltd. (CEC), ant group has achieved carbon neutralization (range I and II) of operating emissions in 2021.
For this cooperation, Zhang Fang, head of corporate banking in China of BNP Paribas (China) Co., Ltd., said: “We are very pleased to cooperate with ant group to complete the first sustainable development linked loan in the field of Chinese science and technology enterprises. This cooperation is a successful case of Chinese innovative enterprises and international innovative finance Jointly Implementing Green achievements. We will use rich green financial tools to support more excellent Chinese enterprises to take green development as a breakthrough and enhance their long-term competitive advantage.”
It is worth noting that not long ago, BNP Paribas also signed a five-year Green Club loan agreement with Chuanli Technology (Hangzhou) Co., Ltd., a subsidiary of Alibaba group. According to the agreement, BNP Paribas will act as the lead bank and green coordinator to provide green financing loan services for Alibaba Xixi phase V construction.
In the first quarter of 2022, BNP Paribas has cooperated with a number of Chinese enterprises to complete China’s first sustainable deposit agreement in the field of consumption, the first green bond in the field of auto finance and other green projects.
According to Dealogic, a global financial data provider, BNP Paribas ranks first in the number of sustainable linked loans in the world. Last year, BNP Paribas participated in 215 sustainable linked loans and 48 sustainable linked bonds around the world, including Chanel and Carrefour.
green financial products to be improved
At present, China’s green financial products are mainly green credit and green bonds. The sustainable development linked loan signed by ant group and BNP Paribas is a meaningful product innovation, but on the whole, there is still a lot of room for further improvement of China’s green financial products.
Fang Yi, assistant general manager of Dongfang Jincheng green finance department, told the reporter of Huaxia times that green financial products need to further unify standards and establish green financial standards with Chinese characteristics in line with international standards. On the one hand, we should promote the standards of China’s green bonds and green credit projects to be in line with international standards and in line with the development characteristics of China’s green industry. On the other hand, we should gradually change the current practice of simply dividing green bonds and green credit standards by Industrial Catalogue, and improve the evaluation system of green bonds and green credit.
At the “2022 Summit Forum on sustainable development” hosted by Caijing magazine last December, Zhang Youfang, vice president of BNP Paribas (China) Co., Ltd., also pointed out the importance of green standards in international cooperation: “Taking China EU green cooperation as an example, a unified green standard will greatly promote global green cooperation, including China EU market, and accelerate the pace of international economic transformation. We very much look forward to the launch of the China EU common standard for green finance. This standard will not only promote the opening and circulation of green products between China and Europe, but also provide more space for the interconnection of a wider range of financial products and their underlying infrastructure systems. ”
Fang Yi also pointed out to the reporter of Huaxia times that financial institutions should strengthen the professional capacity-building of green finance and realize the process, standardization and scientization of green financial business management. Improve scientific indicators, methods and tools for green project selection, identification and evaluation; Build ESG risk assessment for investment or credit customers and stress test tools for portfolio environmental risk and climate risk; Strengthen green finance business training for employees and establish a team of green finance professionals.
In terms of risk control, Fang Yixiang believes that green finance should pay attention to the physical risks caused by climate change, transformation risks caused by climate change, joint and several liability and reputation risks, as well as the “green drift” risk.
