China’s best bank for ESG 2022: Bank of China

Source: Asia Money

Bank of China has long been at the forefront of the mainland’s environmental, social and governance ambitions, and its pivotal role in driving the national agenda has gained steam in recent years.

At the senior level, for instance, BoC has set up a dedicated green finance group led by its chairman, Liu Liange. At the management level, BoC has a green finance committee led by the president, aimed at implementing and executing the firm’s green strategy. The bank also has a professional green finance team, staffed with experts on climate-risk management and sustainability.

These efforts are reflected in some of BoC’s ambitious targets and objectives.

It was China’s first systemically important state-owned bank to put together a five-
year plan for green finance, focused on Liu liange, Bank of China supporting green activities of corporates, small and medium-sized enterprises and individuals. It also has in place a landmark
coal withdrawal policy, committing to make no new financing for new coal mining or coal-fired projects from the fourth quarter of 2021.

By the end of December 2021, BoC’s financing to brown industries was less than 10% of its domestic corporate credit book. Green lending rose 57% in 2021, with BoC being the largest underwriter and most active green-bond issuer among Chinese commercial banks.

The latter point is important, given that BoC has paved the way for China’s, Asia’s, and the world’s ESG debt market development by launching novel and unique products.

Examples are the sale of the world’s first transition bond, the world’s first biodiversity-themed green bond by a financial institution, and the world’s first sustainability re-linked bond. All were landmark trades and all were sold by BoC.

What is exceptional about BoC’s ESG platform is the range of products offered for every group of clients. For retail clients, BoC Hong Kong launched a retail green time deposit in 2021, and its Macau branch unveiled a green facilitation loan with preferential interest rates offered to borrowers.

The bank has investment products including green funds, green wealth management and green equity investment, unleashing private capital to green initiatives.

BoC Leasing, meanwhile, has a green finance leasing product and BoC Insurance has a green insurance product. BoC Wealth Management too has stepped up; by the end of 2021, more than 90% of its funds were allocated to projects with higher ESG ratings.

The bank has also turned its attention to inclusive and social finance for small and micro enterprises. In 2021, inclusive finance loans jumped 53% year on year.