How Green is Belt and Road?
Green has continued to be the main developmental focus of a high quality Belt and Road Initiative. According to media reports, the number of global clean and renewable energy projects under the Belt and Road Initiative have reached 102, with a total value of USD104.95billion.
Jean Lu, Managing Director, Co-Head of Client Coverage, Corporate, Commercial & Institutional Banking, Standard Chartered Bank (China) Limited, said that Standard Chartered participated in more than 160 Belt and Road Projects in 2019, with a total value of over USD30billion. Nearly half of the projects aligned to the UN’s Sustainable Development Goals (SDGs), including renewable energy, waste management and water resources projects.
She thought that Belt and Road Initiative projects will increasingly focus on sustainability, with several key trends observed.
Booming Clean Energy Projects
Clean and renewable energy have always played a major role in green Belt and Road projects, demonstrating Belt and Road markets’ huge demand for clean and renewable energy. According to the World Bank’s 2019 “Private Participation in Infrastructure” annual report[1], out of 150 energy projects that private investment participated in, 91% of them were clean and renewable energy projects.
Standard Chartered has also participated in multiple Belt and Road clean energy projects. For example, the Bank provided financing for a local gas cycle power station and desalination project in Bahrain, which will account for 25% of the country’s power generation after completion, an important milestone in improving the well-being and local economic development of the country.
More Diversified Infrastructure Projects
Standard Chartered also participated in multiple sustainable infrastructure projects to promote social development. Jean Lu noted that Chinese companies have increasingly participated in sustainability projects that improve social well-being and economic development, such as hospitals, school, and water supply, fostering a close relationship between Chinese companies and local communities. In 2019, Standard Chartered participated in nearly 10 projects on water management and waste management in Africa, including support for two infrastructure projects in Tanzania. One project provides water for irrigation and livestock for 20,000 household, and the other provides clean water for 300,000 households after completion.
In addition, Standard Chartered also provided financial support for a local hospital project of a Chinese company in Sri Lanka and another Chinese company's higher education college project in Ivory Coast.
Support Environment Protection Equipment Companies to Go Global
Green Belt and Road Initiative infrastructures also bring opportunities for Chinese environment protection technology and equipment companies to go global and expand in international markets.
For example, Standard Chartered provided USD40million credit for a listed Sichuan Chinese company who won a bid in India to install desulphurization equipment for coal plants locally.
"We can see that the green "Belt and Road" projects of Chinese companies are becoming more abundant, and the livelihood and social benefits brought to the local area are becoming more diversified. We will continue to work with Chinese companies to create a green Belt and Road.” said Jean Lu. Standard Chartered is committed to provide USD75billion financial support for sustainable projects by the end of 2024, including the provision of USD40billion in financing sustainable infrastructure projects, and USD35billion in financing services, M&A consulting and debt structure design services for clean and renewable energy projects (solar and wind). A majority of which would go to funding Belt and Road projects.
“Sustainable Finance”, a new focus
“Sustainable finance” has become a new focus of the market, where the sustainable finance market reached USD465billion in 2019, a 78% year-on-year increase, with green bond continues to be the main product (around 58%), followed by an increasing proportion of sustainable loans and bonds.
Jean Lu said, “Through sustainable finance such as green bond, companies can fulfil its social responsibility while attracting diversified investors, resulting in rapid market growth.” To meet clients’ growing need on sustainable finance, Standard Chartered established a dedicated sustainable finance team to provide comprehensive sustainable finance service for clients globally.
In 2019, the Green Belt and Road Initiative Principle was signed in Beijing. In September of the same year, the City of London published the “Greening the Belt and Road Report”[2], citing that there are already 25 green Belt and Road projects designed under the Ecological and Environmental Cooperation Plan underway, and will be used as case studies to promote green practices.
The "Standard Chartered" mentioned in this article refers to the Standard Chartered Bank Group (Standard Chartered PLC) and its subsidiaries.
[1]https://ppi.worldbank.org/en/ppi
[2]https://www.cityoflondon.gov.uk/business/economic-research-and-information/new-research/Pages/greening-the-belt-and-road-report.aspx
This article is a translation, original article published in 21st Century Business Herald.
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