Green Bond Issuance by Chinese Banks Set to at Least Double in 2021

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Green bond issuance by Chinese banks has surged since the start of 2021, following the setting of ambitious carbon mitigation targets by Beijing in 2020 and a concerted push for growth in green financing.

As of 6 December 13 Chinese banks had raised 33.45 billion yuan via 17 issues of green bonds in 2021, as compared to total issuance of 16.7 billion yuan in 2020.

Issuers have included 1 big state-owned bank, 7 municipal commercial banks and 5 rural commercial banks. The largest green bond issue by ICBC raised 10 billion yuan in funds.

Since the start of the year the Chinese central bank has unveiled multiple plans to support the development of green finance, as well as guidelines to drive the development of environmental information disclosure systems.

The central bank has also made arrangements for green finance reform and innovation trials, with banks conducting accounting for the environmental impact and emissions reductions of the business and financial activities of enterprises situated within trial zones.

The official push for more green financing has prompted leading banks including Bank of China, China Construction Bank, Industrial Bank Co., and China Merchants Bank to unveil their first emissions reduction project loans.

Data from the China Banking and Insurance Regulatory Commission (CBIRC) indicates that as of the end of the third quarter the green credit balance of 21 major Chinese banks stood at 14.08 trillion yuan, for growth of over 21% compared to the start of the year.

CBIRC data points to the strong quality of green credit assets, with a non-performing loan ratio of less than 0.7% for the past five years, well below the figure for all loans across the same period.

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