During the annual meeting of the International Institute of Green Finance (IIGF) held on October 29, 2022 the WWF Beijing Representative Office and the Bank of Beijing signed a memorandum of cooperation to launch the Pilot Project of Green Finance in the Commodity Supply Chain. It is the first such agreement between NGO and Chinese Bank that aims to reduce deforestation from the financing end.
Mobilization of financial resources to support conservation and environmental restoration has become an important topic in China since it became a host country for the 15 The Fifteenth Meeting of the Conference of the Parties on Biodiversity Conservation. Multiple biodiversity finance initiatives were launched in China in 2021 including UNDP BIOFIN China project and The Partnership of Biodiversity and the Finance, PBF (co-intiated by WRI, WWF, World Bank Group, UNDP, UNEP, Paulson Institute， NRDC， MCDF， IFF， CAREC， AIIB， Huaxia Bank and Industrial Bank). During the first part of the COP15 held in Kunming, 36 Chinese financial institutions, including the Bank of Beijing and 24 foreign banks, jointly launched the “Banking Sector Financial Institution Joint Declaration for the Support for the Protection of Biodiversity”. These initiatives play increasingly significant role in increasing the awareness about the role of finance in biodiversity conservation in China.
However, China’s financial sector is at the initial stage in assesing their biodiversity impacts, and the governance structure and risk management practices related to biodiversity, or agricultural commodities with high deforestation risk are not yet formed.
This cooperation agreement is a first big step towards engaging Chinese financial institutions in taking pro-active approach to reducing their biodiversity impacts related to agricultural commodities. Leadership shown by the Bank of Beijing paves the way for other banks in the future. After signing of the agreement, WWF and the Bank of Beijing will jointly work on implementing the pilot project, with thechnical support from IIGF.
Zhou Fei, deputy director-general of WWF Beijing Representative Office, said that the organization is committed to coordinating multi-party cooperation, researching and advocating all possibilities for the financial sector to empower the field of environmental protection. “WWF not only advocates the formulation of green financial policies for Chinese state-owned banks, but also promotes the implementation and large-scale application of financial support for green agricultural practices,” Zhou said.
IIGF, as initiator of the agreement will apply its research experience to and will lead the background research study. We have already participated in similar project early on. IIGF worked jointly with University of Cambridge, looking into the finance of China’s commodity imports. The research aimed to identify possible channels for greening the trade finance in China.
Expect more updates from us about the pilot project in the coming months.