Annual Report on Bank of China s Green Bonds. Outstanding BOC Green Bonds

Transcription

1 Annual Report on Bank of China s Green Bonds Bank of China ( BOC ) Green Bonds enables BOC to support environment friendly projects and companies which are particularly active in terms of environment preservation, energy transition or climate change mitigation. As stated in the Offering Circular as well as Bank of China Green Bond Management Statement ( the Management Statement ) 1, we hereby provide BOC Green Bonds Annual Report, disclosing the allocation of the bond proceeds as well as the expected environmental impacts of the Eligible Green Projects as of 31 st December, Outstanding BOC Green Bonds Issue Date Maturity Amount CNY Equivalent Amount Currency (year) (million) (million) 2016/7/5 3 USD 500 3, /7/5 3 USD 750 5,021 Green Bond /7/5 5 USD 1,000 6, /7/5 5 EUR 500 3, /7/5 2 CNY 1,500 1,500 Green Bond /11/3 3 USD 500 3, /11/15 5 USD 500 3,315 Green Bond /11/15 3 EUR 700 5, /11/15 3 CNY ,000 Bond Details and Proceeds Allocation Green Bond 1 was issued in the offshore market through Luxemburg Branch and New York Branch in July The total amount equated to CNY 20,265 million, and the net proceeds equated to CNY20,224 million. As of December 31, 2017, all of these net proceeds had been utilized to fund 8 metro projects, 3 wind power generation projects, 1 waste water treatment project and 1 solar power generation project. Green Bond 2 was China Green Covered Bond and issued in the offshore market through London Branch in November The total amount equated to CNY 3,392 million, and the net proceeds equivalents to CNY 3,381 million. As of December 31, 2017, all of these net proceeds had been utilized to fund 9 wind power generation projects, 2 waste water treatment projects and 1 solar power generation project. Green Bond 3 was certified by Climate Bond Initiative (CBI) and issued in the offshore market through Paris Branch in November The total amount equated to CNY 9,763 million, and net proceeds equated to CNY9,753 million. 1 available at 1

2 As of December 31, 2017, 92% of net proceeds had been utilized to fund 11 metro projects, 2 wind power generation projects. All the BOC Green Bonds are in alignment with Green Bond Principles (GBP) published by the Executive Committee of Green Bond Principles, with the International Capital Market Association (ICMA) serving as Secretariat. Impact Reporting Below shows the expected environmental impacts in detail. Due to the confidential considerations for our loan clients, the impact results are disclosed on a portfolio basis. For each of the indicators in the table, the project-byproject results include only the pro-rated share (as a percentage of the issuer's share of the total financing) of the total projects results; these individual pro-rata project impacts are then aggregated to indicate the overall impact of the funded projects in a certain category. The environmental impacts are calculated in categories. The impacts of the Renewable Energy Projects refer to the UNFCCC CDM methodology ACM 0002 Grid-connected electricity generation from renewable sources (version 17.0) 2. Noted by * in the table below. For Waste Water Treatment Projects, the environmental impacts are calculated based on the capacity of the treatment effectiveness (waste water treatment = treatment capacity of the facility * (influent quality - effluent quality)). Noted by ** in the table below. The impacts of the Clean Transportation Projects are calculated based on ACM0016 Mass rapid transit projects (version 4.0) 3. Noted by *** in the table below. Renewable Energy (Wind&Solar) Allocated amount Annual Renewable energy Annual GHG emissions (CNY million) generation(mwh) capacity added(mw) reduced*(co2 tonnes) 1, , ,948 Waste Water Treatment Allocated amount Annual pollution prevention**(tonnes) (CNY million) COD NH3-N 500 1, Clean Transportation (Electrified Metro) Allocated amount Annual GHG emissions (CNY million) reduced*** (CO2 tonnes) 18, ,748 2 available at Me6a7-hX 3 available at RcIIWBxk 2

3 Use of Proceeds All the net proceeds of the Green Bonds will be allocated to Eligible Green Projects in the following categories: Renewable energy: the production and transmission of renewable energy, and the manufacturing of renewable energy appliances and products; renewable energy includes solar energy and wind energy; Clean transportation: electric, public, rail, non-motorised, multi-modal transportation, infrastructure for clean energy vehicles and reduction of harmful emissions, and rolling stocks or vehicles carrying fossil fuel products will be excluded; and Sustainable water and wastewater management: sustainable infrastructure for purposes of water collection, storage, treatment or distribution, or for flood protection or drought resilience. Project Evaluation and Selection BOC will follow the procedures below to evaluate and select the Eligible Green Projects: 1. Preliminary Screening Domestic and overseas branches of BOC shall conduct a preliminary screening of potential projects in accordance with the criteria and standards set out in BOC s internal regulations and the Eligible Green Project categories as described in the Use of Proceeds section in this Statement, and form a list of nominated projects which will be submitted to the Headquarters for review. 2. Review and Approval The Headquarters shall review each of the nominated projects for approval as Eligible Green Projects. The approved projects will form an Eligible Green Project list. 3. Update and Maintenance The Headquarters shall review the Eligible Green Project List on a quarterly basis and determine if any changes are necessary (for example, if a project has amortized, been prepaid, sold or otherwise become ineligible). The Headquarters shall organize domestic and overseas branches to nominate new projects, and approve the eligible ones to replace projects that have amortized, been prepaid, sold or otherwise become ineligible. Management of Proceeds Due to its global network, BOC will allocate the net proceeds of the Green Bonds to Eligible Green Projects across various domestic and overseas markets. BOC has established an effective mechanism to manage the proceeds, ensuring that the proceeds from the Green Bonds will be used to fund the Eligible Green Projects. 1. Planning for Use of Proceeds Prior to the issuance of Green Bonds, BOC shall evaluate the recent and pipeline capital spending and develop a preliminary Eligible Green Project List in accordance with the procedures as described in the Project Evaluation and Selection section in this Statement to ensure that the Green Bond proceeds can be allocated to Eligible Green Projects in a timely manner. 2. Management of Separate Ledger BOC shall record the source and allocation of proceeds in a separate ledger to ensure that all the net proceeds of the Green Bonds are used to fund Eligible Green Projects. The ledger shall contain detailed information of the capital source (including the issue amount, the coupon rate, the issue date and the maturity date of the Green Bonds) and the capital allocation (including the project name, the borrower description, the project category, the balance, the release date, the repayment date, and the interest rate of the loan). BOC will review and update the ledger on a quarterly basis. Any proceeds allocated to the projects that have amortized, been prepaid, sold or otherwise become ineligible shall be reallocated to newly nominated and approved Green Projects. 3

4 3. Use of Unallocated Proceeds Unallocated proceeds shall not be invested in greenhouse gas (GHG) intensive or highly polluting or energy intensive projects. The unallocated proceeds could be temporarily invested in Green Bonds issued by non-financial institutions in domestic or international markets, and in money market instruments with good credit rating and market liquidity, or kept in cash until they are allocated to Eligible Green Projects. Reporting As long as the Green Bonds are outstanding, BOC will make and keep readily available up-to-date information on the allocation of the proceeds and the environmental performance of the funded Eligible Green Projects on an annual basis on its official website ( and through other channels where feasible, such as annual reports or social responsibility reports. BOC intends to maintain the transparency of information disclosure following the best practices recommended by GBP, The following contents will be disclosed annually: 1. A brief description of the Eligible Green Projects to which the Green Bonds proceeds were allocated, and the amount and percentage allocated to each of the categories; 2.An attestation report issued by a specialized certification body assuring allocation of proceeds; and 3. The expected environmental impacts figures of the Eligible Green Projects to which the Green Bonds proceeds have been allocated will be based on the financing share of the projects. BOC will adopt some quantitative performance measures of certain categories, where feasible, and disclose them on an aggregated portfolio basis. The environmental impact section will be reviewed by a specialized certification body. In addition, BOC will confirm that the use of proceeds of the Green Bonds issuance conforms to this Statement on its official website ( on a quarterly basis. 4

5 Appendix 1 Green Bond 1 Table 1 Detailed Information of Green Bond 1 ISIN code Currency Tenor (year) Coupon type Amount (million) CNY Equivalent Amount (million) FX rate XS USD 3 Fixed XS USD 3 Floating XS USD 5 Fixed 1, XS EUR 5 Fixed XS CNY 2 Fixed 1, Table 2 Proceeds Allocation in Terms of Category Category Allocated amount (CNY million) Proportion Renewable Energy 1,200 6% Clean Transportation 18,524 92% Sustainable water and wastewater management 500 2% Total 20, % Table 3 Proceeds Allocation in Terms of Location Location Allocated amount (CNY million) Proportion Northern China 17,714 88% Eastern China 1,594 8% Western China 291 1% Overseas 626 3% Total 20, % Green Projects Examples As of December 31, 2017, the proceeds of Green Bond 1 had been utilized to fund 13 Eligible Green Projects. Two projects were selected for field investigation. The details of the field investigation of the 2 projects are as follow: Project I: A wind power generation project located in the east of Inner Mongolia Autonomous Region of China, a concession project with a generation capacity of 399MW. So far, this Project has already been put into operation. It is learnt from the on-site investigation that the total installed capacity of this project is 399MW with the grid-connect volume of 788,293MWh in Equivalently, the Project could reduce CO 2 emission of 0.71 million tons. 5 Project II: A Water treatment project located in the eastern

6 China, consisting of the expansion of an Urban Sewage Treatment Plant together with the laying of supporting pipeline (the Urban Sewage Treatment Project ) and the Rural Sewage Treatment Project. So far, the Urban Sewage Treatment Plant and Rural Sewage Project have both been completed. Based on the on-site investigation, the treatment capacity of the Urban Sewage Treatment Project in 2017 is million tons. The direct reduction of pollutants are as follows: COD : tons / year, NH 3-N : tons / year. 6

7 Table 4 Environmental Impacts of the Renewable Energy Projects on a Portfolio Basis Signed Share of total Eligibility for RE Allocated Average portfolio Annual Renewable energy Annual GHG emissions amount 4 portfolio financing 5 green bonds component amount 6 lifetime generation capacity added reduced* CNY million % % % CNY million year MWh MW tonnes of CO 2 equivalent Renewable Energy 1, , , Pollution prevention and control Table 5 Environmental Impacts of the Pollution Prevention and Control Projects on a Portfolio Basis Signed amount Share of total Eligibility for Average portfolio Allocated amount portfolio financing green bonds lifetime Annual pollution prevention** CNY million % % CNY million year tonnes COD 7 NH 3-N , Table 6 Environmental Impacts of the Clean Transportation Projects on a Portfolio Basis Signed amount Share of total portfolio financing Eligibility for green bonds Allocated amount Average portfolio lifetime Annual GHG emissions reduced CNY million % % CNY million year tonnes of CO 2 equivalent*** Clean Transportation 18, , , This represents the amount legally committed by the issuer for the project or component that is eligible for green bond financing. 5 This is the share of the total project cost that is financed by the issuer. 6 This represents the amount of green bond proceeds that has been allocated to disbursements to the project. 7 Chemical Oxygen Demand 8 Ammonia Nitrogen 7

8 Appendix 2 Green Bond 2 Table 1 Detailed Information of Green Bond 2 ISIN Code Currency Tenor (year) Coupon type Amount (million) CNY Equivalent Amount (million) FX rate XS USD 3 Fixed 500 3, Table 2 Proceeds Allocation in Terms of Category Category Allocated amount(cny million) Proportion Renewable Energy 3,072 91% Sustainable water and wastewater management 310 9% Total 3, % Table 3 Proceeds Allocation in Terms of Location Location Allocated amount (CNY million) Proportion (%) Northern China 1,715 50% Eastern China 203 6% Western China 1,005 30% Central and Southern China % Total 3, % Green Projects Examples As of December 31, 2017, the proceeds of Green Bond 2 had been utilized to fund 12 Eligible Green Projects. One project from each category was selected for field investigation. The details of the field investigation of the 2 projects are as follow: Project I: A wind power generation project located in the east of Inner Mongolia Autonomous Region of China, a concession project with a generation capacity of 49.5MW. So far, this Project has already been put into operation. It is learnt from the on-site investigation that the total installed capacity of this project is 49.5MW with the grid-connect volume of 99,320 MWh. Equivalently, the Project could reduce CO 2 emission of 89, tons. 8

9 Project II: A Water treatment project located in the eastern China, consisting of the expansion of an Urban Sewage Treatment Plant together with the laying of supporting pipeline (the Urban Sewage Treatment Project ) and the Rural Sewage Treatment Project. So far, the Urban Sewage Treatment Plant and Rural Sewage Project have both been completed. Based on the on-site investigation, the treatment capacity of the Urban Sewage Treatment Project in 2017 is 38.88million tons. The direct reduction of pollutants are as follows: COD : 1944 tons / year, NH 3-N : tons / year. 9

10 Table 4 Environmental Impacts of the Renewable Energy Projects on a Portfolio Basis Signed Share of total portfolio Eligibility for RE Allocated Average portfolio Annual Renewable energy Annual GHG emissions amount 9 financing 10 green bonds component amount 11 lifetime generation capacity added reduced* CNY million % % % CNY million year MWh MW tonnes of CO 2 equivalent Renewable Energy , , Table 5 Environmental Impacts of the Pollution Prevention and Control Projects on a Portfolio Basis Signed amount Share of total portfolio financing Eligibility for green bonds Allocated amount Average portfolio lifetime Annual pollution prevention** CNY million % % CNY million year tonnes Pollution prevention and control COD 12 NH 3-N 13 3, This represents the amount legally committed by the issuer for the project or component that is eligible for green bond financing. 10 This is the share of the total project cost that is financed by the issuer. 11 This represents the amount of green bond proceeds that has been allocated to disbursements to the project. 12 Chemical Oxygen Demand 13 Ammonia Nitrogen 10

11 Appendix 3 Green Bond 3 The use of proceeds, project evaluation and selection, management of proceeds, and reporting in relation to BoC s management during Green Bond 3 duration is in accordance with the Climate Bond Standard. Table 1 Detailed Information of Green Bond 3 ISIN code Currency Tenor Coupon Amount CNY Equivalent type (million) Amount (million) FX rate (year) XS USD 5 Floating 500 3, XS EUR 3 Floating 700 5, XS CNY 3 Fixed 1,000 1,000 1 Table 2 Proceeds Allocation in Terms of Category Category Allocated amount (CNY million) Proportion Renewable Energy 180 2% Clean Transportation 8,776 90% Unallocated 797 8% Total 9, % Table 3 Proceeds Allocation in Terms of Location Location Allocated amount (CNY million) Proportion Northern China 7,925 81% Southwestern China 851 9% Overseas 180 2% Unallocated 797 8% Total 9, % Green Projects Examples As of December 31, 2017, the proceeds of Green Bond 3 had been utilized to fund 13 Eligible Green Projects. One project was selected for field investigation. The details of the field investigation of the project are as follow: Project I:An urban rail project locates in northern China is the main line of the city which commuting between the northeast and southwest of the city. The total length of the line is 29.51km with 22 stations. It is learnt from the 11

12 on-site investigation that the annual volume of the passenger flow is million persons, which reduces CO 2 emissions of 43,869.1 tons per year. The subway line is expected to alleviate the heavy traffic of the city, and to speed up the transportation of urban passengers. 12

13 Table 4 Environmental Impacts of the Renewable Energy Projects on a Portfolio Basis Signed Share of total Eligibility for RE Allocated Average portfolio Annual Renewable energy Annual GHG emissions amount 14 portfolio financing 15 green bonds component amount 16 lifetime generation capacity added reduced* CNY million % % % CNY million year MWh MW tonnes of CO 2 equivalent Renewable Energy , , Table 5 Environmental Impacts of the Clean Transportation Projects on a Portfolio Basis Signed amount Share of total portfolio financing Eligibility for green bonds Allocated amount Average portfolio lifetime Annual GHG emissions reduced CNY million % % CNY million year tonnes of CO 2 equivalent*** Clean Transportation 8, , , This represents the amount legally committed by the issuer for the project or component that is eligible for green bond financing. 15 This is the share of the total project cost that is financed by the issuer. 16 This represents the amount of green bond proceeds that has been allocated to disbursements to the project. 13