Interview with Zhang Youfang, Vice President of the Bank of Paris (China), France: What green financial opportunities of international financial institutions in China

21st Century Business Herald reporter Hu Tianzheng Shenzhen Report

Investors want to know the specific investment opportunities of ESG, but let us expand the attention domain to global green/sustainable economy.

As the largest international bank in the euro zone, the Bank of Paris (BNP Paribas, hereinafter referred to as "Faba") began earlier exploration in the field of green and sustainable finance.

Under the "double carbon" strategy, foreign financial institutions have joined. "Global eyes focus on China, China's green/sustainable financial market has great potential." Zhang Youfang, Vice President of Faba China, said in an exclusive interview with the 21st Century Business Herald that Chinese -funded enterprises have a strong sense of sustainable development and are very willing to try new products , High willingness to cooperate with foreign banks. China's domestic regulatory agencies have also given strong support to this and maintain close communication with foreign banks in order to grasp the development of the international market in a timely manner.

my country's green financial market still has great development potential. In addition to the definition and information disclosure of the common talks, Zhang Youfang believes that domestic green financial products need to further enhance the richness to meet the needs of different enterprises to develop transitions to low -carbon sustainable development. He said that most of the domestic green credit is currently financing in the six major areas recognized by the People's Bank of China, and the use of funds is limited to specific projects. In the international market, financial institutions can meet the transformation and financing needs of this type of customers by providing financing linked to sustainable development indicators.

In addition, there are still a large number of other aspects of transformation funds in the six areas of the above -mentioned frames. This is a gap that needs to be supplemented.

Zhang Youfang said that in the future, while assisting Chinese -funded institutions to expand green and sustainable industry financing business, Faba is also exploring the introduction of more green sustain financial products in the international market, including green risk management tools into the country, such as green hedge tools such as green hedge tools Essence

What are the improvements of green financial products

21st Century: How to evaluate China's current green finance/sustainable financial development and prospects? What role will China play?

Zhang Youfang: After the "double carbon" goal was introduced, China's green finance has accelerated in 2020. Green Credit is the most important part of domestic green financial financing, accounting for nearly 90%. According to the caliber of the People's Bank of China, as of the end of 2021, the scale of green credit in China was about 12 trillion yuan, an increase of about 33%year -on -year. As of the first quarter of 2022, the value was 18 trillion yuan, a significant growth rate; the balance of green bonds was about 1.3 trillion yuan, ranking among the top world.

The rapid development of China's sustainable finance is due to the favorable policy environment in China. The government has a great support for green finance. It takes development of green finance as an important starting point to promote the transformation of China's economy and high -quality development, and give strong policy support. We are confident in the prospects of China's green sustainable financial development.

The characteristics of China's current green finance development also reflect that its green finance (market) potential is huge. Globally, China's carbon emissions intensity has been declining, but it is still the largest carbon emission economy. Due to the sustainable economic development, China's total emissions will still increase in the future.

The sustainable development of China affects the global view and will play a pivotal role for a long time.

21st Century: What are the traits and bottlenecks of China's green finance/sustainable financial development?

Zhang Youfang: China ’s green finance has achieved great achievements in development speed and scale. Next, you need to focus on the quality of“ green finance/sustain finance ”, including: information disclosure and green recognition, green finance Product type and international participation.

First, the identification and information disclosure of green financial transactions need to be improved. China's green credit has now reached 18 trillion yuan, and the scale of green bonds is also nearly 800 billion yuan, ranking among the top in the world. However, compared with the European or international markets, China's standards need to be updated and clarified.

Secondly, green financial products still have considerable room for improvement. At present, China's green finance products are mainly concentrated in green credit. The exploration of ESG sustained financial in the broad sense only stays or focuses on the traditional "E", that is, carbon reduction and environmental protection. Also need to be strengthened. In addition, the development and application of the sustainable development of products is not enough. Most of the green credit is to financing the six major areas prescribed by the People's Bank of China. Essence

The relevant experience in overseas is that financial institutions provide financing and funds to enterprises that meet the requirements of low -carbon transformation, but the borrower promises to reach certain specific sustainable development indicators. Make corresponding adjustments according to the specific performance of the borrower to motivate enterprises to improve their sustainable development level.

Third, the current domestic green finance/sustainable financial market is still relatively closed, and the participation of overseas financial institutions is insufficient, and it is basically monopolized by domestic financial institutions or domestic enterprises. To achieve the global sustainable development goals, it is necessary to participate in various countries and multiple aspects. A green market must be an open market. It attracts more financial institutions with international experience and rich product experience to join.

The potential is also the potential. In the future, if the relevant products are further enriched, the market supervision environment is improved, and the level of promoting the integration with international standards, the potential of China's green/sustainable financial market will be fully released. How to adapt to different green financial supervision environments

21st century: As an international bank, how can Faba adapt to the differentiated green financial supervision environment in different regions?

Zhang Youfang: China attaches great importance to the development of sustainable financial business. We maintain close communication with domestic regulatory agencies and introduce some European practices to China. Domestic regulatory agencies also hope to timely grasp the development of the international market through exchanges with foreign capital, thereby continuously improving relevant domestic regulatory policies.

As a foreign bank, when we carry out business, we must comply with China's regulatory policies, but also meet the relevant requirements of the parent company group. Because sustainable development is the common goal of various economies in the world, in terms of sustainable finance, although there are differences in technical details, the domestic regulatory policies and our travel locations of our travels are not fundamental. Under such a big background, we have a smooth communication with domestic supervision and other institutions.

For example, China and the European Union have always been negotiated on the standards of sustainable financing, in order to promote a common framework. After unremitting efforts, China Europe released the "Common Financial Common Catalog Report-Slow Climate Change" in November 2021, including the economy that China EU Green and Sustainable Financial Catalogs, which has a significant contribution to slowing climate changes in the China EU green and sustainable financial catalogs. The event list has recently updated the common classification directory.

Chinese regulatory agencies also hope that more foreign institutions will participate in green sustainable financial business and give us many guidance and help. We convey information from European and Chinese regulatory agencies on specific issues or specific industries, link communication channels, and share the "green experience and experience" of Faba's "green experience and experience" in Europe or other regions of Europe. The reason for the "insufficient participation of foreign institutions" mentioned in the aforementionedness is not to "supervise", but to need a process of market environment conversion.

21st Century: Faba has previously served as a green financing structure consultant for two banks in China, and has also provided sustainable loans to Chinese banks. Does Faba notice the characteristics of Chinese banks when providing green funds?

Zhang Youfang: In the past few years, Chinese financial institutions have issued green or sustainable bonds overseas. In contact with them, we found that domestic financial institutions, especially banks, have a high grasp of market dynamics and are willing to try new products and have a strong willingness to innovate.

Strong execution is also one of the characteristics of Chinese banks. In terms of transaction execution speed, Chinese banks are different from foreign banks. The latter will evaluate all aspects before making a decision, and it will be slower in time. In contrast, as long as the market has new concepts or new products, Chinese banks will immediately express their willingness to try, and the sense of smell is very keen.

This is a very interesting phenomenon, highlighting the diversified innovation of Chinese banks, and in the case of ensuring financial product compliance, it is determined to quickly carry out business. For example, shortly after the promulgation of China -Europe "Sustainable Finance Classification Catalog (Update Version)", the Bank of China has issued the world's first single "Common Catalog (Update)" item in the international capital market with the assistance of international banks such as Fa Paba. Green bonds have a total of $ 500 million.

21st century: In Faba's contact, what specific obstacles will Chinese companies have when they conduct "green loans" or green financing?

Zhang Youfang: At present, most Chinese companies in China have the requirements of "must be transformed". They understand that the company's green sustainable transformation involves the weighing of "long -term returns" and "short -term costs". It will face a great risk of transformation, causing the business to be compressed or even eliminated.

Statistics show that about 10%of the credit business can be called green, which means that there are still 90%of the business still need to transform. This requires adjustments to the existing regulatory framework, introduce new policies, and develop new products to support the sustainable transformation of the majority of enterprises.

In particular, the problem of "transformation of finance" is particularly mentioned. This involves a large number of companies in traditional industries with heavy carbon footprints, such as steel, cement, chemical industry and other industries. How to provide financing support for their transformation is an urgent issue.

At the specific operation level, most domestic enterprises lack professional talents in the field of sustainable financial, do not understand market dynamics, product development trends, and regulatory policies, and lack practical trading experience. On the other hand, domestic enterprises should establish their own ESG sustainable development framework as soon as possible, collect and sort out relevant basic data, such as carbon emissions, to determine the goals and roadmates of transformation and development. In these respects, banks with rich industry experience can provide assistance.

Integrated innovative products such as green hedge and green repurchase to China

21st Century: How does Faba currently carry out green/sustainable financial business in China? how is the progress?

Zhang Youfang: When carrying out business, I think the most important point is to understand the customer, to analyze the specific situation of each customer, identify the specific needs of different customers in low -carbon and sustainable transformation, and explore its possible transformation The approach involves appropriate green sustainable financial products and implemented it.

According to Faba's experience, large state -owned enterprises generally have a high cognition and grasp of sustainable development, and also have strong transformation needs. In terms of private enterprises, especially head private enterprises in the new economy industry, they are also keen in the transformation of the green market. The communication between us is relatively smooth, and business progress is smooth. In terms of multinational enterprises, Faba is also actively developing business, and its current progress is good. Taking European multinational companies as an example, they can use their parent company to help them carry out sustainable financial business in domestic subsidiaries.

Faba has deeply cultivated China's sustainable financial field in recent years. It is one of the most active foreign banks in this field. The linked financing, the world's first green repurchase with Chinese banks overseas.

In the 21st century: In the future, what sustain financial products or business will Faba will launch in China? Compared with other foreign banks, how does the relative advantage of Faba reflect?

Zhang Youfang: As the largest international banking in the euro zone, Faba regards sustainable development as one of the most important development strategies for the entire group, and vigorously develops green financial services such as green credit and green bonds.

法巴将在多个层面继续在中国开展可持续金融业务：依托集团的资源和产品优势，协助中资企业赴境外发行绿色与可持续债券，或组织银团，‍‍为中资企业筹集资金，以Support its green sustainable business; in the domestic market, Faba will continue to broaden customer coverage and provide customers with various green sustainable financial products, including green financing, green cricket deposit products, green ABS, etc. At the same time, we will continue to foreign abroad. Mature financing products are introduced into the domestic market and innovated in China to meet the needs of the domestic market.

Faba also provides consulting services to Chinese -funded institutions, such as assisting customers to set up a green financing framework. At the same time, considering the opportunity to carry out carbon finance -related businesses, it has actively communicated with relevant Shanghai institutions. Faba also plans to lead overseas innovative products such as green hedge and green repurchase to China.

In addition, Faba will continue to communicate with regulatory agencies, hoping to exert global business advantages, provide suggestions for the improvement of domestic sustainable financial regulatory frameworks, help China more closely in line with international standards and integration, so that more international internationals Participants enter China's potential green financial market.

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