Measures for the Administration of Green Finance in Banking and Insurance Industry

Guide to Green Finance for Banking and Insurance Industry

Chapter I General Provisions

Article 1 These Guidelines are formulated in accordance with the Banking Supervision Law of the People's Republic of China, the People's Republic of China (PRC) Commercial Bank Law and the People's Republic of China (PRC) Insurance Law in order to promote the development of green finance in the banking and insurance industries, actively serve all kinds of economic activities with environmental and social benefits, better help the tackling of pollution prevention and control, and promote the peak of carbon dioxide emission and carbon neutrality in an orderly manner.

Article 2 The bank insurance institutions mentioned in these Guidelines include development banks, policy banks, commercial banks, rural cooperative banks, rural credit cooperatives, insurance group (holding) companies, insurance companies, reinsurance companies and insurance asset management companies established in People's Republic of China (PRC) according to law.

The green financial management of other banking financial institutions and insurance institutions shall be implemented with reference to these Guidelines.

Article 3 Banking and insurance industries should comprehensively, accurately and comprehensively implement the new development concept, promote green finance from a strategic perspective, increase support for green, low-carbon and circular economy, guard against environmental, social and governance risks, improve their own environmental, social and governance performance, and promote the overall green transformation of economic and social development.

Article 4 Banking and insurance institutions shall effectively identify, monitor, prevent and control environmental, social and governance risks in business activities, pay special attention to the hazards and risks that customers (financiers) and their main contractors and suppliers may bring to the environment and society due to corporate governance defects and inadequate management in construction, production and business activities, incorporate environmental, social and governance requirements into management processes and comprehensive risk management systems, strengthen information disclosure and communication with stakeholders, and improve the level of risk management. Concerned customers mainly include the following four categories:

(1) bank credit customers;

(2) Customers insured against environmental, social and governance risks;

(three) the financing party of the investment project of the insurance fund entity;

(4) Other customers who should carry out environmental, social and governance risk management according to laws, regulations or contracts.

Article 5 The Bank of China Insurance Regulatory Commission (hereinafter referred to as China Banking and Insurance Regulatory Commission, China) and its dispatched offices shall be responsible for supervising and managing the green financial business activities of the banking and insurance industries according to law.

Chapter II Organization and Management

Article 6 The board of directors or the board of directors of banks and insurance institutions shall bear the main responsibility of green finance, establish and practice green development concepts such as economy, low carbon, environmental protection and sustainable development, attach importance to the role of banks and insurance institutions in promoting the construction of system of ecological civilization and the overall green transformation of economic and social development, and establish a win-win sustainable development model with society.

Article 7 The board of directors or the board of directors of banking and insurance institutions shall be responsible for determining the green financial development strategy, examining and approving the green financial targets set by the senior management and the green financial reports submitted, appointing special committees to be responsible for the green financial work, and supervising and evaluating the implementation of the green financial development strategy of the institutions.

Article 8 The senior management of a bank insurance institution shall, according to the board of directors or the decision of the board of directors, set green financial objectives, establish mechanisms and processes, clarify responsibilities and authorities, carry out internal supervision, inspection, assessment and evaluation, report the development of green finance to the board of directors or the board of directors every year, and submit and disclose relevant information on green finance to the China Banking Regulatory Commission or its dispatched office as required.

Article 9 The headquarters of banking and insurance institutions and provincial, prefectural and municipal branches shall designate a senior manager to take the lead in the work of green finance, establish an inter-departmental leadership and coordination mechanism for green finance as needed, and make overall plans to promote related work.

Banks and insurance institutions should fully authorize the person in charge of green finance and relevant departments, equip them with corresponding resources, and fully reflect the implementation of green finance in performance appraisal.

Article 10 Banks and insurance institutions are encouraged to carry out innovation in the system and mechanism of green finance on the premise of compliance with laws and controllable risks, and improve the quality and efficiency of green financial services and the level of risk management by setting up professional departments of green finance, building characteristic branches and setting up full-time posts.

Chapter III Policy System and Capacity Building

Article 11 Banking and insurance institutions shall establish and constantly improve policies, systems and processes for environmental, social and governance risk management in accordance with the national green and low-carbon development goals and plans, relevant environmental laws and regulations, industrial policies and industry access policies, define the support direction and key areas of green finance, formulate credit guidelines for restricted categories under state supervision and industries with major risks, implement differentiated and dynamic credit or investment policies, and implement risk exposure management systems.

Article 12 Banking and insurance institutions shall promote the peak of carbon dioxide emission and carbon neutrality in an orderly manner with the guidance of helping pollution prevention and control. Insist on striving for progress while maintaining stability, adjust and improve credit policies and investment policies, actively support the construction of clean and low-carbon energy systems, support energy conservation, pollution reduction, green disaster prevention in key industries and fields, implement cleaner production, promote the popularization and application of green and low-carbon technologies, implement carbon emission and carbon intensity policies, make overall plans first, maintain pressure, and implement classified policies to prevent "one size fits all" and exercise-style carbon reduction. Resolutely curb the blind development of projects with high energy consumption, high emission and low level, strengthen the risk identification, assessment and management of high-carbon assets, and gradually and orderly reduce the carbon intensity of asset portfolios while ensuring energy security and industrial chain supply chain security, and finally realize the carbon neutrality of asset portfolios.

Article 13 An insurance institution shall, in accordance with relevant laws and regulations and in combination with its own business scope, actively carry out insurance guarantee business and service innovation in the fields of environmental protection, climate change, green industry and science and technology, develop relevant risk management methods, technologies and tools, provide risk management and services for producers and operators in related fields, promote insurance customers to raise their awareness of environmental, social and governance risk management, and carry out accident prevention and potential risk investigation in accordance with the contract.

Article 14 Banking and insurance institutions shall formulate standards for assessing the risks of customers' environment, society and governance, and conduct classified management and dynamic assessment of customer risks. Banking institutions should take the risk assessment results as an important basis for customer rating, credit access, management and withdrawal, and take differentiated risk management measures in terms of loan "three checks", loan pricing and economic capital allocation. Insurance institutions should take the risk assessment results as an important basis for underwriting management and investment decision-making, and implement differential rates according to the risk status of customers.

Bank insurance institutions should implement list management for customers with significant environmental, social and governance risks, actively exercise their legitimate rights as creditors or shareholders, and require them to take risk mitigation measures, including formulating and implementing major risk response plans, unblocking the appeal channels of stakeholders, establishing adequate, timely and effective communication mechanisms, and seeking third-party verification or risk sharing.

Fifteenth banking and insurance institutions should establish a working mechanism conducive to green financial innovation, and promote the innovation of green financial processes, products and services on the premise of legal compliance, effective risk control and sustainable business.

Article 16 Banking and insurance institutions should pay attention to their own environmental, social and governance performance, establish relevant systems, strengthen publicity and education on the concept of green finance, standardize business behavior, implement green office, green operation, green procurement, green travel and CD-ROM action, actively develop financial technology, improve the level of informatization, intensive management and service, gradually and orderly reduce the carbon footprint, and finally achieve carbon neutrality in business.

Article 17 Banks and insurance institutions should strengthen the capacity building of green finance, establish and improve relevant business standards and statistical systems, strengthen the management of green financial data, improve relevant management systems, strengthen green financial training, and cultivate and introduce relevant professionals. When necessary, we can use a qualified independent third party to review environmental, social and governance risks, or obtain relevant professional services through other effective means.

Chapter IV Investment and Financing Process Management

Article 18 Banks and insurance institutions shall strengthen due diligence on credit granting and investment, and make clear the main points of due diligence on environmental, social and governance risks according to the characteristics of customers and industries and regions where the project is located, so as to ensure that the investigation is comprehensive, in-depth and meticulous. When necessary, you can seek the support of qualified independent third parties and relevant competent departments.

Article 19 Banking and insurance institutions shall conduct strict compliance review on the customers to be granted credit and the projects to be invested, formulate a list of compliance documents and a list of compliance risks such as environment, society and governance according to the characteristics of customers in different industries, and review the compliance, effectiveness and completeness of documents and related procedures submitted by customers, so as to ensure that customers pay enough attention to relevant risk points and effectively control them dynamically to meet substantive compliance requirements.

Article 20 Banking and insurance institutions should strengthen the management of credit and investment approval, and determine reasonable credit and investment authority and approval procedures according to the nature and severity of environmental, social and governance risks faced by customers. Credit and investment should be strictly restricted for customers who have serious violations of laws and regulations and major risks in environment, society and governance.

Article 21 Banking and insurance institutions shall urge customers to strengthen environmental, social and governance risk management by improving contract terms. For credit customers and investment projects involving significant environmental, social and governance risks, customers should be required to submit environmental, social and governance risk reports in the contract text or annexes, and make statements and commitment clauses for customers to strengthen environmental, social and governance risk management, as well as relief clauses for customers who default in environmental, social and governance risk management.

Twenty-second bank insurance institutions should strengthen the management of credit and investment funds, and take the management of customer environment, society and governance risks as an important basis for the allocation of credit and investment funds. Reasonably set up environmental, social and governance risk assessment checkpoints in the design, preparation, construction, completion, operation and shutdown of credit and investment projects. If there are major risks, the disbursement of funds can be suspended or even terminated according to the contract.

Twenty-third bank insurance institutions should strengthen post-loan and post-investment management, and formulate and implement targeted management measures for customers with potential major environmental, social and governance risks. Pay close attention to the impact of domestic and foreign laws, policies, technologies and market changes on customers' operating conditions and industry development, strengthen dynamic analysis, carry out scenario analysis and stress testing, and adjust asset risk classification and accrual in a timely manner. Establish and improve the internal reporting system and accountability system for major environmental, social and governance risks of customers. When a customer has a major environmental, social and governance risk event, it should urge the customer to take relevant risk disposal measures in time and report the possible impact of the event in time.

Article 24 Banking and insurance institutions should actively use big data, blockchain, artificial intelligence and other scientific and technological means to improve the management level of green finance, constantly improve business processes such as product development, business sales, investment and financing management, optimize environmental, social and governance risk management of small and micro enterprises' financing and online financing, and take differentiated and convenient management measures in terms of risk assessment, due diligence, compliance review, credit management and post-investment management in combination with business characteristics.

Article 25 Banking and insurance institutions should actively support the "Belt and Road" green and low-carbon construction, strengthen the environmental, social and governance risk management of overseas projects to be granted credit and invested, and require the project organizers and their main contractors and suppliers to abide by the relevant laws and regulations on ecology, environment, land, health and safety in the country or region where the project is located, and follow relevant international practices or standards to ensure that the project management is substantially consistent with international good practices.

Chapter V Internal Control Management and Information Disclosure

Article 26 Banks and insurance institutions shall incorporate the implementation of green financial policies into the scope of internal control and compliance inspection, and organize the implementation of internal audits on a regular basis. If violations are found in the inspection, the responsibility shall be investigated according to these provisions.

Article 27 Banking and insurance institutions shall establish an effective assessment system and reward and punishment mechanism for green finance, implement incentive and restraint measures, improve the due diligence exemption mechanism, and ensure the sustainable and effective development of green finance.

Twenty-eighth banks and insurance institutions should make public the strategies and policies of green finance and fully disclose the development of green finance. Learn from international practices, standards or good practices to improve the level of information disclosure. For credit or investment involving major environmental, social and governance risks, a complaint response mechanism should be established, and relevant information should be disclosed voluntarily, timely, accurately and completely in accordance with laws, regulations and self-discipline management rules, and be supervised by the market and stakeholders. When necessary, qualified independent third parties can be hired to verify, evaluate or audit the activities of banks and insurance institutions in fulfilling their environmental, social and governance responsibilities.

Chapter VI Supervision and Administration

Article 29 China Banking Regulatory Commission and its dispatched offices shall strengthen coordination and cooperation with relevant competent departments, promote the establishment and improvement of information sharing mechanism, provide convenience for banks and insurance institutions to obtain information on green industry projects, corporate environment, society and governance risks, and remind them of relevant risks.

Article 30 The China Banking Regulatory Commission and its dispatched offices shall strengthen off-site supervision, improve off-site supervision indicators, strengthen monitoring and analysis of the operating environment, society and governance risks of the banking and insurance industries, guide them to timely adjust and improve credit and investment policies, and strengthen risk management.

Article 31 When organizing daily supervision, supervision and inspection, the China Banking Regulatory Commission and its dispatched offices shall fully consider the business environment, social and governance risks of banks and insurance institutions, and clarify the relevant supervision contents and requirements.

Article 32 If a bank insurance institution violates relevant regulatory provisions in the process of developing green financial business, the China Banking Regulatory Commission and its dispatched offices may take regulatory measures according to law and urge the bank insurance institution to rectify.

Article 33 The China Banking Regulatory Commission and its dispatched offices shall strengthen the guidance on the green finance business of banking and insurance institutions, take appropriate measures to evaluate the effectiveness of green finance of banking and insurance institutions on the basis of their self-evaluation, and take the evaluation results as an important reference for the regulatory rating, institutional access, business access and performance appraisal of senior executives of banking and insurance institutions in accordance with relevant laws and regulations.

Article 34 The China Banking Regulatory Commission and its dispatched offices shall guide the self-regulatory organizations of the banking and insurance industries to play an active role, and promote the development of green finance by organizing member units to regularly evaluate the implementation of green finance, carry out education and training on green finance, conduct exchanges and seminars, investigate and study, and recommend professionals.

Chapter VII Supplementary Provisions

Article 35 These Guidelines shall come into force as of the date of promulgation.

Banking and insurance institutions shall establish and improve relevant internal management systems and processes within 1 year from the date of implementation of these guidelines to ensure that green financial management meets regulatory requirements.

Article 36 The China Banking Regulatory Commission shall be responsible for the interpretation of these Guidelines.

China Banking and Insurance Regulatory Commission.

June 2022 1

(This copy will be sent to the Banking Insurance Regulatory Branch and the local corporate bank insurance institution)