Green Banking in China  Emerging Trends

The report examines the top-down evolution of China's green banking system, highlighting the role of the 'Big Four' state-owned banks. It finds that green loans generally exhibit lower non-performing loan (NPL) ratios than traditional portfolios, though significant barriers such as insufficient risk modeling and weak financial incentives persist. The ICBC case study illustrates the integration of green governance and the use of offshore green bonds, while noting that green finance still represents a small fraction of the bank's total balance sheet compared to its continued fossil fuel financing.

• China's four largest state-owned commercial banks, known as the 'Big Four', are the largest banks globally with combined total assets of RMB 103.6 trillion (USD 14.8 trillion).
• Between 2016 and 2019, the Big Four banks provided USD 240 billion to the fossil fuel industry, with USD 106 billion (44%) specifically targeting coal mining and coal power.
• Green loans in China have demonstrated better financial performance than conventional loans; as of the end of 2018, the non-performing loan (NPL) ratio for green loans was 0.42%, compared to 1.83% for the overall credit NPL ratio.
• The total balance of green loans grew as a share of overall credit from 8.8% in 2013 to 10.4% at the end of 2019, totaling over RMB 10.6 trillion (USD 1.5 trillion).
• The People's Bank of China (PBoC) provides financial incentives for green banking by accepting green loans as collateral in the standing lending facility (SLF) and green bonds with AA ratings in the medium-term lending facility (MLF).
• Several barriers hinder the growth of green banking, including insufficient risk modeling, weak direct financial incentives, regulatory pressure to deleverage, and a lack of penalizing factors for high-emissions projects.
• The Industrial and Commercial Bank of China (ICBC) had a green loan portfolio estimated at USD 199 billion in 2019, representing 8% of its total portfolio and 13% of China's total green credit balance.
• ICBC has issued approximately USD 9.8 billion in offshore green bonds since 2017, with a significant portion earmarked for Belt and Road Initiative (BRI) projects.
• ICBC's green credit portfolio reportedly reduced nearly 90 million tons of CO2 emissions as of 2018.
• Despite its green initiatives, ICBC's fossil fuel financing is estimated to be as large as 14% of its total financing.

APA

Choi, J., Escalante, D., & Larsen, M. L. (2020). Green Banking in China  Emerging Trends. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/08/Green-Banking-in-China-Emerging-Trends-1.pdf

Chicago

Choi, June, Donovan Escalante, and Mathias Lund Larsen. Green Banking in China  Emerging Trends. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/08/Green-Banking-in-China-Emerging-Trends-1.pdf.

Wikipedia

{{cite report |last1=Choi |first1=June |last2=Escalante |first2=Donovan |last3=Larsen |first3=Mathias Lund |title=Green Banking in China  Emerging Trends |publisher=Climate Policy Initiative |date=August 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/08/Green-Banking-in-China-Emerging-Trends-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{choi2020green, author = {Choi, June and Escalante, Donovan and Larsen, Mathias Lund}, title = {{Green Banking in China  Emerging Trends}}, institution = {Climate Policy Initiative}, year = {2020}, month = aug, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/08/Green-Banking-in-China-Emerging-Trends-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }