Lenders step up high-tech efforts for green businesses
China has stepped up deep integration of fintech and green finance to promote green transitions and sustainable development of the real economy, experts said.
“Over the past few years, we have seen fintech play an important role in promoting the development of green finance. Through financial technology measures, China has effectively improved its ability to identify green assets and reduced the cost of green certification, the financing costs of environmentally friendly small and medium enterprises. medium-sized enterprises and the transaction costs of green assets,” said Ma Jun, chairman of the green finance committee of the China Society for Finance and Banking and president of the Beijing-based Institute of Finance and Sustainability (IFS).
“With the adoption of fintech, the country can also improve information transparency and verify the authenticity of data to reduce the risk of greenwashing,” Ma said.
A recent report published jointly by the IFS and the Green Finance Center at the Paulson Institute stated that many good practices for identifying green assets can come from the adoption of fintech, which is also used in several other scenarios, including green data collection, environmental risk early warning, and management and environmental information disclosure. Some financial institutions have also explored creating personal and corporate carbon accounts, promoting financing for sustainable agriculture and green consumption, and promoting carbon accounting for financial institutions.
The Green Finance Committee of the China Society for Finance and Banking has estimated that China’s cumulative demand for green and low-carbon investments will reach 487 trillion yuan ($69.43 trillion) between 2021 and 2050. incentives, more innovations and also the application of fintech, Ma said.
“We believe fintech can enable more green financial activity in the future,” he said.
Gracie Sun, managing director of the Paulson Institute’s Green Finance Center and senior adviser to the institute, said fintech will have more space for development in terms of biodiversity conservation, carbon accounting, carbon assets, transition financing, environmental protection, social and governance (ESG) factors assessment and investment and sustainable agriculture.
Huang Dingwei, deputy director of the Huzhou Municipal People’s Government Financial Works Bureau, said the bureau has upgraded its green financial services platform this year through the application of artificial intelligence and digital technologies. .
“Our platform adopted models to perceive a company’s financing needs by analyzing its tax, hiring and order information as well as financial indicators, found the most suitable bank for the company using algorithms , and sent the financing needs information to the bank. As a result, we have enabled banks to be aware of the financing needs of enterprises in a smarter way,” Huang said.
The platform also created corporate client profiles on green development smartly and efficiently based on its ESG and carbon accounting systems, he said.
Bank of Huzhou, a regional commercial equity lender based in Huzhou, Zhejiang Province, developed an ESG rating model for corporate borrowers, integrated data provided by the Huzhou Municipal People’s Government Financial Works Bureau with business credit information collected by the bank. , integrated the ESG model into its credit management system and generated visualized analysis results.
“We used big data profiling to detect potential risks of our client companies and improve the quality and efficiency of due diligence as much as possible. Then we will use our ESG rating results as a risk premium factor, which will directly affect our corporate lending pricing,” said Fang Xiaying, general manager of the bank’s green finance department.