PBOC Issues New Assessment Measures for Green Financing by Chinese Banks

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The Chinese central bank has released a new set of assessment measures for green financing undertaken by banking sector financial institutions, amidst a concerted push for growth in the sector from Beijing.

On 8 June the People’s Bank of China (PBOC) issued the “Banking Sector Financial Institution Green Finance Assessment Plan” (银行业金融机构绿色金融评价方案) with green finance assessment work set to commence in July 2021.

According to the Plan the results of green financing assessments will be included in macro-prudential policies and regulatory tools adopted by PBOC, including gradings of financial institutions in China.

The Plan outlines two sets of measures for the assessment of green financing undertaken by banks – qualitative indices and quantitative indices. Qualitative indices will receive a 20% weighting under the Plan, while for quantitative indices the weighting will be 80%.

Quantitative Indices under China’s Green Finance Assessment Plan

IndexAssessment StandardsWeighting
Total share of green finance operations (25%)Vertical: The average share of total green finance operations of banking sector financial institutions over the past three quarters. 10%
Horizontal: The average share of the green finance operations of banking sector financial institutions participating in assessments for the current quarter.15%
Total sub-amount share (25%) Vertical: The average share of the total sub-amount of the green finance operations of banking sector financial institutions over the past three quarters. 10%
Horizontal: The average share of the total sub-amount of the green finance operations of all banking sector financial institutions participating in assessments for the current quarter.15%
Year-on-Year growth in green finance operations (25%)Vertical: Average YoY rate of growth in the green finance operations of banking sector financial institutions over the past three quarters. 10%
Horizontal: Average YoY rate of growth in total green finance operations of all banking sector financial institutions participating in assessments in the current quarter. 15%
Green financing risk share (25%)Vertical: The average share of total green finance risk operations of banking sector financial institutions over the past three quarters.10%
Horizontal: The average share of the green finance risk operations of banking sector financial institutions participating in assessments for the current quarter.15%

Qualitative Indices under China’s Green Finance Assessment Plan

Index ContentsPoints
Implementation of state and local green finance policies30
Formulation and implementation of institutional green finance systems40
Financial support for development of green sectors30

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