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China: CBIRC issues Green Finance Guidelines

The China Banking and Insurance Regulatory Commission ('CBIRC') issued, on 1 June 2022, the Green Finance Guidelines for the Banking and Insurance Industry. In particular, the Guidelines highlight that banking and insurance institutions must effectively identify, monitor, and prevent environmental, social, and governance ('ESG') risks in their business activities, focusing on customers and their main contractors and suppliers' deficiencies and inadequate management. In addition, the Guidelines outline that the board of directors or council of banking and insurance institutions are responsible for determining a green finance strategy, examining and approving green finance aims, and appointing a committee for overseeing such work.

More specifically, the Guidelines provide that banking and insurance institutions must strengthen due diligence on credit granting and investment, clarifying the main ESG risks of clients and their project, developing internal guidelines where applicable to guide such a process. Notably, the Guidelines detail that for clients with a prior history of serious violations of relevant laws and regulations, representing serious ESG risks, credit extension and investment must be curtailed. For instance, the Guidelines note that ESG risks may be curtailed through the amendment of contractual terms, submission of reports on ESG risks by clients, and formulation of potential remedies in the event of a client default in managing ESG risks.

Finally, the Guidelines hold that banking and insurance institutions must establish internal systems and procedures within one year of the Guidelines' issuance.

You can read the Guidelines, only available in Chinese, here.