"Enterprise A, paper products manufacturing industry, carbon efficiency level 1, medium green degree, ESG score 65 points. ”
"Company B, furniture manufacturing industry, carbon efficiency level 3, green light green, ESG score 43 points. ”
"If company B wants to get more green financial support, it needs to work carbon reduction performance and ESG performance. ”
This diagnosis, like the "ESG physical examination report", comes from the "Green Finance Big Data Application Platform" of the Zhejiang Branch of the Agricultural Bank of China, which collects data in the fields of corporate governance, environment and society, distinguishes between "brown" (high-emission industries) and "non-brown" industries (other industries), and forms corporate carbon accounts and ESG models. Through the model evaluation, companies not only receive ESG scores, but also are labeled as "red", "yellow", "dark green", "medium green" and "light green" based on low-carbon indicators such as carbon emission intensity per unit of product.
Based on the evaluation content, ABC Zhejiang Branch tracked the low-carbon transformation process of enterprises in different industries in a timely manner, and matched the innovative green finance exclusive products, effectively promoting the bank's credit resources to favor high-quality green enterprises, helping enterprises in low-carbon transformation, and illuminating the way forward for sustainable development.
For example, the "green carbon guarantee" gives enterprises a differentiated guarantee amount according to the labeling of the company's carbon account, and the upper limit of the guarantee amount for enterprises labeled as "dark green" can reach 10 million yuan, and the guarantee amount for "light green" is 5 million yuan.
The "Green Factory Improvement Loan" focuses on the needs of enterprises for star rating of green factories, and can obtain differentiated policy support such as financing interest rate, loan amount, and green approval channel according to the star rating and per mu tax index.
The "Green Intelligent Transformation Loan" aims at the green technological transformation needs of small and micro enterprises, and provides special funds for the transformation of intelligent workshops and green technology investment for enterprises.
The staff of the Huzhou Branch of the Agricultural Bank of China visited the enterprise and applied for green inclusive loans for the enterprise (photo provided by the interviewee)
Originated from Huzhou's "agricultural greenery"
The Agricultural Bank of China is one of the first commercial banks in China to explore green finance business. As early as 2017, the Agricultural Bank of China set up a green finance division in its Zhejiang branch. In 2021, the Party Committee of the Agricultural Bank of China elevated green finance as one of the three major strategies of the bank, deepening and accelerating the practice of green finance. Located in the first batch of green finance reform and innovation pilot zones in China, a series of reform measures such as the green finance franchise system introduced by the Agricultural Bank of China have been piloted in Huzhou Branch, and the pace of innovation is at the forefront of the industry.
Due to the particularity of green projects, it is difficult to obtain environmental data and quantify the effect of emission reduction, which brings challenges to financial institutions to assess the risks and returns of green credit.
Therefore, ABC Huzhou Branch registered the first green finance trademark in the national financial system - "Agricultural Green", and in 2021, it cooperated with the local government and third-party institutions to develop the country's first green finance big data platform. In 2022, ABC will promote the platform to the whole province of Zhejiang. By the end of 2023, the platform has functions such as green credit determination, ESG evaluation, carbon account management, green customer management, and carbon map, and can be used to standardize green loan labeling, calculate green credit emission reduction quotas, and prevent environmental and social risks.
Agricultural Bank of China Zhejiang Branch believes that adding a wider range of ESG indicators such as environmental, social and governance to the development of green finance is not only in response to national requirements, but also needs to improve banks' risk management and business development capabilities. Incorporating ESG elements into risk management frameworks and processes can help banks improve their ability to identify and respond to ESG risks, and at the same time, commercial banks can further develop ESG-linked financial products and expand their green finance product lines by carrying out ESG evaluation and application practices.
On the basis of years of risk control and based on the ESG risk characteristics of credit customers, Chinese commercial banks have gradually explored a set of ESG evaluation methodology, and the accumulation and increase of corporate information disclosure and government data have also laid an objective foundation for ABC to carry out ESG evaluation.
Labeling ESG "portraits" for enterprises
The ESG evaluation model of ABC Zhejiang Branch covers more than 50 non-financial indicators, including 56 indicators for brown industries, 50 indicators for 10 sub-sectors of non-brown industries, and nearly 30 data on corporate environmental penalties, production safety accidents, administrative lawsuits, etc., mainly from authoritative channels such as government websites and third-party databases, and the remaining 20 items are filled in by account managers after on-site investigation.
The evaluation indicators include qualitative indicators such as records of environmental violations and violations, major accidents in production safety, and violations of laws and regulations by shareholders, as well as quantitative indicators such as the number of environmental penalties imposed in the past three years, and the relevant information has been accurate to specific events, amounts and rectifications.
Based on the existing ESG systems at home and abroad, the overall framework is designed in accordance with industry standards for the ESG index system applicable to the Zhejiang Branch of the Agricultural Bank of China, based on the Notice of the Zhejiang Supervision Bureau of the China Banking and Insurance Regulatory Commission on Forwarding the Green Finance Guidelines for the Banking and Insurance Industries issued by the former China Banking and Insurance Regulatory Commission and the Measures for Environmental, Social and Governance Risk Management of Credit Business issued by the Agricultural Bank of China.
ESG evaluation index of Agricultural Bank of China Zhejiang Branch
According to the model, the Zhejiang Branch of the Agricultural Bank of China (ABC) assigns ESG rating "portrait labels" to enterprises, and classifies the ESG performance of enterprises into very poor, poor, fair, acceptable, good, and excellent grades, which are applied to the whole process management of ABC's credit business within the jurisdiction of Zhejiang.
At present, the ESG evaluation tool has covered all corporate customers of ABC Zhejiang Branch, embedded in the whole process of credit business such as due diligence, review and approval, credit management, and duration management, reflecting the latest ESG scoring results, and providing a reference basis for bank credit decision-making and management.
ABC Zhejiang Branch will update the data regularly to ensure timely monitoring of risk information, for example, the evaluation results of environmentally sensitive (Class A) customers will be updated at least once every six months. For customers who have records of violations of laws and regulations in areas such as "environmental protection, production safety, backward production capacity, and occupational disease prevention and control" and have not yet completed rectification, implement a "one-vote veto system" to carry out credit control, and strictly prohibit the use of new credit.
The road to green finance
Although ESG evaluation has been fully integrated into the credit process, due to the limited subject and quality of information disclosure, there are still lag and accuracy problems in ESG evaluation to a certain extent.
ABC Zhejiang Branch hopes that in the future, the government will take the lead in building a unified ESG information platform to realize standardized operations such as filling, reviewing and collecting ESG information of enterprises, which will avoid the error of banks relying on customer managers to manually fill in the information, and achieve 100% online data collection and automatic calculation.
In terms of deepening the bank's green finance practice, ABC Zhejiang Branch believes that, first, it is necessary to continuously improve the accurate identification, quantitative evaluation and whole-process management methods of enterprises and projects that are "green or not", "how green" and "how long", second, it is necessary to cultivate professionals who understand both business and green finance policies at the grassroots level, so that characteristic products and typical practices can be replicated, applied and promoted to the whole bank in a more systematic way, and third, it is necessary to strengthen the construction of application scenarios of ESG evaluation results, and do a good job in supporting the introduction of differentiated resources and policies.
The Zhejiang branch of the Agricultural Bank of China said that in the future, it will strengthen the forward-looking layout in frontier fields such as transition finance, climate investment and financing, and carbon finance, explore financing paths for biodiversity and just transition, increase innovation in green financial products and services, and fully embed ESG evaluation requirements in other financial products.
In terms of specific actions, the first is to fully support Lishui's national climate investment and financing pilot, guide and support Lishui to take the lead in exploring and practicing in the field of climate investment and financing, and fully support Huzhou's transition finance pilot, so as to provide necessary financial support for the low-carbon transformation of traditional high-emission industries and enterprises in a steady and orderly manner.
Second, it will pay attention to new international green trade barriers such as the EU carbon border adjustment mechanism and the new requirements of "dual control of carbon emissions" of service countries, launch "carbon footprint" management tools and corporate carbon account functions, assist enterprises to carry out "carbon inventory", and help account opening enterprises to do a good job of "carbon neutrality".
Third, we will actively support the innovative model of ecological value transformation, promote the financing services of EOD projects (Eco-environment-oriented Development), and promote the integrated development of ecological projects with strong public welfare and related industries with good returns (such as cultural tourism, education, science and technology, etc.), so as to amplify the ecological value.
(Interviewee of this article: Xu Chenzhong, Unit Manager of Green Science and Technology Innovation Department, Corporate Business Department, Agricultural Bank of China Zhejiang Branch)
Southern Weekly researcher Kang Hua
Editor-in-charge: Sun Xiaowen