© Archyde.com. Changing the direction of bancassurance funds, driving a carbon neutral portfolio, adjusting credit and investment policies This green finance guide is informative!
Financial Associated Press, June 3 (Reporter Wang Hong) The China Banking and Insurance Regulatory Commission recently issued the “Guidelines for Green Finance in the Banking and Insurance Industry” (hereinfollowing referred to as the “Guidelines”), focusing on six requirements to guide the banking and insurance industry to develop green finance. Promote carbon peaking and carbon neutrality in an orderly manner.
Industry experts pointed out that when banking and insurance institutions integrate into the trend of green finance development, they should focus on controlling ESG risks, establish a set of standards, make information public, and allow management mechanisms to be adjusted. In addition, bancassurance institutions should develop green financial products and achieve carbon neutrality in their own operations.
The Guidelines point out that banking and insurance institutions should adjust and improve their credit policies and investment policies, gradually and orderly reduce the carbon intensity of their asset portfolios, and ultimately achieve carbon neutrality in their asset portfolios. Experts said that the “Guidelines” will change the investment direction of bancassurance funds and promote lighter and lower-carbon assets. Considering the difficulty of achieving carbon neutrality, the combination of banking and insurance institutions and the national carbon market, including the allowance market and the CCER market, will be greatly enhanced in the future.
Comprehensively and pragmatically promote the development of green finance by banking and insurance institutions
The China Banking and Insurance Regulatory Commission stated that in order to guide the banking and insurance industry to develop green finance, the “Guidelines” put forward six key requirements for banking and insurance institutions:
Banking and insurance institutions are required to promote green finance from a strategic height, and improve relevant policy systems and process management; clarify that the board of directors or the board of directors assumes the main responsibility of green finance; adjust and improve credit policies and investment policies, gradually and orderly reduce the carbon intensity of asset portfolios, and realize asset management. carbon neutrality of the portfolio; strengthen the management of investment and financing processes, do a good job in credit granting and investment due diligence, and strengthen credit granting and investment approval management; strengthen internal control management and information disclosure, and establish a green finance assessment system.
When talking regarding the significance of the development of green finance by banking and insurance institutions, Li Zhiqing, executive director of the Green Finance Research Center of Fudan University, said in an interview with a reporter from the Financial Associated Press that, first of all, the guidelines for the green financial system issued by the People’s Bank of China in 2016 clearly pointed out that increasing the green finance The support of low-carbon industries and production and consumption patterns guides funds to enter green and low-carbon industries. Bancassurance has gathered a large amount of bank credit funds and insurance funds, so it must play a supporting role in green and low-carbon industries.
Secondly, a large number of high-carbon assets have been accumulated in the assets of bancassurance, but high-carbon assets are not the future development direction of the country. Therefore, bancassurance needs to reallocate assets to better serve the green transformation and development of the real economy. Finally, finance is the blood of the real economy, and banking and insurance institutions are the top priority of my country’s financial market. Therefore, in order to play the supporting role of finance for green development, it is necessary to vigorously implement banking and insurance institutions, systems, tools, and related markets. A green transition in behavior.
Li Zhiqing said that in 2012, the China Banking Regulatory Commission issued green credit guidelines, and the current green finance “guidelines” are more comprehensive, more specific and more pragmatic than before.
Bancassurance development of green finance should focus on controlling ESG risks
How should bancassurance institutions comply with the requirements of the Guidelines? Li Zhiqing believes that the top priority of the transformation of banking and insurance institutions is not to transform for the sake of transformation, but to control risks, especially ESG risks. How to prevent, identify, monitor and manage ESG risks? It is necessary to establish a complete set of standards, to make information public, and to adjust the management mechanism and system. “If we grasp this key point, banks and insurance institutions should be able to integrate into the tide of green finance development.”
The Guidelines also pointed out that banking and insurance institutions are required to promote green finance from a strategic perspective, incorporate environmental, social and governance requirements into their management processes and comprehensive risk management systems, and strengthen environmental, social and governance information disclosure and interaction with stakeholders. Improve relevant policies, systems and process management.
China Life said it has incorporated ESG assessment into its investment decision-making process for alternative investment projects. China Life Asset Management Co., Ltd. continues to build an ESG investment management system. The “Guiding Opinions on Promoting the High-Quality Development of the Banking and Insurance Industry” previously issued by the China Banking and Insurance Regulatory Commission clearly requires banks to integrate ESG management into their overall business management behavior.
Li Zhiqing also believes that banking and insurance institutions should develop green financial products. Especially for insurance institutions, there are two directions for serving green finance, one is the liability side and the other is the asset side, including the investment of a large amount of insurance funds. In addition, banking and insurance institutions must also achieve carbon neutrality in their own operations, influence the concept of low-carbon development through carbon-neutral operations, and lead the development of carbon-neutrality in the financial service industry.
Achieving carbon neutrality in portfolios will change the direction of bancassurance funds
The Guidelines point out that banking and insurance institutions should adjust and improve credit policies and investment policies, actively support the construction of a clean and low-carbon energy system, support key industries and fields in energy conservation, pollution reduction, carbon reduction, greening, and disaster prevention, implement cleaner production, and promote The promotion and application of green and low-carbon technologies, the implementation of carbon emission and carbon intensity policy requirements, the establishment of the first and then the breakthrough, the overall planning, the preservation of pressure, and the classification of policies, to prevent “one size fits all” and campaign-style carbon reduction. While ensuring energy security, industrial chain supply chain security, gradually and orderly reduce the carbon intensity of the asset portfolio, and ultimately achieve carbon neutrality of the asset portfolio.
Li Zhiqing believes that the “Guidelines” clearly proposes to achieve carbon neutrality of the asset portfolio, which will bring great changes to the assets of banking and insurance institutions. One of them is to change the direction of bank credit and insurance capital investment. “In the future, high-carbon industries are obviously not in line with the development direction of carbon neutrality, so they need to be removed from the investment portfolio. In this way, assets will become lighter and more green and low-carbon.”
In terms of insurance, Ping An of China has made a commitment that the annual growth rate of green investment in the future will not be less than 20%, the annual growth rate of green insurance premiums will not be less than 70%, and the annual growth rate of green credit balance will not be less than 20%. By 2025, strive to achieve the overall goal of investment + credit scale of 400 billion yuan and green insurance premiums of 250 billion yuan. In terms of banks, the annual report shows that by the end of 2021, the total green loan balance of the six major state-owned banks will reach 8,677.657 billion yuan. Among them, ICBC’s green credit balance reached 2.48 trillion yuan, the highest among all listed banks.
However, Li Zhiqing reminded that it is not easy to achieve carbon neutrality. For example, if you want to calculate the carbon emissions of various financial products in the market, there may be tool challenges and uncertainty challenges. Therefore, it is necessary to promote the field of carbon finance, and the tools combined with the carbon market can play a better role. In addition, the misunderstanding that needs to be paid attention to is that carbon neutrality is not zero emission, but near zero emission. If there are industries necessary for the national economy such as steel, cement, chemical industry, etc. in the asset portfolio, the asset portfolio can be realized by purchasing carbon sinks, etc. carbon neutral.
“In the end, our country may still have 1.5 to 2 billion tons of carbon emissions that cannot be reduced, and we can only use third-party means, such as carbon markets, carbon technology and other tools to achieve carbon neutrality as much as possible. In the future, banking and insurance institutions and the national carbon market , including the combination of the quota market and the CCER market will be greatly improved.” Li Zhiqing pointed out.