The Shanghai Head Office of the People’s Bank of China (“PBC”), all branches and operations offices of the PBC, all central sub-branches of the PBC in capital cities of provinces (autonomous regions) and the National Association of Financial Market Institutional Investors; and China Development Bank, all policy banks, state-owned commercial banks, joint-stock commercial banks and Postal Savings Bank of China:
For the purposes of thoroughly implementing the spirit of the Nineteenth CPC National Congress on strengthening the development of ecological civilization, implementing the concept of green development, deepening the implementation of the Guiding Opinions of Seven Ministries and Commissions including the People’s Bank of China on Building a Green Financial System (No. 228 [2016], PBC), Announcement No. 39 [2015] of the People’s Bank of China and other requirements, further improving the supervision and administration of green financial bonds in the duration, enhancing the transparency of information disclosure, and urging issuers to increase support for green development, you are hereby notified of the relevant matters as follows:
I. Strengthening the supervision and inspection of the use of proceeds of green financial bonds in the duration and ensuring that the proceeds are actually used for green development
(1) The PBC shall supervise and inspect the use of the proceeds of green financial bonds in the duration by China Development Bank, policy banks, state-owned commercial banks, joint-stock commercial banks and Postal Savings Bank of China, and may authorize the relevant branches of the PBC to implement the specific work.
Except the aforesaid financial institutions, the branch offices at or above the level of central sub-branch of the PBC in a capital city of a province (autonomous region) (hereinafter referred to as “branch offices”) shall supervise and inspect the use of proceeds of green financial bonds in the duration by other issuers of green financial bonds whose registration places are within their respective jurisdictions.
(2) All branch offices shall fully understand the basic information on green financial bonds of issuers within their respective jurisdictions, mainly including the issuer’s operation status, the progress of allocation of proceeds and the situation of green projects, and supervise issuers in using the proceeds in a standardized manner by comprehensively using off-site monitoring, on-site inspection, field research, written inquiry, interview and other forms.
(3) All branch offices shall, in accordance with the relevant provisions of Announcement No. 39 [2015] of the People’s Bank of China, focus on inspecting the integrity of the green projects to which issuers allocate the proceeds, compliance of the selection and decision-making procedures, standardization of the management of proceeds and realization of the objectives of environmental benefits. In particular, the scope of on-site inspection of the current year shall cover all the issuers of green financial bonds within their respective jurisdictions, and the inspection proportion shall generally not be less than 20% of the allocated amount of the proceeds of all issuers. Working papers for on-site inspection shall be developed in a standard manner, to record the inspection contents, scope, results and other information in detail.
(4) All branch offices shall, before April 30 each year, submit their supervision and inspection reports of the previous year to the PBC, mainly including the supervision and inspection of the use of proceeds by issuers within their jurisdictions and the effect of issuers’ support for green development. During the process of supervision and inspection, all branch offices shall, if finding that issuers fall under the circumstances that may have significant impact on the use of proceeds, report to the PBC in a timely manner and notify the National Association of Financial Market Institutional Investors (“NAFMII”) by letter.
II. Strengthening the monitoring and evaluation of information disclosure for green financial bonds in the duration and improving the transparency of information
(1) The PBC shall be responsible for the supervision and administration of the information disclosure for green financial bonds in the duration, and the NAFMII shall conduct self-discipline management. The NAFMII shall, in accordance with the Rules for the Information Disclosure for Green Financial Bonds in the Duration (see Annex 1) and the template for information disclosure reports (see Annexes 2 and 3), urge issuers to effectively conduct information disclosure for green financial bonds in the duration.
(2) The NAFMII shall establish a market opinion collection and feedback mechanism, set up special e-mail, telephone and fax to collect and receive the opinions and information from the market on information disclosure for green financial bonds in the duration, track and monitor the information disclosure for green financial bonds in the duration, and strengthen the supervision and guidance of the issuers’ information disclosure work.
(3) The NAFMII shall follow the principles of fairness and impartiality, arrange for market institutions and other relevant parties to evaluate the information disclosure for green financial bonds in the duration according to the monitoring of the information disclosure for green financial bonds in the duration and the feedback of market participants, and urge the issuers to improve the quality of information disclosure.
(4) The NAFMII shall, before April 30 each year, report the monitoring and evaluation of the information disclosure for green financial bonds in the duration and other information in the previous year to the PBC. During the process of monitoring and evaluation, the NAFMII shall, when finding that issuers fall under the circumstances that may have significant impact on the use of proceeds, report to the PBC in a timely manner and notify the relevant branch offices of the PBC by letter.
III. Strengthening the supervision and rectification of the violations relating to green financial bonds in the duration and improving the dynamic management mechanism
(1) All branch offices and the NAFMII shall, if finding that issuers fall under the circumstances of violating the relevant provisions in the use of proceeds and information disclosure, in light of their respective duties, respectively urge relevant issuers to complete rectification within three months and submit rectification reports.
(2) All branch offices and the NAFMII shall include the issuers that fail to satisfy the requirements after rectification in the watch list, urge them to continue making rectification, and report to the PBC in a timely manner.
(3) The PBC shall organize the relevant branch offices and the NAFMII to form a joint working group to conduct on-site inspection of the issuers that are included in the watch list. Issuers that still fail to comply with the relevant provisions on green financial bonds upon on-site inspection shall be subject to administrative punishment in accordance with the laws and regulations.
IV. Strengthening organization and coordination, specifying work responsibilities, and ensuring the effective implementation of the supervision and administration of green financial bonds in the duration
(1) All branch offices and the NAFMII shall deepen the understanding, designate special departments to take charge of the work from the political height of implementing the concept of green development and development of ecological civilization, improve the organization and coordination mechanism, share the information found in supervision and inspection in a timely manner, strengthen communication and coordination, and effectively conduct the supervision and administration of green financial bonds in the duration.
(2) The issuers, lead underwriters and other intermediaries of green financial bonds shall, in strict accordance with the relevant provisions on green financial bonds, diligently implement all requirements for information disclosure and management of the use of proceeds, and actively cooperate with the supervision and administration of green financial bonds in the duration by all branch offices and the NAFMII.
(3) The results of the supervision and administration of green financial bonds in the duration shall serve as an important reference for the PBC in carrying out the following operations: macro-prudential management, provision of relevant financial market services, comprehensive evaluation of financial institutions, and other operations that the PBC deems applicable.
All entities shall, according to the requirements of this Notice, diligently complete the relevant work. All branch offices shall forward this Notice to the issuers and relevant institutions within their respective jurisdictions.
Annexes:
1. Rules for the Information Disclosure for Green Financial Bonds in the Duration
2. Template for Quarterly Report on the Use of Green Financial Bond Proceeds
3. Template for Annual Report on the Use of Green Financial Bond Proceeds
Annex 1
Rules for the Information Disclosure for Green Financial Bonds in the Duration
For the purposes of improving the transparency of the use of green financial bond proceeds and ensuring that the proceeds effectively support green projects, the following requirements for information disclosure for green financial bonds in the duration are hereby put forward in accordance with the Measures for the Administration of the Issuance of Financial Bonds on the National Inter-bank Bond Market (Order No. 1 [2005], PBC) and Announcement No. 39 [2015] of the People’s Bank of China:
I. Issuers of green financial bonds (hereinafter referred to as “issuers”) shall, in strict accordance with Announcement No. 39 [2015] of the People’s Bank of China and these Rules, complete the information disclosure for green financial bonds in the duration. An issuer shall, before April 30 each year, disclose its annual report on the use of proceeds in the previous year and the report on the use of proceeds in the first quarter of this year, and disclose the reports on the use of proceeds in the second and third quarters of this year respectively before August 31 and October 31 each year.
II. The quarterly report on the use of green financial bond proceeds shall focus on the use of the proceeds during the reporting period. A quarterly report shall include, but not be limited to, the amount of proceeds newly allocated to green projects during the reporting period and the number of the projects, the due amount of the projects to which the proceeds have been allocated and the number of the projects, the balance of proceeds allocated to the projects and the number of the projects at the end of the reporting period, the management and use of unallocated proceeds and a brief analysis on the balance of proceeds allocated to the projects and the number of the projects at the end of the reporting period.
III. An annual report on the use of green financial bond proceeds shall comprehensively explain the overall use of proceeds in the reporting year and the expected or actual environmental benefits, among others. An annual report shall include, but not be limited to, the amount of proceeds newly allocated to projects during the reporting period and the number of the projects, the due amount of the projects to which the proceeds have been allocated and the number of the projects, the balance of proceeds allocated to the projects and the number of the projects at the end of the reporting period, the management and use of unallocated proceeds, the information on the green projects to which the proceeds are allocated and the expected or actual environmental benefits, and the detailed analysis and demonstration of the relevant contents.
IV. An issuer shall, in an annual report, disclose the information on the green projects to which the proceeds are allocated during the reporting period, and may withhold the key commercial information. Projects ranking among the top 10% in the allocated amount of green financial bond proceeds and projects with an allocation of 50 million yuan or more or accounting for 1% or more of the size of existing green financial bonds shall be disclosed one by one; and other projects may be summarized and disclosed by category.
V. Issuers shall select typical green project cases in annual reports to conduct detailed analysis. To select typical green project cases, priority shall be given to projects with relatively large size of allocation or significant environmental benefits. The key commercial information may be withheld and the details of the projects and the expected or actual environmental benefits shall be introduced.
VI. Issuers shall, in the annual reports and quarterly reports, disclose the major pollution liability accidents or other illegal environmental events, among others, of the enterprises or projects supported by green financial bonds.
VII. Issuers shall be encouraged to disclose in the annual reports the measurement methods or evaluation institutions for environmental benefits.
VIII. Issuers shall be encouraged to disclose in the annual reports their visions and objectives for the issuance of green financial bonds and the fulfillment thereof in a proper space.
IX. Issuers shall be encouraged to highlight the features of the allocation of green financial bond proceeds according to their own understanding and disclose the key areas of allocation or the investment fields in which they will definitely not participate.
X. The lead underwriters of green financial bonds shall supervise and direct the issuers in effectively conducting information disclosure in accordance with Announcement No. 39 [2015] of the People’s Bank of China and these Rules, and the assessment and certification institutions and auditing firms retained by issuers shall actively cooperate with the issuers in the completion of relevant work.
Annex 2
Template for Quarterly Reports on the Use of Green Financial Bond Proceeds
(Until the X Quarter in Year XXXX)
I. Basic Information
The issuer’s issuance of green financial bonds during each period, including the bond name, bond code, issue size, term, interest rate, time of receipt of proceeds and other elements.
II. Management of Proceeds
The issuer shall describe the development and implementation of its rules for the management of green financial bond proceeds, and the name of the third-party assessment and certification institution retained by the issuer (if any).
III. Use of Proceeds
(1) Allocation of proceeds.
The content shall include, but not be limited to:
The amount of proceeds newly allocated to green projects during the reporting period and the number of the projects, the due amount of the projects to which the proceeds have been allocated and the number of the projects, and the balance of proceeds allocated to the projects and the number of the projects at the end of the reporting period.
The categorical distribution of the balance of proceeds allocated to green projects and the number of the projects at the end of the reporting period (at least to level-II classification), display in such forms as tables and charts is proposed.
Other information that should be disclosed in the opinion of the issuer.
(2) Unallocated proceeds and next steps.
Introduction to the amount of unallocated proceeds, the management and use of unallocated proceeds, the allocation plan (if any) and other content.
(3) Other warning information.
Information on major pollution liability accidents or other illegal environmental events, among others, of enterprises or projects supported by green financial bonds.
Annex 3
Template for Annual Reports on the Use of Green Financial Bond Proceeds
(Year XXXX)
I. Basic Information
The content shall include, but not be limited to:
The issuer’s visions and objectives for the issuance of green financial bonds and the completion thereof (if any).
The issuer’s implementation of the green financial business in the reporting period.
The issuer’s issuance of green financial bonds during each period, including the bond name, bond code, issue size, term, interest rate, time of receipt of proceeds, and other elements.
Other information that should be disclosed in the opinion of the issuer.
II. Management of Proceeds
The content shall include, but not be limited to:
The issuer’s development of rules for the management of green financial bond proceeds.
The issuer’s green project decision-making process and procedures.
The issuer’s green project selection standards.
The issuer’s specific measures to promote the allocation of proceeds to green projects.
The deposit, use and management of proceeds by the issuer.
The information on assessment and certification conducted by the third party retained by the issuer (if any).
Other information that should be disclosed in the opinion of the issuer.
III. Use of Proceeds
(1) Use of proceeds in the reporting period.
The content shall include, but not be limited to:
The green fields to which the proceeds are mainly allocated.
The amount of proceeds newly allocated to green projects in the reporting year and the number of the projects, the due amount of the projects to which the proceeds have been allocated and the number of the projects, and the balance of proceeds allocated to the projects and the number of the projects at the end of the reporting period.
The ratio of new allocation to new projects to the refinancing of existing projects in the reporting period.
The categorical distribution of the balance of proceeds allocated to green projects and the number of the projects at the end of the reporting period (to level-III classification), and geographical distribution, among others, display in such forms as tables and charts is proposed.
Other information that should be disclosed in the opinion of the issuer.
(2) Unallocated proceeds and next steps.
Introduction to the amount of unallocated proceeds, the management and use of unallocated proceeds, the allocation plan (if any) and other content.
(3) Other warning information.
Information on major pollution liability accidents or other illegal environmental events, among others, of enterprises or projects supported by green financial bonds.
IV. Information on Green Projects Supported by the Proceeds and Environmental Benefits
(1) Allocation of proceeds to green projects.
The use of a tabular form is proposed. For projects ranking among the top 10% in the allocated amount of green financial bond proceeds and projects with an allocation of 50 million yuan or more or accounting for 1% or more of the size of existing green financial bonds, the issuer shall disclose the projects one by one, and the disclosed content shall include, but not be limited to, the overview of each project, the category (level-I to level-III classification), the location of the project, the actual amount allocated, and the expected or actual environmental benefits. The issuer may summarize and disclose other projects by category (level-I to level-II classification), and the disclosed content shall include, but not limited to, the amount allocated to each category, regional distribution, and expected or actual environmental benefits.
(2) Overall environmental benefits of the bond in the current period.
The expected or actual environmental benefits of the annual allocation of proceeds in green projects shall be introduced, so as to reflect the role of green financial bonds in effectively supporting environmental protection. Environmental benefits indicators may include, but not be limited to, the conservation of standard coal (ton), reduction of greenhouse gas emissions (ton), reduction of chemical oxygen demand (COD) emissions (ton), reduction of ammonia nitrogen emissions (ton), reduction of sulfur dioxide emissions (ton), reduction of nitrogen oxides (ton), reduction of flue gas emissions (ton), water conservation (cubic meter), planting of nursery stock, increase of green area (square meter), length of river under comprehensive treatment, dredging area (square meter), purchase of public transport vehicles, quantity of disposed solid wastes (ton), quantity of disposed hazardous wastes (ton), quantity of disposed sludge (ton), recycling of waste and old materials (ton), installed capacity of clean energy (kilowatt), output of new energy vehicles, production of new energy supporting power batteries (watt hour), and the area of natural reserves, wetland and wildlife habitats and other ecological land (hectare).
(3) Case analysis of typical green projects.
In the green projects to which the proceeds are allocated, several typical cases shall be selected for analysis, the environmental benefits of the relevant projects shall be fully explained, not less than six projects shall be selected, and if the total number of the projects to which the proceeds are allocated is less than six, all projects shall be analyzed.
V. Information Disclosure Rules and Implementation
Introduction to the construction of relevant information disclosure mechanisms and information disclosure in the reporting year.
