Case study: How Hua Xia Bank takes action on its PRB targets: climate change mitigation and financial inclusion

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

Each year, Hua Xia Bank identifies stakeholders relevant to its impact analysis and target-setting activities. In 2023, it recognized eight key stakeholders, which include the government, regulators, clients and customers, shareholders and investors, employees, partners, communities, and the environment. Hua Xia Bank actively engages in consultation, collaboration, and partnership with these stakeholders. It places significant emphasis on their interests and continuously identifies, evaluates, screens, and updates related concerns. Issues are prioritized based on two factors: their significance for the sustainable development of Hua Xia Bank and their relevance to stakeholders. Through this approach, Hua Xia Bank identifies key issues that are vital to both its stakeholders and the organization itself, and appropriately implements responses.

What actions were taken by Hua Xia Bank on its PRB targets, climate change mitigation and financial inclusion?

In its 2023 PRB Reporting and Self-Assessment Template Hua Xia Bank reports that it took the following actions on its PRB targets, climate change mitigation and financial inclusion:

• SMART Target 1: Climate change mitigation
• Hua Xia Bank has proactively adopted the national strategies for achieving carbon peak and carbon neutrality, enhancing the development of green finance with innovative features, and providing financial support for the country’s high-quality economic and social growth.
  • Conducted comprehensive research on key green industries and implemented ecosystem-based marketing through in-house ecosystem maps and marketing platforms, aimed at attracting more green clients and increasing the coverage and collaboration with whitelist clients.
  • Developed a comprehensive suite of green financial products and services at the group level, including green loans, green bills, green investments, green leasing, underwriting for green debt financing instruments, green wealth management, green funds, and carbon finance. A specialized product for financing backed by carbon credits was introduced and piloted in 15 branches that have established green finance departments.
  • Investigated opportunities to collaborate with insurers, green investment funds, and industry professionals to create a specialized mechanism for sharing responsibilities related to green risks. The bank has innovated new business models through ongoing trials and pilots to highlight features in green finance, including the successful issuance of China’s first photovoltaic public REITs, known as the China Aviation Jingneng Photovoltaic Closed-end Infrastructure Securities Investment Fund.
  • Developed the Guiding Opinions on Environmental, Social, and Governance (ESG) Risk Management of Credit Business for Corporate Clients and revised the Administrative Measures for Green Finance to bolster support for green, low-carbon, and circular economies, while reinforcing ESG risk management throughout the credit business process to mitigate associated risks.
  • Established a green financial information system.
  • Enhanced professional service capabilities and conducted targeted research in areas such as energy storage, hydrogen energy, comprehensive energy services, biodiversity, ESG risk ratings, climate transition risks, and carbon tariffs.
  • Engaged with the World Bank on the development of green finance and the “China Renewable Energy and Battery Energy Storage Promotion Project.” Through international partnerships with various institutions, including the World Bank, the French Development Agency, and the Asian Development Bank, Hua Xia Bank has introduced a total of USD 1 billion in foreign investment via loan transfer projects.
• As of December 31, 2023, Hua Xia Bank’s green loan balance reached RMB 269.273 billion, representing a 9.00% increase compared to the end of 2022.

• SMART Target 2: Financial inclusion
• The year 2023 marked a significant milestone for the national inclusive finance strategy that was initiated ten years ago. Hua Xia Bank adhered to the policy directives from the CPC Central Committee and regulators, maintaining strategic alignment while continually enhancing its ability to support the real economy. The bank focused on becoming the premier partner for micro and small enterprises (MSEs) during their growth journey, enhancing its reputation as a “financial service provider for SMEs.”
  • Improved resource allocation to further develop the service system for MSEs, structured as “Head Office – branches – sub-branches.”
  • Introduced the “Thousand, Hundred, Ten” programme aimed at enterprises utilizing advanced and specialized technologies to produce innovative and unique products, implementing tailored approval processes and a green channel for these businesses. This includes case-by-case policies, real-time assessments, prioritized reviews by the credit committee, and expedited approvals.
  • Enhanced ecosystem scenarios and launched four series of products focused on digital inclusive finance, key industry sectors, ecosystem and chain scenarios, and regional characteristics.
  • Accelerated process reengineering to promote digital inclusive finance, developed a credit approval decision matrix, and implemented an online post-lending automation system to improve smart risk management.
• As of December 31, 2023, Hua Xia Bank’s inclusive loan balance for MSEs reached RMB 175.011 billion, reflecting an 8.77% increase from the end of 2022.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by Hua Xia Bank, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.hxb.com.cn/en/images/about-hua-xia-bank/investor-relationship/prbreport/2024/08/05/4B60430758779F23EB0E0C1944F57A0E.pdf

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