Institutions

China Development Bank

China Development Bank (CDB) was established in 1994. According to its website, China Development Bank is “a policy financial institution under the direct leadership of the State Council.”10 Its largest shareholder is the Chinese Ministry of Finance, which owns roughly 36.5% of outstanding shares, and its debt is backed by China’s sovereign credit. The China Development Bank invests in infrastructure, basic industries, energy and transport around the world. It provides loans, loan guarantees and a range of other financial tools. Its objectives include promoting economic growth within China and promoting the competitiveness of Chinese entities abroad.

China Development Bank is the world’s largest development finance institution. At the end of 2017, its assets were RMB 15.96 trillion ($2.4 trillion) and loan balance was RMB 11.04 trillion ($1.66 trillion). This is more than the assets and loan balances of the World Bank and Asian Development Bank combined.11

CDB’s website states that “CDB is one of the earliest advocates of green credit practice in China, which aims to support environmental protection and energy conservation through its designated loans and investments.”12 In 2008, CDB began implementing the Equator Principles, a tool to help financial institutions assess the environmental and social risks of projects. CDB has developed the environmental and social risk assessment system for its international projects in accordance with the UN Global Compact principles.

According to CDB’s 2017 Annual Report, CDB made RMB 327 billion (about $49 billion) in green loans in 2017, bringing its total green loans outstanding to RMB 1.642 trillion (about $250 billion). “Green loans” include those for energy-saving projects, clean energy, industrial pollution control, circular economy and urban environmental improvement. CDB calculates that its green loan portfolio helps reduce carbon emission by 132 million tons each year.13

China Development Bank does not have a separate, stand-alone climate change or low-carbon policy.

CDB is one of the largest financiers of coal-fired power plants in the world. In the past decade it has provided more than $30 billion for coal plants abroad.14

China ExIm

The Export-Import Bank of China (China ExIm) was also established in 1994. It operates under the direct leadership of China’s State Council and is solely owned by the Chinese government. Like China Development Bank, China ExIm provides loans, loan guarantees and a range of other financial tools. China ExIm supports projects in infrastructure, medical care, education, agriculture and environmental protection around the world.15

According to China ExIm’s 2016 annual report (the most recent available), China ExIm had RMB 3.33 trillion (roughly US$520 billion) in total assets and RMB 2.38 trillion (roughly $370 billion) in outstanding loans as of December 31, 2016.16

China ExIm highlights its policies to promote clean energy and protect the environment. Its website reports that China ExIm “has vigorously supported projects related to energy conservation and emission reduction, environmental protection and circular economy” and that the bank has “intensified support to projects involving new energies such as wind, solar and biomass power.” It states that these projects “have produced good economic and social returns.”17 China ExIm also states that it applies environmental standards in all lending, describing a three-stage process:

  • “During the loan application review, the compliance and integrity of the project’s environmental impact assessment documents and legality of relevant procedures are carefully examined.”

  • “When loans are being delivered, the energy consumption rate and environmental compliance practice of the borrower are to be kept under scrutiny.”

  • “In the post-lending management stage, stringent...standards are observed and real- time risk warning management is put in place...”18

China ExIm reports that it has carried out exchanges with the World Bank Group, International Financial Corporation and others on environmental assessment.19

China ExIm is one of the largest financiers of coal-fired power plants in the world. In the past decade, it has provided more than $25 billion for coal plants abroad.20

 

Asian Infrastructure Investment Bank (AIIB)

According to its website, the Asian Infrastructure Investment Bank (AIIB) is “a multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond.” China proposed establishment of AIIB in 2013 and waged a successful diplomatic campaign over several years to bring countries on board as members. AIIB started operations in 2016, with a Beijing headquarters. As of March 31, 2018, AIIB had assets of $19.2 billion and outstanding loans of $4.2 billion (for 24 projects). As of July 2018, 87 countries were members.21

The AIIB describes its core values as “Lean, Clean, and Green.” Its Environment Framework calls for environmental and social due diligence on all projects, as well as public disclosure of social and environmental risks. AIIB specifically addresses climate change in its Environment Framework, stating that

The Bank recognizes the challenges presented by climate change and the need to support both mitigation and adaptation measures in a Project facing such challenges. The Bank supports its Clients in their evaluation of both the potential impacts of the Project on climate change and the implications of climate change on the Project. To this end, the Bank plans to prioritize investments promoting greenhouse gas emission neutral and climate resilient infrastructure, including actions for reducing emissions, climate-proofing and promotion of renewable energy.22

AIIB released its Energy Sector Strategy in June 2017. The strategy’s “Principle 3” is “Reduce the carbon intensity of energy supply.” The text states:

  • “The Bank will support clients to reduce the carbon intensity of energy to help them achieve their long-term climate goals provided in the Paris Agreement...”

  • “The Bank will support and accelerate its members’ respective transitions toward a low-carbon energy mix through investments in RE and reduction of carbon emissions from fossil fuels...”

  • “The Bank will support clients to develop intermittent RE—hydropower, wind, solar, and other sources—to reduce fossil fuel consumption and increase access to modern energy through decentralized generation, and mini- and micro-grids...”

  • “The Bank will focus on supporting and accelerating its members’ respective transitions toward a low-carbon energy mix, including lower carbon emissions from fossil fuels... Supported fossil fuel-based generation facilities would be expected to use commercially available least-carbon technology.”

  • “Carbon efficient oil- and coal-fired power plants would be considered if they replace existing less efficient capacity or are essential to the reliability and integrity of the system, or if no viable or affordable alternative exists in specific cases.”23

As of July 2018, AIIB had approved 12 projects in the energy sector, including a coal replacement project in Beijing, a natural gas–fired power plant in Bangladesh, a solar PV feed- in tariffs program in Egypt and hydropower projects in Tajikistan, Myanmar and Pakistan.24

 

New Development Bank (NDB or BRICS Bank)

The New Development Bank was established in 2014 by the five BRICS countries—Brazil, Russian, India, China and South Africa. Its headquarters are in Shanghai. Each member country pledged a capital contribution of $10 billion.25

The purpose of the NDB is “to support infrastructure and sustainable development efforts in BRICS and other underserved, emerging economies for faster development through innovation and cutting-edge technology.” NDB materials say the following:

The 21st century has brought with it tremendous development. However, this progress has been skewed, insufficient and often harmful to our environment. We will collaborate with Initiatives that drive growth and employment while ensuring environmental protection.26

The New Development Bank gives priority to clean energy in its lending. As of July 2018, the NDB had provided 20 loans, seven of which were for renewable energy and energy conservation projects. These seven projects had a cumulative loan amount of $1.4 billion.27

NDB’s Environmental and Social Framework directly addresses climate change, stating the following in the section on “Core Principles”:

NDB seeks to promote mitigation and adaptation measures to address climate change. Recognizing the sustainable nature of green economic growth and the associated benefits, NDB aims to build upon existing green economic growth initiatives and provide support for the new ones at regional, national, sub-national and private sector level. NDB also encourages climate proofing of its infrastructure financing and investments to build resilience to climate change.28

In evaluating potential projects, NDB staff are directed to:

[a]ssess both the potential impacts of the project on climate change as well as the implications of climate change on the project and develop both mitigation or adaptation measures as appropriate. Identify opportunities for no- or low-carbon use, where applicable, and for reducing emissions from the project.29

References

  1. China Development Bank website, http://www.cdb.com.cn/English/gykh_512/khjj/.
  2. China Development Bank Annual Report 2017 at p.6, http://www.cdb.com.cn/English/bgxz/ndbg/ndbg2017/; The World Bank, World Bank Group Annual Report 2016: financial statement at p.5, under “balance sheet”; Asian Development Bank, “ADB at a Glance” (May 2016) at p.2, last table, https://www.adb.org/sites/default/files/ page/41282/adb-glance-may2016.pdf.
  3. CDB NEWS, “Power plant just part of bank’s ‘green credit’ plan” (July 26, 2016), http://www.cdb.com.cn/English/xwzx_715/khdt/201609/t20160906_3628.html.
  4. China Development Bank Annual Report 2017 at pp.6, 14, 47, http://www.cdb.com.cn/English/bgxz/ndbg/ ndbg2017/.
  5. Global Development Policy Center, “China’s Global Energy Finance,” Boston University (accessed July 8, 2018), http://www.bu.edu/cgef/#/intro.
  6. China ExIm Bank, The Export-Import Bank of China Annual Report for 2015 (October 2016) at p.5, http://english. eximbank.gov.cn/tm/en-AR/index_634_29302.html.
  7. China ExIm Bank, The Export-Import Bank of China Annual Report for 2016 at p.3, http://english.eximbank.gov.cn/ upload/accessory/20175/2017531315427099615.pdf.
  8. China ExIm Bank, “Green Finance,“ http://english.eximbank.gov.cn/tm/m-aboutinfo-en/index_731.html.
  9. Ibid.
  10. Ibid.; China ExIm Bank, The Export-Import Bank of China Annual Report For 2015 (October 2016) at p.34, http:// english.eximbank.gov.cn/tm/en-AR/index_634_29302.html.
  11. Global Development Policy Center, “China’s Global Energy Finance,” Boston University (accessed July 8, 2018), http://www.bu.edu/cgef/#/intro.
  12. AIIB website (accessed July 6, 2018), https://www.aiib.org/en/about-aiib/; Daniel Poon, “AIIB: Experiments in scaling-up development finance,” United Nations Conference on Trade and Development (March 2018), http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1704. See also Sara Hsu, “How China’s Asian Infrastructure Investment Bank Fared Its First Year,” Forbes (January 14, 2017), http://www.forbes.com/sites/ sarahsu/2017/01/14/how-chinas-asian-infrastructure-investment-bank-fared-its-first-year/#323684209194.
  13. AIIB ESF, Environmental and Social Framework (February 2016) at p.8, para. 16,https://www.aiib.org/en/policies-strategies/_download/environment-framework/20160226043633542.pdf.
  14. AIIB, Energy Sector Strategy: Sustainable Energy for Asia (June 15, 2017) at pp.12, 15, 17, https://www.aiib.org/en/policies- strategies/strategies/sustainable-energy-asia/.content/index/_download/aiib-energy-sector-Strategy-2017.pdf.
  15. AIIB, “Approved Projects” (accessed July 6, 2018), https://www.aiib.org/en/projects/approved/index.html.
  16. New Development Bank website, http://www.ndb.int/about-us/; Stephany Griffiths-Jones, “Financing Global Development: The BRICS New Development Bank,” German Development Institute (November 2015) at pp.1–3,http://www.stephanygj.net/papers/financing-global-development-brics.pdf.
  17. New Development Bank website, http://www.ndb.int/about-us/essence/mission-values/.
  18. “Projects,” New Development Bank (accessed July 6, 2018), http://www.ndb.int/projects/list-of-all-projects/.
  19. New Development Bank, “New Development Bank Environment and Social Framework” (March 11, 2016) at pp.4–5, http://www.ndb.int/wp-content/uploads/2017/02/ndb-environment-social-framework-20160330.pdf.
  20. Ibid., at p.17.

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