China Development Bank Financial Leasing Co., Ltd. (hereinafter referred to as CDB Leasing) has recently managed to put up a Sustainable Finance Framework and had it approved by second-party certifiers according to both domestic and international standards, thus becoming the first Chinese financial institution whose sustainable finance framework conforms to both domestic and international certification standards. The framework applies to green operations, fulfillment of social responsibility and sustainable development, as well as sustainability-linked bond financing, bank financing and derivative transactions in CDB Leasing and its subsidiaries.
Moody’s Investors Service (hereinafter referred to as Moody’s), an internationally prestigious certification body, and Lianhe Equator Environmental Impact Assessment Co., Ltd. (hereinafter referred to as Lianhe Equator) have certified that the framework conforms to pertinent international and domestic standards, respectively. Moody’s rated through the Sustainability Quality Score the framework as SQS2 (of very good quality), the highest rating by Moody’s for sustainable finance frameworks in global financial institutions after Moody’s updated its second-party certification and rating methodology in October 2022.
CDB Leasing has set up the Sustainable Finance Framework to respond effectively to the national call for developing green finance and inclusive finance in the central financial work conference as well as national goals of achieving “carbon peaking and carbon neutrality”.
The Sustainable Finance Framework has opened up a high-efficiency financing channel for CDB Leasing to deal directly with assets compliant with sustainability standards, and helped provide a wider range of options for financing products, thereby providing a reliable financing channel for the sustainable leasing business system including green energy, inclusive finance, energy-efficient aircraft and environmentally friendly ships and helping CDB Leasing to make long-term planning on sustainability. Bearing in mind that the leasing business should be essentially conducive to the real economy, CDB Leasing will stretch the strength of financial leasing, faithfully implement national strategies and decisions, adhere to an innovation-driven development strategy and continue to take on its responsibility as a state-owned financial enterprise to facilitate the development of sustainability-related financial business in depth and breadth.
The Sustainability Finance Framework has two sub-frameworks, namely, the Green, Social and Sustainability Finance Framework and the Sustainability-linked Finance Framework.
◆ The Green, Social and Sustainability Finance Framework covers CDB Leasing’s all green development, social responsibility and sustainability-related leasing business activities at home and abroad. CDB Leasing plans to earmark the proceeds for five green projects, namely, renewable energy including wind, photovoltaic and hydroelectric power, energy efficiency, clean transportation, pollution prevention and control, and green architecture as well as one social project targeting small and micro businesses. Standard Chartered Bank serves as the exclusive adviser for this sub-framework.
The sub-framework is considered by Moody’s to be of good sustainability quality through the Sustainability Quality Score, and has been highly scored as “the Best Practice” in terms of project appraisal, screening, management of proceeds and other detailed items.
The sub-framework has also obtained second-party certification from Lianhe Equator. It is certified by Lianhe Equator to comply with the latest prevailing rules including the China Green Bond Principles, the Green Bond Endorsed Project Catalogue (2021 Edition), the Green Industry Guiding Catalogue (2019 Edition) and the Common Ground Taxonomy: Climate Change Mitigation (updated version).
◆ The Sustainability-linked Finance Framework covers carbon emission reduction targets set by CDB Leasing in high-emission sectors such as aviation and shipbuilding, which are not stipulated in the above Green, Social and Sustainability Finance Framework, and includes development targets for green energy. By setting Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) in aviation, shipbuilding and green energy sectors, CDB Leasing and its subsidiaries can resort to sustainability-linked financing instruments that link financing costs with KPIs and SPTs. Crédit Agricole Corporate and Investment Bank and Standard Chartered Bank jointly serve as advisors for the sub-framework.
The sub-framework is considered by Moody’s to be of good sustainability quality through the Sustainability Quality Score, and has been highly scored as “the Best Practice” in terms of alignment between sustainability targets and long-term strategies of CDB Leasing, external verification in duration and other detailed items.
Framework documents and second-party certification opinions have been published on the website of CDB Leasing.
