Three Chinese Banks Launch Emissions Reductions Products Including World’s Biggest Issue of Carbon Neutrality Bonds

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At least three of China’s banking sector financial institutions have launched carbon neutrality financial products amidst broader efforts to drive the growth of green finance by the Chinese government.

These banks include commercial lender Industrial Bank Co., Ltd.; big state-owned lender Bank of China (BOC) and policy lender China Development Bank (CDB).

On 16 March Industrial Bank’s Nanping branch executed a “Forestry Carbon Sink Pledge Loan and Forward Repurchase Agreement” (林业碳汇质押贷款和远期约定回购协议) with the state-owned forestry farm of Shunchang county in Nanping.

Under the Agreement Industrial Bank will make a 20 million yuan “carbon sink” loan to the forestry farm, in what marks the first use of a forestry carbon sink as loan collateral in Fujian province.

On 18 March BOC served as the main underwriter for the issuance of China’s first carbon neutrality securitised products for State Grid International Leasing Company (国网国际融资租赁有限公司), while on the same date CDB issued China’s first carbon neutrality green bonds to global investors via the Bond Connect initiative to raise up to 20 billion yuan in funds.

The CDB carbon neutrality bonds are the first to be certified in China under the Climate Bonds Initiative, and mark the biggest issue globally of a carbon bond to support achieving peak carbon and carbon neutrality targets.

In 2020 the Chinese government set the goal of achieving peak carbon by 2030 and carbon neutrality by 2060.

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