China Guangfa Bank strengthens credit support to contribute to a low-carbon life

The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) proposed that Chinese-style modernization is the modernization of harmonious coexistence between man and nature, and that it is necessary to improve the institutional system of ecological civilization, promote carbon reduction, pollution reduction, green expansion and growth, actively respond to climate change, and accelerate the improvement of the institutional mechanism for the implementation of the concept that lucid waters and lush mountains are invaluable assets. Green finance is not only an important channel for insurance institutions to open up the transformation of "lucid waters and lush mountains" into "gold and silver mountains", but also a powerful starting point for them to give full play to their long-term financial advantages and promote the comprehensive green transformation of economic and social development.

As the main force serving the real economy, Chinese Life has always been mindful of the "great of the country", fully practiced the responsibility of large state-owned financial institutions, continued to improve the green financial management system, and on the basis of formulating the "Chinese Life "14th Five-Year Plan" Green Finance Special Plan, clarifying the main objectives and key tasks of the Group's three major business segments of insurance, investment and banking, giving full play to the role of business functions and comprehensive financial advantages, and strengthening and expanding green financial products and services. According to the information disclosed at the Chinese Life 2024 First Half Work Conference, Chinese Life's green insurance provided nearly 7 trillion yuan of risk protection in the first half of the year, and by the end of the first half of the year, the scale of green investment stock exceeded 500 billion yuan, an increase of 3.4% over the beginning of the year, and the balance of green credit was about 193.3 billion yuan, an increase of more than 25% over the beginning of the year.

Green insurance escorts lucid waters and lush mountains

As an important part of green finance, green insurance should give full play to the role of loss compensation and risk reduction on the liability side to help the comprehensive transformation of the social economy. In April 2024, the State Administration of Financial Supervision and Administration issued the "Guiding Opinions on Promoting the High-quality Development of Green Insurance" (hereinafter referred to as the "Guiding Opinions"), proposing nine key tasks from the liability side to strengthen green insurance protection in key areas. Chinese Life adheres to innovation-driven, constantly explores new ways to support green development, and actively deploys environmental pollution liability insurance, biodiversity conservation insurance, climate insurance, wind and solar insurance, green building insurance and other fields, covering key areas under the "dual carbon" goal.

In terms of serving enterprises in the green industry chain, the life insurance companies under Chinese Life Group have continuously improved the protection of green enterprise customers in recent years, providing a package of life insurance protection solutions such as accident, medical and life insurance for upstream and downstream enterprises in the green industry chain according to customer needs, and the green premium income in the first half of 2024 increased by more than 20% year-on-year.

In terms of promoting the consolidation and improvement of carbon sink capacity, the property insurance company under Chinese Life Group actively provides insurance protection for targets with carbon sequestration roles such as forests, grasslands, wetlands, oceans and soils, and promotes risk management and insurance mechanism innovation in the fields of blue carbon, fisheries and coastal ecology. In recent years, a number of "first order" projects have been implemented, such as the country's first "forestry carbon sequestration insurance+" service project in Longyan, Fujian Province, which provides 8.91 million yuan of carbon sink loss risk protection for the carbon emission trading value of the state-owned forest farm in Longyan Silla District and the state-owned forest farm in Jiulongjiangyuan; In Jinjiang, Fujian Province, the country's first wetland biodiversity conservation insurance was launched, providing risk protection for natural disasters, accidents, and invasion of alien species for major local wetlands and nature reserves. Launched the country's first marine carbon sink index insurance in Weihai, Shandong Province, focusing on the weakening of carbon sinks caused by changes in the specific marine environment; In Fuding, Ningde, Fujian Province, the country's first agricultural carbon sink insurance was launched, providing 3 million yuan of carbon sink loss risk protection for local characteristic agricultural industries. At present, Chinese Life Insurance has achieved full coverage of carbon sequestration insurance in forests, grasslands, oceans and other ecosystems.

The landing of these "first orders" is not only a vivid illustration of the rich supply of green insurance products of Chinese Life, but also promotes the continuous growth of the scale of green insurance of Chinese Life.

In terms of supporting green and low-carbon national actions and helping the green and low-carbon development of transportation, Chinese Life Property Insurance Company focuses on the development of key areas such as new energy vehicles, provides insurance protection for R&D, manufacturing, application and other links, and promotes green and low-carbon travel; Separately formulate a new energy vehicle insurance development strategy in line with the market and the company's actual situation, focus on strengthening the cultivation of development capabilities, promote the formation of a first-mover advantage from point to area, and innovate and develop personal charging pile property loss insurance, and continue to improve the new energy vehicle development service chain.

In terms of improving the level of environmental pollution prevention and control of enterprises, the Guiding Opinions propose to explore the development of insurance business for progressive pollution and ecological environmental damage, and Chinese Life has also taken action in this regard. In 2023, Chinese Life Property Insurance Company and Chengdu Longquanyi District River Chief System Office jointly launched the "Government + Insurance + Risk Management Service" water quality insurance project, providing 10 million yuan of insurance protection for the local Dong'an Lake water quality during the insurance period, and providing services such as water quality risk tracking, early warning and control measures suggestions by hiring a third-party water quality risk management agency. It is the first of its kind in Sichuan to provide water quality insurance, and the new water control model provides a model for the future city's pollution prevention and control work.

The above case is one aspect of Chinese Life's exploration of expanding green insurance coverage and escorting green mountains and green waters. From 2020 to 2023, the cumulative risk protection provided by Chinese the whole group through green insurance has increased from about 5.4 trillion yuan to nearly 12 trillion yuan, with an average annual compound growth rate of more than 30%.

Green investment empowers economic transformation

Insurance funds are one of the important sources of funds for the real economy. In the field of insurance investment, the "Guiding Opinions" proposes to strengthen the support for green investment of insurance funds. Chinese Life gives full play to the natural advantages of the combination of insurance funds and green investment concepts, systematically integrates green investment concepts into the use of insurance funds, deepens the "cohesion" of all types of investment, further enriches and improves the green financial product and service system, focuses on supporting the financing needs of low-carbon, circular and ecological fields, acts as a booster of economic transformation, and implements a number of typical cases with industry influence, and continues to expand the breadth and depth of green investment.

In the field of traditional fixed income investment, Chinese Life has grasped the trend of interest rates and actively allocated green bonds and actively created a series of green bond products. For example, the asset company of Chinese Life Group launched an ESG bond index earlier - "China Bond-China Life Asset ESG Credit Bond Select Index". On this basis, the company further initiated the establishment of special ESG/green investment asset management products such as "China Life Asset Management - Stable Profit ESG Theme Selected Insurance Asset Management Product" and "China Life Asset Management - Stable Green Short and Medium Term Bond Insurance Asset Management Product", so as to guide more social capital to flow to entity projects with excellent environmental protection, low-carbon and social responsibility performance. By the end of the first half of 2024, the total scale of Chinese Life ESG/green themed fixed income asset management products exceeded 10.8 billion yuan.

The continuous innovation and exploration has also won wide recognition for Chinese Life Asset Company, and has won the "China Bond Green Bond Index Excellent Investment Institution" award for seven consecutive years.

In terms of alternative investments, Chinese Life has gradually increased in recent years. Chinese Life Asset Co., Ltd. initiated the establishment of "Chinese Life-Lancang No. 1 Green Equity Investment Plan" and "Chinese Life-Lancang No. 2 Green Equity Investment Plan" (collectively referred to as the "Lancang Project"), and strategically increased its capital to Kunming Yunneng Industry and Finance Co., Ltd. and Kunming Yunneng Industry Co., Ltd., both subsidiaries of Yunnan Energy Investment Group, by a total of 5 billion yuan, becoming the first certified green equity investment plan in the industry and obtaining the highest level (G-1) green certification in China. It is expected to save 21.76 million tons of standard coal and reduce carbon dioxide emissions by about 36.72 million tons per year. China Life Investment Co., Ltd., a subsidiary of the Group, has joined hands with the Social Security Fund and Guangxi Investment Group to invest in the nuclear power projects of Guangxi Investment Group and Guangxi Energy Group in the form of funds to help the development of clean energy, with a total fund size of 10.002 billion yuan, and the "China Life Investment-Baowu Green Carbon Fund Equity Investment Plan" with a total scale of 1 billion yuan focuses on green technology, clean energy, energy conservation and environmental protection, and helps traditional industries to save energy and reduce emissions.

Green credit contributes to a low-carbon life

In addition to comprehensively improving green insurance protection and increasing green investment in insurance funds, Chinese Life is also actively developing green finance businesses such as green credit and green bonds.

China Guangfa Bank, a member of the Group, continued to adjust its credit structure, strictly implemented the "one-vote veto system" for environmental and social risks, provided preferential interest rate subsidies to green credit business, embedded green credit standards into the credit business process, and at the same time clarified the target market positioning, actively intervened in the energy conservation and environmental protection industries supported by national policies, and formed a loan constraint mechanism for industries with high pollution, high energy consumption and overcapacity. In particular, China Guangfa Bank has formulated the "Implementation Plan for China Guangfa Bank to Support Green Finance and Increase Loans in the Field of Carbon Emission Reduction Support Tools", clarifying development responsibilities step by step, building a linkage and coupling organization, responsibility and execution chain, and giving preferential policies to branches in advance of carbon emission reduction projects declared in accordance with the method of "subsidy first and then application", so as to "lend" the economy to move towards "green". In the first half of 2024, China Guangfa Bank's green credit will increase by nearly 39 billion yuan, and the balance of green bill rediscount will increase by nearly 90%, and a number of influential projects will emerge.

For example, in terms of environmental equity pledge loans, the Yangjiang Branch of China Guangfa Bank innovated green financial products, explored a new financing model of "carbon sequestration fishery", pledged the expected carbon sequestration income rights that can be realized by breeding snails as a means of credit enhancement, and introduced financing guarantee companies to provide guarantees, and launched the "marine carbon sequestration expected income settlement account pledge + financing guarantee" business to further revitalize the "green assets" of aquaculture enterprises, and was successfully selected as a 2024 Guangdong green finance reform and innovation case; Hangzhou Branch implemented the Anji Bamboo Industry Transformation and Upgrading Carbon Sequestration Capacity Improvement Project, and innovated the "Bamboo Forest Carbon Sequestration Pledge + Insurance" model. In terms of sustainability-linked loans, China Guangfa Bank Shenzhen Branch participated in the "Green International Syndication Project" of CDB Aviation Financial Leasing Co., Ltd.; Based on the residential photovoltaic application scenarios of rural construction, Meizhou Branch launched the "Rural Photovoltaic Loan" product.

From insurance protection to insurance fund investment, to bank credit and other financial businesses, one project after another, a series of data, is a vivid portrayal of Chinese Life's practice of green finance concept. As a large state-owned financial institution, Chinese Life will continue to take the promotion of green development as its own responsibility, enrich the connotation of "green finance" from multiple angles and in all aspects, fully serve the "dual carbon" goal, play a leading role in the industry, improve the quality and efficiency of serving the real economy, and make lucid waters and lush mountains become "golden mountains and silver mountains" that depict a beautiful picture of common prosperity.