cover image: CLIMATE & DEBATES - Green Credit: A Catalyst for Industrial


CLIMATE & DEBATES - Green Credit: A Catalyst for Industrial

17 Nov 2023

These guidelines enable all market participants to clearly understand the characteristics of a green loan, based on the following four core components: • Use of proceeds (UoP) The fundamental determinant of a green credit (or green loan) is the utilization of the loan proceeds for green projects (including R&D, and other related and supporting expenditures). [...] • Process for Project Evaluation and Selection The GLP oblige the borrower of a green credit to clearly communicate to its lenders the environmental objectives and risks of the green project and the process by which the borrower determines how the project will fit within the aforementioned categories. [...] For the avoidance of doubt, a facility cannot be labeled as green if it includes a green and non-green tranche(s); the green label applies only to the tranche(s) aligned to the four core components of the GLP. [...] Due to China's prominent role in the green loan markets and its significant contribution to the scientific literature on the subject, it is interesting to focus on the specific implementation of green credits within the country. [...] The evolution of China's green credit policy can be traced back to 2007, when the Environmental Protection Administration (now the Ministry of Environmental Protection) in collaboration with the China Banking Regulatory Commission (CBRC) and the People's Bank of China issued the Suggestions on Implementation of Environmental Policies and Regulations and Guard against Credit Risks.
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