GREEN CREDIT -2018 Edition – CHINA BANKING ASSOCIATION (592 Page Book) for Banking Professionals

Note: on the cover page it states;
Series Books for Banking Professionals
Technically Supported by International Finance
Corporate, a member of the World Bank Group
Green Credit – 2018 Edition
Edited by:  China Banking Association
Oriental Research Institute of Banking Professionals


Faced with increasing resource constraints, severe environmental pollution and a deteriorating ecosystem, the Central Committee of the Communist Party of China and the State Council highly valued the development of green finance, and successively issued framework documents in recent years, such as the Opinions on Accelerating the Development of Ecological Civilization and the General Plan for the Reform for Promoting Ecological Progress to guide and lead the ecological progress. The said documents clearly put forward the strategy for establishing China’s green finance system for the first time and clarified the due diligence and liability exemption requirements as well as the legal liability of environmental protection of lenders. In 2017, General Secretary Xi Jinping addressed in his report at 19th National Congress of the Communist Party of China that China will develop green finance to promote green development, to speed up reform of the system for developing an ecological civilization, and to build a beautiful China.

In 2016, green finance was incorporated into the Outline of the 13th Five-Year Plan and became a key field to promote during the “13th Five-Year Plan” period. The Twenty-seventh Meeting of the Central Leading Group for Comprehensively Deepening Reforms chaired by General Secretary Xi Jinping pointed out that developing green finance is not only an important approach to achieve green development, but also an important content of the supply-side structural reform. More In 2016, green finance was incorporated into the Outline of the 13th Five-Year Plan and became a key field to promote during the “13th Five-Year Plan” period. The Twenty-seventh Meeting of the Central Leading Group for Comprehensively Deepening Reforms chaired by General Secretary Xi Jinping pointed out that developing green finance is not only an important approach to achieve green development, but also an important content of the supply-side structural reform. More


2. Dam safety policy. The owner of any dam, regardless of capital source or construction stages, is responsible for adopting appropriate measures and providing sufficient resources to guarantee dam safety during the whole service life of the dam. WB is concerned about the safety of new dams it finances and existing dams to which a WB- financed project is directly subordinate. WB stresses the reviews conducted by an independent panel of international experts throughout investigation, design and construction of the dam and the start of operations. Also, if appropriate, WB’s working staff may make use of the policy dialogue with the country borrower to discuss the necessary measures to strengthen the country’s dam safety management mechanism, legislation and regulation framework.

3. Forestry policy. WB’s intervention in the forestry authority aims to reduce forest degradation, increase forest regions’ contribution to environment, promote afforestation, alleviate poverty and encourage


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economic development. To achieve these goals, WB has worked out the following policy: WB does not finance commercial logging or purchase equipment used for cutting virgin tropical rainforest; it takes comprehensive work methods to protect forestry and forest; it establishes loan transaction conditions that governments must promise to stress sustainable management and protection of forestry.

4. Natural habitats policy. The protection of natural habitats plays a significant role in long-term sustainable development. Therefore, the economic survey, project loan and policy dialogue of WB all support protection, preservation and recovery of natural habitats and their functions. WB supports and expects borrowers to take preventive measures in natural resource management, so as to ensure sustainable development of environment.

5. Pest management policy. To assist borrowers in controlling pests that affect agriculture or public health, WB advocates and supports the strategy to: promote and use biological or environmental controlmethods, and reduce dependence on chemosynthetic pesticides. When WB evaluates projects involving pest control, it shall assess regulatory frameworks of the country concerned and institutional capacity to judge whether they can promote and support safe, effective and environment-friendly pest control.

(III) Other Industry Practices

1. Forest/wood certification. Sustainable forest management certification is a tool using market mechanism to facilitate sustainable forest management. It can be simply called forest certification, wood certification or just certification. Forest certification consists of two basic parts, namely forest management (FM) certification and chain-


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of-custody (COC) certification. FM certification is to certify forest management performance as per stipulated and generally accepted procedures and according to a series of formulated principles, standards and indexes; while COC certification is to certify all production links of wood processing enterprises, i.e. the whole chain from log transport, processing, circulation to end consumers. Forest/wood certificate is issued by FSC, who authorizes certification bodies to conduct forestcertification on the basis of such principles and standards.

2. Extractive industries transparency initiative (EITI). In 2002, the World Summit on Sustainable Development (WSSD) launched the Extractive Industries Transparency Initiative (EITI), which pays attention to distribution of resources income and lays emphasis on transparency and accountability of the payment made by mining companies to governments and of governments’ utilization of resources income. EITI aims to guarantee that the country and all people can benefit from natural resources excavation. For this purpose, an index system of sustainable development of resources needs to be established to solve relevant technological, theoretical and educational problems. EITI’s basic framework includes basic principles, basic standards, stakeholders, demonstration and guidance, implementing countries, etc..

3. Hydropower sustainability guidelines and assessment protocol.

The Hydropower Sustainability Guidelines and the Hydropower Sustainability Assessment Protocolwere issued by the International Hydropower Association. The Hydropower Sustainability Guidelineshas brought forward the overall policy after fully considering sustainable development of environment, society and economy of projects, analyzed environmental, social and economical problems that may occur in relation to new energy supply schemesor in operation


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of newly-built and existing hydropower projects, and worked out corresponding reference solutions. The Hydropower Sustainability Assessment Protocol was formulated on the basis of the guideline and consists of three parts: part A is the new energy scheme, which provides overall policy of sustainability and lists key problems needing consideration and assessment requirements based on 20 aspects ofsustainability; part B targets newly-built hydropower schemes; part C targets operation of hydropower equipment and gives corresponding scores to 20 aspects of sustainability based on objective evidence.

II. Domestic Policies Regarding Overseas Business

(I) Guidelines for Environmental Protection in Foreign Investment and Cooperation

In order to encourage Chinese enterprises to perform environmental pro- tection responsibility in the process of “going global” and timely identi- fy and prevent environmental risks, the Ministry of Commerce and the Ministry of Environmental Protection jointly issued the Guidelines for Environmental Protection in Foreign Investment and Cooperation (En- vironmental Protection Guidelines) in February, 2013, which is China’s first special guidelines aimed at enterprises’ environmental protection behaviors in the field of foreign investment and cooperation.

The Environmental Protection Guidelines consists of 22 articles, regu- lating and directing enterprises’ environmental protection behaviors in overseas investment and cooperation from four aspects:

1. Identify environmental and social responsibilities. The Environmental Protection Guidelines advocates that enterprises shall respect religious belief and national customs of the host



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country, guarantee laborers’ legal rights and interests, actively perform environmental protection responsibility, build the concept of environmental protection, carry out mutually beneficial cooperation, and achieve win-win outcomes for itself and environmental protection.

2. Establish environmental management system and pollution prevention. The Environmental Protection Guidelines brings forward instructional comments and suggestions aimed at enterprises’ environmental protection behaviors in the aspects of internal environmental management system construction, environmental protection training for employees, EIA, biodiversity, social impact evaluation, up-to-standard discharge, environment monitoring requirements, environment due diligence, hazardous waste management, environmental accident prevention and emergency, ecological recovery, cleaner production and green procurement. 


4. Study and learn from international experience. The Environmental Protection Guidelines encourages enterprises to correspond with international standards, study and learn from environmental protection principles, standards and practices adopted by international institutions and multilateral financial institutions.


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(II) A Guide on Sustainable Overseas Silviculture by Chinese Enterprises

In order to actively direct Chinese enterprises to help countries and regions confronted with difficulties in forest restoration speed up silvi- culture process and further improve life quality of local people through silviculture, In August, 2007, the State Forestry Administration and the Ministry of Commerce jointly prepared A Guide on Sustainable Over- seas Silviculture by Chinese Enterprises (Silviculture Guide), which is the world’s first management and technical standard specially aimed at overseas silviculture by domestic enterprises.

The Silviculture Guide has absorbed internationally advocated advanced concept of sustainable development, emphasizes and actively encourages overseas Chinese enterprises to adopt “the pattern of sustainable development”, “the pattern of biodiversity protection” and “the pattern of promoting community development” to carry out silviculture activities overseas. It requests that Chinese enterprises consciously observe international convention, formulate scientific and rational sustainable management schemes based on conditions of the host country. Also, it puts forward instructional comments on overseas forest plantation, ecological protection, environmental management, community development and forest resources management by Chinese enterprises.

According to the Silviculture Guide, Chinese enterprises engaged in overseas silviculture shall strictly observe relevant laws and regulations of the host county, protect woodland by operation of laws and rigorously protect forests with high conservation value, and must not convert woodland use illegally; they shall conduct scientific investigation and evaluation of local resources, particularly of local forest resources with high conservation value and specific cultural,



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ecological and religious background, according to long-term planning of forestry development formulated by local governments and forestry authorities, and identify rare, threatened and endangered species and their habitats, soil and water resources that require protection; they shall take into account dominant demands of local economic and social development as well as livelihood of local people, and prepare andimplement scientific, feasible silviculture schemes on this basis; also, they shall determine contents of silviculture in aspects of purpose, measures, overall layout, forest fire protection, pest control, wildlife and habitats conservation, forest product deep processing, forest road infrastructure construction and dynamic monitoring of forest ecosystem, according to local ecological, economic and social conditions.

Section 3 Analysis of Environmental and Social Risks in Key Industries

The influence exerted by different investment areas on environment and society differs greatly. For example, forestry and mining investment poses high-level E&S influence; hydropower investment poses high-lev- el social influence and medium-level natural influence; infrastructure construction poses relatively high-level environmental influence and rel- atively low-level social influence. This section is going to introduce the mining and power industries that attract concentrated overseas invest-ment by Chinese enterprises and pose relatively high E&S influence.


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I. Analysis of Environmental and Social risks in Mining In- dustry and Countermeasures

(I) Analysis of Environmental and Social Risks in Mining Industry

1. Environmental risk analysis.

(1) Risk overview. The environmental risk of overseas mining investment refers to various environmental problems involved in the process of overseas investment made by mining enterprises, mainly including administrative penalties, decline in reputation or economic loss mining enterprises suffer due to their failure to observe relevant environmental protection policies, law and regulations of the host country. The environmental risk mainly consists of environmental damage risk, environmental protection law risk, and cost of environmental conservation.

(2) Environmental damage risk of the host country. 

The overseas mining investment is often located in ecologically vulnerable countries and regions, and serious damage may be caused to local ecological environment during the project operation. For example, mining investment would consume a huge amount of water resources, and in the meantime potential water resource pollution may occur at the exploration and exploitation stages because many factors including direct impact (immigration) may influence water quality; a large amount of waste may be produced during the mining operation and it would lead to potential harm to surrounding environment and residents’ health if the mining company concerned fails to dispose of such waste properly, and the company may even be punished by government and sued by local residents; mining investment needs to use a large amount of land resources, which would impair local



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ecological diversity; a lot of dust, exhaust air and noise are produced during mining operation, which would harm the health of nearby residents; finally, mining operation needs to consume a great amount of energy, which would not only emit more air pollutants and exert negative impact on the environment, but also aggravate global energy shortage and do exert negative impact on sustainable development. The environmental damage risk of enterprises will finally turn into the risk of credit assets loss of financial institutions.

(3) Environmental protection law risk. 

Currently, environmental protection issue has aroused common concern of the whole world, and each country has formulated strict policies and regulations regarding environmental protection. China’s overseas mining investment is mainly concentrated in developing countries in Africa and in LatinAmerica and developed countries represented by Australia, USA and Canada, and relevant environmental protection laws and regulations of different host counties vary significantly. For example, the environmental protection laws and regulations of Australia are of strong operability. The country’s legal measures and systems regarding licence system, EIA and self-monitoring by polluting enterprises attach importance to prior control. Governments request that prospectors not only consider how mining would influence surrounding flora, fauna and habitation before exploitation, but also work out treatment plans to be implemented after exploitation starts, including plans of abandoned mine filed restoration. Also, prospectors need to pay the cost of abandoned mine restoration before exploitation starts. Due to the fact that domestic enterprises often have weak environmental protection awareness and mining industry involves a wide range of environmental protection fields, if investing enterprises violate relevant environmental protection policies and regulations of the host country, they would


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suffer economic and administrative sanctions placed by governments of the host country, and if serious, they even would suffer the risks of penalty, access cancellation and mandatory exit by governments of the host country. Therefore, financial institutions need to focus on investigation of legal awareness of environmental protection and legal adviser team building of “going-global” enterprises.

(4) Environmental protection cost. It has become a global trend to constantly strengthen environmental protection. Yet the resulting high- er environmental protection threshold and higher cost have made some of China’s overseas mining investment project unable to shoulder the burden. Accordingly, financial institutions shall make adequate estima- tion of environmental protection cost when calculating financial data of enterprises. For example, in terms of CITIC Group’s magnetite project in Western Australia, in order to protect ecology in Australia, steel pipe piles were used throughout the whole process of constructing a two-hole bridge. Accordingly, the bridge, whose domestic cost of construction is only RMB5 million, finally has cost over 50 million Australian dollars,tens times higher than the domestic cost of construction. What’s more, it needs to take about two years to complete environmental protection re- view and approval for mining investment projects in Western Australia.a Such high time cost and economic cost increase risks and uncertainties of overseas mining investment projects.

2. Social risk analysis.
(1) Risk overview. The social risk of overseas mining investment

a Refer to the Brief Analysis of Social Risks Confronting “Going-abroad” Chinese Mining Enterprisesat, 2010- 08-05.



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refers to negative impacts on production, operation and reputation of enterprises caused by their failure to take on necessary social responsibilities in the host country during the process of mining enterprises’ overseas investment. The social risk mainly include differences in social customs, issues of work safety, labor and migrant, sanitation and health, residents of the host country, sustainable development and differences in laws between China and the host country. As social risks, facing overseas investment are complicated and involve several risk factors, when financial institutions cooperate with enterprises investing overseas, they shall pay special attention to social risk information collection capacity and relevant preventive measures deployment capacity of such enterprises.

(2) Issue of differences in social customs. The issue of differences in social costoms refer to all sorts of obstacles arising in the process of investment caused by big differences in culture, society, custom, religion and value between the investor’s home country and the host country. In fact, as a number of host counties are involved in overseas investment by Chinese mining enterprises, the cultural differences between the investor’s home country and the host country often contribute to misunderstanding of the project and investing enterprises by residents of the host country. Particularly in terms of the mine development project which concerns multiple problems of environmental protection, social migration, energy strategy safety, etc., inadequate work of communication and public relation during the project implementation may lead to huge social risks. Besides, China’s overseas mining investment projects are mainly distributed in developing countries where basic education, national quality and labor union organization differ greatly from China, so it is necessary for financial institutions to intervene beforehand so as to reasonably



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evaluate the social risk.

(3) Issue of work safety. The relatively large total number of mining accidents, and occasional occurrence of major accidents and extra serious accidents determine the importance of word safety. Besides, due to the fact that production safety accidents arouse very high level of attention in the host country, once an accident occurs, investing enterprises would suffer enormous economic loss and reputation loss. As a result, financial institutions shall investigate whether enterprises have established perfect work safety management system to keep an eye on possible safety risk that may arise in the whole process of production. The work safety of mining enterprises mainly includes work site safety, use safety of dangerous substance and blasting, electric safety, ionizing radiation protection, work intensity control, etc.

(4) Issue of laborer and migrant. The strong labor union organizations and labor protection policies with clear tendency of the host country for some of overseas investment make it hard for Chinese overseas mining investment projects to move forward. To take Shougang Hierro Peru SAA subordinate to Shougang Group as an example, over simply one year from 2005 to 2006, the company has encountered three large scale strikes and thus suffered an economic loss of several million dollars. The company had to promise a pay rise each time to meet the requirements of workers for ending the strike.a Confronted with such labor risk, some Chinese enterprises want to export sufficient and relatively cheaper domestic labor force to investment destination.

a Refer to Yang Guisheng, Investment Risks and Countermeasures of Overseas Mining Investment, 45, 2013-2-5.



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However, most of host countries have policies to protect employment of local labor, creating obstacles to labor export and migration. To take CITIC Group’s magnetite project located in Western Australia as an example, as the Chinese investor couldn’t afford the very high wage standard for local miners, it has attempted to export domestic labor force to Western Australia. Even after the Chinese enterprise and government lobbied local government, only several hundred visas were obtained, and the Australian government requested all workers employed pass all-English quality certification as an auxiliary condition, which was nearly impossible for all laborers to be exported.

(5) Issue of sanitation and health. Developing countries usually have undeveloped infrastructure and social healthcare system. When Chinese mining enterprises invest in developing countries, mining areas may be trapped in serious sanitation and health problems. For example, miners are confronted with huge health risk, as dust at mining areas would lead to serious occupational diseases like silicosis and black lung disease; besides, the abandoned tailings and dumping would cause local air pollution, and a large amount of dust, exhaust air and solid waste would pose tremendous threats to the health of nearby residents. For this reason, financial institutions must take into consideration sanitation and health problems caused by enterprises investing overseas to residents and laborers of the host country. Otherwise, they may suffer sanctions and protests by governments and residents of the host country and international organizations. In the meantime, health problems of miners may lead to strikes and unfavorable operation of projects.

(6) Issue of residents of the host country. The most direct impact of mining investment on society of the host country is the change of local residents’ lifestyle. A large number of local residents have



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to change residence due to the constant expansion of mining areas. Meanwhile, due to the fact that mining investment has created a host of job opportunities and attracted a lot of migrant workers moving to the project location, local residents are forced to change traditional lifestyle. Besides, these migrants would pose great impacts on local agriculture and social security system. As residents of the host country have had higher right-protection awareness, the tension between Chinese investors and residents of the host country is getting greater. For example, the “Ring of Fire” used to be one of the few original ecological enviroments in the world is the most attractive destination for exploration investment in Ontario, Canada but the rise of mining investment has brought unprecedented environmental crisis to this area.a Local aborigines say that “mining companies” have turned a blind eye to their benefits, and they are worried that the damaged lakes and swamp cannot be restored. Even local companies of the host country find it difficult to cope with irreconcilable community contradictions, let alone foreign investors. What’s worse, these problems usually mingle with traditional culture and national sentiments, which makes them even harder to solve. Such risks may exist in populated areas and protected areas of the Inuit in Canada, aboriginal Australians, Indians in USA and Canada, Maoris in New Zealand and Lapps in Finland. Thus, it is necessary for financial institutions to have a clear understanding of local community residents’ view on credit projects so as to keep risks under control.

(7) Issue of sustainable development. (As) a resources-intensive

a Refer to the Brief Analysis of Social Risks Confronting “Going-abroad” Chinese Mining Enterprisesat, 2010- 08-05.



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industry, the survival and development of mining industry depend on resources, environmental and social sustainable development. If enterprises are short of sustainable development awareness, the whole industry may encounter serious development crisis and public trust crisis. The sustainable development of the mining industry consists of multiple parts including economic sustainable development, resources sustainable development, environmental sustainable development and social sustainable development. Damages to the sustainable development of any part would do harm to the overall development of the industry. Financial institutions need to evaluate whether domestic mining enterprises stress economic sustainable only development and ignore the sustainability of other parts, whether the resources input to maintain environmental and social sustainable development in theprocess of overseas investment is sufficient, whether plans are made to cope with sustainable development crisis and whether the issue of sustainable development has been paid enough attention to.

(8) Issue of differences in laws between China and the host country.Differences in legal systems include differences in legal policies regarding mineral resources, foreign investment, tax, labor, environmental protection and export exchange as well as differences in policy continuity, legal stability and government review and approval. Such differences in policies and laws are of decisive significance on success or failure of investment projects.

To take foreign investment policy as an example, according to Canada’s Non-Resident Ownership Policy in uranium mining sector, once uranium mine enters into production stage, non-Canadian residents cannot hold more than 49% of shares of the uranium mine. Failure to understand relevant laws and regulations of the host country



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beforehand may contribute to increase of project cost and even risk of project failure. Meanwhile, due to the long investment cycle of mining projects, legal stability and policy continuity are among the most concerned problems of investors. Some investors even think policy continuity is more important than preferential policy. For example, Australia proposes to raise tax by 40% on non-renewable resources. Once the policy is issued, profits of the existing mining investment projects of Chinese enterprises in Australia will be greatly influenced. Some projects that are supposed to be profitable according to financial calculation may even encounter huge loss. In terms of procedures for government review and approval, it may take about two years to complete environmental protection review and approval for mining investment projects in Western Australia. The above example shows the significant impact of legal policy risk of the host country on mining projects.

(II) Preventive Countermeasures for Environmental and social Risks of the Mining Industry

1. Preventive countermeasures for environmental risk.

(1) Actively adopt environmental risk management measures. Given environmental damages mining industry may cause to the host country, financial institutions request mining industries to take specificmanagement measures when investing abroad to lower the possibility of environmental risk. Measures can be taken in the following aspects: establish water balance in the mining area, increase treatment,recycling and re-use of production water and reduce water resources consumption; enhance sewage treatment capacity and reduce pollution to water around the mining area; conduct plan, design and operation on landfills, trailings sewage basin and filling equipment, and carry out



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proper evaluation and management of geotechnical engineering risks and environmental impacts throughout the mining cycle; implement biodiversity-offset projects or take other mitigation measures; install exhaust air treatment device and reduce emission of dust from tailings equipment, landfills, tailings dump and other dry surfaces of exposed areas as much as possible; enclose and cover the mining area, install natural barriers next to equipment, and install appropriate acoustic barriers or noise containment in addition to conducting enclosure and placing acoustic screens in or next to noise source equipment (such as crushing machine, lapping machine and filter net); mining enterprises in cooperation with financial institutions shall attach importance to energy efficiency improvement, and use renewable energy and clean energy as much as possible.

In the meantime, financial institutions shall request enterprises to establish environmental protection index monitoring system to ensure the environmental impacts exerted by mining investment on the host country do not exceed limits stipulated by the host country, so as to prevent potential environmental risks beforehand.

(2) Strictly observe environmental protection policies, laws and regulations of the host country. Financial institutions must investigate whether enterprises investing overseas can strictly observe laws, regulations and policies regarding environmental protection issued by the host government and relevant international organizations, so as to guarantee such enterprises’ compliance management. For example, Australia, one of the major host countries of overseas mining investment, has issued the Mining Law, the Aboriginal Land Rights Law, the Environmental Protection Law, etc., and various countries have issued specific pollutant discharge or emission limits



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to govern the mining industry. In addition, the Environmental, Health, and Safety Guidelines for Mining Industry, prepared by IFC and other international organizations can also function as environmental protection guidelines for oversea investment of China’s mining enterprises. China’s mining enterprises shall know and observe the above-listed environmental protection laws, regulations and international standards when investing abroad.

(3) Increase environmental protection awareness of enterprises investing abroad. When cooperating with enterprises investing abroad, financial institutions shall investigate whether enterprises have sufficient capacity to communicate with government environmental protection departments and social and environmental protection organizations of the host country, whether transnational corporations have advanced experience in protecting and managing overseas investment environment and whether they can be timely informed of the latest development in environmental protection field of the host country. In the meantime, financial institutions shall know whether environmental protection training mechanism has been established for internal employees, whether employees have environmental protection awareness and knowledge base, and whether they can strictly observe policies, laws and regulations regarding environmental protection of the host country, for the purpose of lowering the risk of environmental protection violations.

2. Preventive countermeasures for social risks.

(1) Actively communicate with the host government. First, financial institutions shall pay attention to whether enterprises are capable of communicating with the departments of the host government and whether diplomatic influence of Chinese government can be used to solve problems arising in communication with the host government.



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However, enterprises shall not solely rely on home government to cope with social risks. Instead, they shall actively enhance contact with social organizations of the host country, and consolidate local mass base, improve enterprise images and influences residents of the host country by virtue of the influence of local social organizations. Besides, financial institutions shall pay attention to whether enterprises are active to help improve the living conditions of the residents of the host country, and whether they can disseminate social value of enterprises and investment projects, lift the degree of social cognition of enterprises, reduce frictions with local residents and achieve mutually beneficial outcome.

(2) Understand social culture of the host country. In order to avoid credit risk caused by cultural differences, investing enterprises need to be able to build a clear understanding of concrete differences in culture between the home country and the host country and make corresponding adjustments to strategies and behaviors of enterprises. For this reason, enterprises shall first of all comprehensively learn and investigate relevant aspects of cultural constitution of the host country, find out differences from culture of the home country, and analyze realistic and potential influence that may be produced by such differences. Besides, they shall organize cultural training of the host country for internal employees, such as training of language, communication skills, cultural adaptation and self-consciousness of culture, so as to help employees to form the thinking and mind of internationalized business operation, enable them to be capable of cross-cultural communication, increase cross-cultural coordination awareness and reduce problems caused by cultural differences.

(3) Enhance mine work safety management. Governments of various


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countries and relevant international organizations have attached great importance to the work safety issue in the mining industry. Mining enterprises investing abroad shall take the following measures to effectively cope with work safety risk: first, strictly observe production safety laws, regulations and standard systems governing the mining industry in the host country; second, strengthen enterprises’ awareness of work safety and establish an internal work safety management system; third, promote the advance of safety production technologies of enterprises; fourth, improve miners’ production safety quality through training and education; fifth, improve mine safety emergency rescue system.

(4) Guarantee the health of residents of the host country. In terms of sanitation and health risks facing the mining industry, financial institutions shall investigate whether enterprises can observe relevant laws and supervision of the host government, so as to fully guarantee health rights and interests of the miners and residents living near the mining area. In the meantime, investors shall intensify training of occupational hazard identification and prevention for employees to lower the possibility of occupational damages to laborers. Finally, investors shall actively take effective measures to reduce impacts of harmful substance on residents living near the mining area.

(5) Observe laws and regulations of the host country. The most important thing during financial institutions’ cooperation with enterprises investing abroad is to make sure enterprises fully understand and strictly observe relevant laws and regulations of the host country, especially laws, regulations and standard practices in fields of work safety, labor security and social responsibility, such as the Social Accountability 8000 International Standard.

(6) Establish social responsibility management system. Due to the fact



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that sustainable development is of particular significance to mining enterprises, before domestic mining enterprises invest abroad, they shall actively draw lessons from advanced experience of internationalmining industry the in field of sustainable development and establish a sound social responsibility management system at internal level. The management system shall include targets and visions, organizational structure and relevant institutional guarantee . In terms of organizational structure, enterprises shall at least set up a social responsibility management committee for strategy making and social responsibility management team for implementation, and they shall guarantee necessary education of social responsibility for employees at the same time. Besides, enterprises can refer to guidance documents such as the ISO26000: Guidance on Social Responsibility and the Guidance on Social Responsibility Reporting for mining enterprises, and prepare and release enterprise social responsibility report annually.

II. Analysis of Environmental and Social Risks in Power Industry and Countermeasures

(I) Analysis of Environmental and Social Risks in Power Industry

Overseas power projects usually require a large sum of start-up capital and relatively long construction cycles. Many stakeholders are involved in such projects, which make management extremely complicated. Also, political, economic and cultural differences of the project location or the host country from the home country often exert big impact on the development of such projects. Overseas power investment projects usually are faced with a variety of internal and external risks, mainly including natural risk, social risk, economic risk, legal risk, material supply risk, design risk, standard risk, period



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risk and contact management risk. For power enterprises, especially projects likely to produce serious E&S impacts locally such as large scale water conservancy projects and thermal power projects, if enterprises don’t fully evaluate risks or take risk prevention measures beforehand, they are more likely to be influenced, thereby leading to failure of projects. The analysis of E&S risks confronting overseaspower projects are as follows:

1. Environmental risk analysis. Environmental risk mainly includes two parts: natural phenomena or natural conditions change risk that may influence economic output and environmental damage risk of projects. Overseas power projects have very high demands for natural environment and geographical conditions of the host country; local government, army and people also make very high requirementstowards the influence of the completed power project on local natural environment.

(1) Natural environment risk. Natural environment risk refers to the risk that factors such as climate, geological conditions and resources status impede project development or lead to failures of on-time con- struction or operation of projects. Overseas power projects usually have very high demands for natural environment of the project loca- tion based on basic characteristics of such projects. For example, only when hydrologic conditions of the project location meet standards can hydropower stations guarantee supply of power.

(2) Environmental damage risk. Environmental damage risk refers to a series of ecology-related risks that may cause damage and pollution to environment during the process of site selection, project construction and operation and further lead to protest by local government and people based on characteristics of power projects.


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Power projects can be divided into electric source projects and power net projects. Herein, thermal power, nuclear power and large-scale hydropower projects may cause ecological damage, environmental pollution, resident migration, etc. Particularly, hydropower projects would interdict water of original riverway after damming, which would greatly change river source relations and ecological environment in the basin. In the meantime, construction of power projects may give rise to different levels of damage to unique and rare geology, landforms and natural sceneries.

2.Social risk analysis. Usually, social risk confronting the power in- dustry consists of culture & custom risk, infrastructure risk and public service risk.

In theory, local market of overseas investment basically relies on the self -regulation of market economy. Yet, power projects are closely related to local communities, which, plus differences in customs and habits of various areas, makes it generally difficult for power enterprises to invest in development projects in the host country and may easily arouse the attention of local media and local people. Such attention often exert major influences on internationalized business development of power enterprises, direct policies of the host country and attitude of the host government, and impede market expansion by Chinese enterprises in the host country. Likewise, good social public opinions and support of local people would facilitate business development of power enterprises in the host country. More importantly, they can improve political and diplomatic relations between the host country and China. Yet negative public opinions would lead to protest by the pubic of the host country impeding the construction or operation of overseas investment projects in local area. For example, in 2011, Burmese government suspended the



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Myitsone Hydropower Station Project on the Irrawaddy River, because the Chinese enterprise began construction blindly without taking into account the demands of local people in the process of construction and operation. Therefore, paying attention to social risk is quite important to smooth the development of projects.

(1) Culture and custom risk. Culture and custom risk refers to the risk formed in the process of communication due to relatively big differences in culture, society, custom, religion and value between the home country of enterprises investing abroad and the host country. In fact, as there are many overseas investment destination countries attracting power enterprises in China and these enterprises are still accumulating experience in investing abroad, differences in culture and customs between China and the host country often would cause misunderstanding of the project and project undertake by people of the host country. Particularly, power construction projects are usually large scale infrastructure construction projects with broad influence and usually would involve issues in aspects of environmental protection, social migration and energy strategy safety, etc. During the project construction, inadequate explanation and resettlement work would lead to huge E&S risks. Overseas power projects of China usually are located in remote and impoverished regions. Given the basic education local people receive, personnel quality and strikes organized by labor union organizations, it is necessary for financial institutions to intervene in advance, rationally evaluate risk and guarantee feasibility of the project plan.

(2) Infrastructure risk. Infrastructure includes public facilities such as roads, railways, airports, communication and utilities. Infrastructure risk mainly refers to the impacts of convenience of infrastructure such



Chapter 9 Overseas Business and Green Credit

as road transport and communication on the project. As construction sites of overseas power projects are often located in remote areas, financial institutions need to evaluate infrastructure of these areas before establishing cooperative relationship with enterprises. For projects which need to mobilize local social force to promote the development of newly built infrastructure, project undertakers also need to consider the possible resulting E&S risks.

(3) Public Service risk. Public service risk refers to the risk caused by healthcare conditions and public security degree of the project location. As overseas power projects are mainly located in remote and impoverished areas where the capacities providing health services are limited and a great amount of manpower and material resources are required to construct power stations, there are several cases where project staff have died because medical treatment is not readily available. Besides, owning to the poor public security management in the project location, personal and property security of project staff cannot be guaranteed, or, due to social unrest, project staff are confronted with open plunder of property, personal injury and kidnap, etc. at any time, which would hinder project construction and operation. Financial institutions need to fully anticipate public service risk facing enterprises and establish pre-loan, mid-loan and post-loan continuous investigation and monitoring mechanism.

(II) Preventive Countermeasures for Environmental and Social Risks of the Power Industry

1. Formulate emergency response plans to prevent social risk. According to social environment and customs of the host country, financial institutions shall ask enterprises to collect relevant materials before construction starts, formulate emergency response plans, stress social environment and customs of the host country,


3. Jointly establish professional financial institutions in power industry through cooperation. To cope with E&S risks confronting overseas power investment projects, financial sectors of developed countries have designed specialized electricity financial derivatives, for the purpose of avoiding such risks by means of combining financial institutions with power enterprises. By contrast, power enterprises of China are less experienced in this regard. In China, power enterprises usually are good at judging development direction of power business and industry and less experienced in financing model and structure. Therefore, enterprises can cooperate with financial institutions to jointly establish the research department of power finance where both parties can give play to their advantages, so as to strengthen the studies of power industries of various countries, improve enterprises’ investment and financing capacities, provide professional information service for them, help them to cope with E&S risks in advance and better support their overseas investment projects. 




5. Enhance cultural exchange. Financial institutions must evaluate power enterprises’ localization capacity and feasibility of corresponding measures and plans. In order to prevent E&S risks, power enterprises must clarify differences in culture between the home country and the host country and their concrete manifestations, so as to make corresponding adjustments to strategies and behaviors of enterprises. First of all, enterprises shall comprehensively learn and investigate relevant aspects regarding cultural constitution of the host country, find out differences from the culture of the home country, and analyze realistic and potential influences that may be caused by such differences. In addition, power enterprises shall strengthen training of cultural difference awareness for employees, including training of language, communication skills, cultural adaptation and self-consciousness of culture, further understand cultural factors that influence people’s behaviors, help employees to form the thinking and mind of internationalized business operation, enable them to be capable of cross-cultural communication, increase exchange and communication between cross-cultural personnel, weaken cultural differences and strive to achieve complete localization.

6. Unite industry association to conduct analysis of E&S risks. Analysis of E&S risks of the host country conducted solely by power enterprises often is inadequate and ineffective with relatively high cost, and research



Chapter 9 Overseas Business and Green Credit

results obtained usually cannot be used for reference and applied. By contrast, industry association is more advantageous than enterprises in conducting analysis. The industry association can integrate information of all aspects through uniting forces of power enterprises of the whole industry and provide help for individual enterprises. The speech right of the industry association enables the association to collaborate with government and enterprises, so as to assist enterprises in raising their voice in the international arena. Besides, the industry association has the advantage of integrating industrial information resources, thanks to which, enterprises can take what they need and supply each other’s needs. To be specific, they can realize overseas project experience sharing, seize the industry’ overall and long-term interests, prevent mistakes caused by one-side decisions of single enterprise andereduce reputation risk of China’s overseas power project.

Link: Nam Ngum 5 Hydropower Station

Nam Ngum 5 Power Co., Ltd. (NN5 Power Company) is a branch the Sinohydro Group Ltd. has set up in Laos, and it is mainly responsible for Nam Ngum 5 Hy- dropower Station — Sinohydro’s investment project in Laos. Nam Ngum 5 Hydro- power Station is Sinohydro’s first BOT hydropower station project in the market of Laos. The hydropower station is located on the Nanting River which is 300 km north of Vientiane, the capital of Laos, with the installed capacity of 120 MW and a total investment of nearly USD200 million.

According to the project’s EIA report, Nam Ngum 5 Hydropower Station will produce certain negative influences on local ecological environment and livelihood of residents living in the reservoir area. The reservoir of the hydropower station will inundate about 50 hectares of farmland and forest at the upper Nanting River, and construction of tunnels in the reservoir area will also impair the growth of aboveground vegetation. 

Below Page 186Chapter 10 Environmental and Social Performance of Banks

The banking financial institutions are committed to shareholders, employees, consumers, business partners, government, communities, and other stakeholders as banks are key players in China’s economic operation system and China’s social organization system.They are required to act in the fundamental interests of the broad masses of the people, meet the needs of the society, serve customers and bring benefits to the society.To enhance social responsibilities is the requirement of social development to the banking financial institutions while to fulfill social responsibilities is the basis for the banking financial institutions to promote the sustainable development of society and build a harmonious society.

The Guidelines requires that the green credit policy of banks enhance the support for a green, low-carbon and recycling economy, prevent environmental and social risks, and raise their environmental and social performance in order to improve the service level. This chapter mainly introduces how banks improve their environmental and social performance and can better carry out green operation and perform their social responsibilities. page 386

Chapter 10 Environmental and Social Performance of Banks 

Section 1 Concept and Culture of Green Operation

I. Main Content of Concept and Culture of Green Operation

Green operation is a collection of concept, culture and values. It is a corporate culture embodied through enterprise strategies and systems and employees’ behavior, and generally consists of three aspects, namely, concept and culture, knowledge, and system. Specifically, concept and culture, the core spirit of green operation, is the most im- portant factor influencing the behavior of employees in a direct and long-term way while knowledge and system are an important support to guide employees to act correctly. The concept and culture of green operation plays a significant role in forming consensus, strengthening cohesion, stimulating innovation and standardizing behavior. By de- voting greater effort to the cultivation and dissemination of the con- cept and culture of green operation, an enterprise culture atmosphere of conservation, environmental protection and sustainable develop- ment can be created so that all employees will consciously implement the green operation into the business management activities.

The core principle of green operation mainly includes:

(I) Principle of Resource Conservation

The operation of banks should reflect the principle of resource conservation in all aspects, which not only reduces the environmental impact and meets the moral requirements, but also saves costs and ensures the healthy development of banks. Banks should form an atmosphere of honor for saving and shame on waste, in which we will build the virtue of thrift and resolutely oppose extravagance and waste



Green Credit

from trifles and from ourselves. In practice, banks should develop the relevant systems and measures, carry out supervision and performance appraisal, and establish a long-term working mechanism under which we will fight waste and practice economy.

(II) People-oriented Principle

People are the ultimate objective of development, and the fundamen- tal driving force for development. Everything is done for people; and everything depends on people. The unification of them constitutes the whole content of the people-oriented principle. Banks should think a lot of customers, shareholders, employees and the public especially by internally creating a good interpersonal environment and working conditions, which allow employees to work and live happily, and then promote the improvement of work efficiency and civilization.

(III) Principle of All-person Participation

Employees at all levels in banks should participate in green operation. Executives and managers at all levels should play a role in promoting, organizing, leading and supervising green operation, formulate and approve the relevant overall plan, policies and guidelines and overall objectives, and employees will carry out the green concept in specif- ic work. All employees should take the initiative to think about and improve green operation, share knowledge and experience, and make suggestions for the sustainable development of enterprises.

(IV) Principle of Simplicity and Practicality

Banks Should streamline business activities. Externally, banks should continuously improve the business efficiency and customer experience,



Chapter 10 Environmental and Social Performance of Banks

and strengthen the popularization of online banking, mobile banking, telephone banking and TV banking; internally, banks should improve the electronic level of business activities, reduce manual operation with low efficiency, and regularly review, optimize and simplify the business process.

II. Promotion by Managers and Participation by All

(I) Managers Promote Green Operation

1. Play a role in introducing the concept and taking the lead in practice.For green operation, the most important thing is that manag- ers at all levels can play a role in actively guiding, leading and promot- ing public opinion and behavior in order to form a sound atmosphere in the enterprise. Thus, the concept and culture of green operation will be more fundamental, lasting, convincing, and effective. Enterprises should strictly avoid a promotion model, namely, doing things in a big way in the short term and slipping back into the old ways afterwards, which may lead to the decline of work efficiency, disorder of enterpris- es and increase in costs. Green operation is to change the customary practice of part of managers and employees, so conflicts are inevitable. It needs to take a long time to provide guidance and exercise an invis- ible and formative influence to form new usual practice and ultimatelyreflect the convenience and advantages of green operation. For ex- ample, many grassroots managers get used to paper signature and on- site meeting, resulting in great waste of resources and time, therefore, senior management needs to take the lead in the implementation of electronic signature and video conferencing to change prevailing hab- its and customs.


Green Credit

2. Determine the objectives and policies, systems and standards.

The board of directors and the council of the banking financial institutions shall be responsible for determining their green credit development strategies, examine and approve the objectives of green credit formulated and the reports on green credit submitted by senior management, and supervise and assess the implementation of their green credit development strategy. Managers should decide the long- term objectives and short-term objectives of green operation according to the needs of business development, and formulate and approve relevant policies, systems and standards accordingly. The objectives and systems of green operation should be workable. The standards for energy consumption, material consumption and expense should be set up according to the business needs and in line with the social advanced level. Specific standards may include business process effectiveness, electronic substitution rate, meeting expenditure standards, institutional energy consumption standards, company vehicles efficiency standards and so on. The green operation system should coordinate the interests of the organization and employees and obtain the real support from the employees. The policy which cannot be recognized by employees will eventually become empty talk.

3. Organization and resource guarantee. The board of directors or senior management should have specifically-assigned persons to be responsible for the guidance on green operation, appoint a department for coordination of green operation, define the specific objectives of green operation for each institution, and allocate the responsibilities of green operation to each institution and employee in order to let ev- eryone to bear his share of responsibility. In addition, the banking in- dustry should provide propaganda resources, training resources and in- centive resources accordingly to promote the sustainable development



Chapter 10 Environmental and Social Performance of Banks

of green operation. The information construction should be done with more efforts and investment as it plays an important role in enhancing the efficiency of banking business.

(II) Green Operation Participated by All

1. Everyone bears his share of responsibility for green operation.

Employees, enterprises, the society and ecological environment have the same fundamental interests in the green operation. The implemen- tation of green operation should be the spontaneous behavior and the internal demand of bank staff. “Every employee has a stake in the suc- cess of the bank”. Enterprises who fail have no successful employees. To carry out green operation is to perform their duties for enterprise development, seek for their career development, and contribute to the sustainable development of the environment and society.

Green operation can be reflected in details and trifles, such as to deal with client business in the best and fastest way, to complete coopera- tion with colleagues in the best and fastest way, to switch off electric appliance after work, to turn off the taps when leaving, and to save of- fice suppliers.

2. Actively make suggestions. Grassroots employees know actual needs of customers and bottlenecks of the business operation best. Grassroots and work site are the engine for innovation. Therefore, banks should strongly encourage employees to make suggestions on the innovation of products and processes, attract grassroots employees to participate in various topics on green operation, and actively adopt and promote reasonable suggestions. A communication channel should be made available to timely and properly deal with problems and con- tradictions put forward by employees.



Green Credit

III. Culture Development of Green Enterprises

(I) Promote the Concept of Green Operation as the Core Value of Enterprises

Banks should reflect the concept and culture of green operation in spe- cific decision-making and operation in the way such as managers serv- ing as an example to others, new employee orientation training, Code of Conduct and experienced employees teaching new employees by their precept and personal examples. By doing so, green operation will finally become the tradition for enterprises, the code of conduct abided by all employees, and the core culture inseparable with enterprises.

(II) Carry out Diversified and Multi-layered Publicity and Training Activities

Managers should constantly emphasize and implement the concept of green operation, reflect the concept of green operation in the doc- uments, systems and manuals, introduce the knowledge about green operation in the internal website, engage experts to give lessons to and answer questions from employees at all levels, publicize and report advanced deeds and excellent innovation, give suggestions on im- provement of summaries of institutions and individuals, enhance the environmental awareness by participating in such activities as “Earth Hour”, organize low-carbon living essay activities, and disclose the results of green operation of banks.

(III) Focus on Publicizing and Reporting Models and Typical Deeds in Green Operation

Models and typical deeds are more infectious and influential to drive more people to stimulate their subjective initiative. Models and typical


Chapter 10 Environmental and Social Performance of Banks

deeds should be close to life and work. As a benchmark, they can guide us to improve things around us and specific practice.However, it should be noted that the models to be overstated may be unreachable and cannot produce the desired results. Systems and incentives may not effective in all respects, but good examples can achieve good results.

IV. Introducing the Concept of Green Operation to Customers

(I) Promote E-banking and Reduce Resources and Time Consumption

Banks should help customers develop the habit of using E-banking by offering them points or favorable prices, actively promoting online banking, mobile banking, telephone banking, television banking and other business processing means to customers, encouraging customers to use electronic bills. By doing so, it saves time for customers as they are not required to go to banks in person and to queue up for business processing, and reduces the consumption of resources such as papers, meanwhile, it helps banks process customers’ business more conve- niently and quickly and know the account information more timely.

For example, the E-banking substitution rate of non-cash business of some bank climbed to 90.7%, equivalent to saving 5,335 tellers and 721 outlets upon measurement. The rate of customers for credit card electronic bills accounted for more than 60%, equivalent to saving 274 million pieces of papers, avoiding cutting down 5000 mature trees, reducing the carbon dioxide emission by 480 tons, protecting 480 (1mu=0.0667 hectares) of forests, and avoiding producing about 100,000 tons of sewage.

(II) Support and Urge Credit-granting Customers to Improve the Environmental Performance

Banks can provide support for customers to save resources, protect


Green Credit

environment, and guide and encourage customers to raise their awareness for social responsibilities and actively act through the credit and other financial instruments. During this process, banks are required to attach importance to the environmental protection training for customers. The contents of training include, but are not limited to specific operation of the environmental impact assessment process, the preparation of green credit documents, etc.. They should advocate independent on-site investigation and review of the environmental impact of financing projects, rather than relying solely on the environmental impact assessment reports and other information provided by customers to make judgments.

For the energy conservation and emission reduction projects and the production capacity integration projects of customers, upon verifica- tion, banks should give priority to the examination and approval and the arrangement of funds, and adopt preferential policies in terms of the distribution of the loan amount and the risk pricing. Furthermore, banks should give full play to the basic role of financial allocation of resources, provide more financial support for environmental protection enterprises, and impose restrictions on polluting enterprises together with related departments to force them to make rectification or exit the market. In the post loan management, if it is found that an existing customer has environmental problems, the bank should actively urge it to make rectification; and if the customers did it deliberately, the banks shall be resolved to withdraw.

(III) Do Well in Matching Green Projects with Technologies and Funds

As a comprehensive economic organization, banks have certain


Chapter 10 Environmental and Social Performance of Banks

information advantages, and in similar enterprises, can introduce and recommend advanced technologies and practices in this industry to customers. Banks should enhance the cooperation with the functional departments for energy conservation and emission reduction and the professional energy management companies, strengthen matching projects with technologies and funds, do well in the promotion and application of the energy conservation and emission reduction technologies and assist enterprises to obtain the policy allowance to achieve a win-win situation.

Section 2 Green Operation Practice of Banks

The concept and culture of green operation should be put into practice, namely, the practice of green operation of banks. By implementing the green transformation, banks should realize the planned green operation step by step. It is the only road leading to the improvement of green competitiveness. Then, the practice of green operation of some banks will be introduced in three aspects, including, green office, green procurement and green buildings.

I. Green Office

1. Energy conservation. Banks should set energy-saving options in the computer power management, appropriately lower the display brightness, shut down computers during the lunch break, and turn offthe display and power of the wiring board at the end of the day; in the daytime, if the natural light is appropriate, it is not recommended to use lighting; and if there is no special circumstance, the airconditioning and lighting in the office area with no workers should


Green Credit

be turned off; based on the local electricity policy, it is suggested to arrange the operation of the air-conditioning and the heating equipment during the shoulder and off-peak time, and appropriate suspension of them during the peak time in summer, the set temperature of the air conditioning in the office should not be less than 26 °C , and the air conditioning should not be turned on when the windows are open; and banks should try to reduce the use of elevators, and encourage staff to take the stairs if the destination is under the fifth floor. Business institutions may timely adjust the lights in the lobby in accordance with the weather and lighting conditions, and the opening and closing time for outdoor light boxes according to the daybreak and dark time of different seasons.

2. Water saving. Banks should cultivate the water saving awareness of employees, stick prominent labels beside taps and drinking fountains in the places of business reminding employees to turn off taps after use and drink water on demand, and conduct effective supervision and management.

3. Reduce the use of paper.Bank employees should make full use of the internal office system and try to trim down official documents, reports for signature and other paper documents; reduce printing anddistributing various internal books, publications and learning materials and replace them with electronic versions; strictly control the use of office paper through centralized management and centralized receipt and use; try to provide and use the paperless fax system; print employees’ business cards with renewable paper; make obvious marks to remind employees of double-sided copying and printing, and minimize the use of napkins, paper towels and so on. Bank employees should use electronic billing instead of paper billing.


Chapter 10 Environmental and Social Performance of Banks

Passing paper documents will consume a lot of resources. For exam- ple, a bank, after replacing the original manual operation with the elec- tronic legal review system, reviewed about 30,000 cases every year. If it takes 15 minutes to pass each reviewed case, such replacement has saved nearly 7,000 working hours in total; and if ten pieces of papers are required for copies of each reviewed case, such replacement has saved nearly 280,000 pieces of papers.

4. Reduce meetings and travels. Banks should make full use of Internet TV and telephone conference system, and vigorously reduce travel and conference costs. The most direct advantage of a network meeting is to save a lot of manpower and money. According to rough statistics, if 150 persons are organized to participate a meeting, it will spend about RMB 50,000 covering venue rental, meeting documents fees, meals fees and other expenses. If the network meeting is held, assuming that an amount of RMB 1,000 is saved from each participant, an amount of RMB 150,000 will be saved from 150 persons, and plus the meeting fees of RMB 50,000, totaling about RMB 200,000 which will be saved for the whole meeting. In addition, in a traditional meeting, souvenirs may be distributed, and even some participants travel at public expense in the name of meeting. Network meeting will let the unhealthy fashion nowhere to hide to a great extent.

5. Reduce the consumption of disposable goods. For all kinds of internal meetings and training, banks may can the distribution of paper, pens, notebooks and other office supplies and give up the use of disposable paper cups, then use the recyclable teacups, and advocate that participants should bring their own cups.

6. For office supplies, banks should use propelling pencils rather than wooden pencils; and use paper clips and staples rather than solvent



Green Credit

products containing benzene such as glue, correcting liquid, etc.; use document envelopes more than once; advocate the use of recycled pa- per, toner cartridge, rechargeable batteries and other recyclable items.

7. There are often sources of pollution in the office, for example inkjet printers will bring in inhalable particles, laser printers will produce ozone, and correction fluid contains carbon monoxide, dichloromethane and other substances which effect the respiratory system, and the nervous system. Long-term contact and inhalation of these substances can do harm to the health of staff in the office. In order to prevent the pollution of office equipment, printers, photocopiers and other office equipment should be placed in well- ventilated areas.

8. All kinds of internal parties, activities and the like shall be consis– tent with the principle of saving and low carbon. Extravagance and waste are strictly forbidden. Banks should try to use environmental protection paper certificates instead of trophies and medals.

9. The Marketing Department should make a scientific planning of annual marketing plan, integrate all kinds of publicity materials, and reasonably determine the number to be printed in order to prevent the phenomenon of a large number of overstocked products.

10. Strengthen the management of official vehicles, improve the effi- ciency of using official vehicles, make reasonable scheduling of offi- cial vehicles and make official vehicles fully loaded as far as possible.

11. Contact with related departments in local areas, realize garbage classification and recycling. Set up waste battery recycling bins for unified recycling and disposal.



Chapter 10 Environmental and Social Performance of Banks 12. 

According to the actual situation, non-front-line staff may wear ca-

sual business attire on Friday.a 

II. Green Procurement

“Green procurement” refers to give priority to the purchase of environmental label products having less negative environmental impacts and to drive the improvement of corporate environmental behaviors for playing a promotion and demonstration role in the green consumption of the society through great purchasing power.

There are mainly six standards for the judgement of green products. Firstly, the green products have disassembling design.The green products can be easily disassembled and conveniently maintained, and the parts of such products can be recycled after the scrap of the green products and can be reused fully and effectively in order to save energy and resources to protect the environment. 

Secondly, green products have quality products, low energy consumption and good environmental behavior.

Thirdly, the production of green products generates no or little waste, makes comprehensive utilization and/ or adopts cleaner production process.

Fourthly, the quality of green products reflects the people-oriented principle and the objective of improving comfort, health protection and environmental protection more than that of common products. 

Fifthly, the wastes of green products are easy to be disposed. Sixthly, the enterprises producing a Super Cool Biz” is originated from Japan. Such activities called that staff in the office may wear business casual attire at work rather than wearing suits in summer. In this way, even if the temperature on the air conditioning is set at 28 °C , staff are still comfortable so as to achieve the effect of energy conservation and emission reduction.



Green Credit

green products pay much attention to the protection of the health and the rights and interests of workers.

Banks are encouraged to take “low carbon, energy saving and environ- mental protection” as a condition for selecting material suppliers, and as an essential condition for inclusion in the terms of the contract in order to guarantee that the requirements for energy conservation and environmental protection are met during the procurement and use of materials. Especially for electronic equipment, decoration materials, office furniture and other office equipment, etc., the use of products with low energy consumption, low carbon emissions and environmen- tal protection performance are promoted.

III. Green Buildings

According to statistics, China’s current building energy consumption accounts for about 1/3 of the total energy consumption in the whole society. The promotion of green buildings is an important way to achieve the objectives of national mandatory energy conservation and emission reduction and the solemn commitment to the international community.

Banks’ building should accord with the requirements for energy sav- ing, land saving, water saving, materials saving, environmental pro- tection and pollution reduction and be subject to the efficient use of resources in order to minimize the impact on the environment. The requirements for environmental protection and energy saving should be included in all aspects of site selection, design and construction in order to build energy saving, high efficient, healthy and comfortable low-carbon projects. Banks are encouraged to have their newly con- structed buildings to participate in the selection of national star-level


green buildings.

Chapter 10 Environmental and Social Performance of Banks

The pre-existing buildings should be renovated for energy saving purpose gradually on the basis of cost control by changing the office lighting to the energy-saving lamps, using water-saving automatic in- duction faucet and actively adopting fresh air heat transfer, cycling use of water, frequency conversion renovation, intelligent lightning control and energy saving technologies.

The idea of green operation shall be implemented in the construction and utilization: if the natural lighting is enough, artificial lighting should be turned of if the temperature can be lowered through natural ven- tilation, the air conditioning is unnecessary; the utilization rate of renewable energy, the utilization rate of unconventional water re- sources, the utilization of recyclable building materials and the like should be improved; the use of buildings should conform to the laws of nature.