SINOSURE: Green development needs green finance

Zhang Hui, Vice President at SINOSURE, brings the Chinese ECA’s perspective on bringing an impetus to ‘green’ development and decarbonisation

With the Paris Agreement setting the goal for global sustainable development, governments of different countries have declared commitments or released roadmaps for decarbonisation. Green finance and low-carbon development has thus become the key focus among global enterprises, investors and financial institutions.

As policy-oriented financial instruments, ECAs shoulder the mission of serving national strategy and guiding the flow of capital. This includes, at a top level, actively embedding design of comprehensive measures to tackle climate change into national climate strategies. At a business level, ECAs need to gradually ‘green’ the business portfolio by stressing the equal importance of ‘reducing high-carbon projects’ and ‘increasing low-carbon underwriting’.

At present, major ECAs are planning their decarbonisation pathways echoing their national strategies and innovative green products and services are springing up. Various measures such as carbon calculation, climate change related risk analysis and assessment, information disclosure and cultivation of carbon risk awareness have been adopted.

Additionally, with the mission of promoting exports, ECAs are also expected to fully recognise the different developing phases of both exporting and importing countries to ensure a just and reasonable transition in the green cause, embodied with the principle of taking ‘common but differentiated responsibilities’. Currently, ECAs are taking practical and realistic decarbonisation measures, such as independently identifying the industries that apply and setting flexible exclusions where necessary.

SINOSURE stepping on its path of green transition

The carbon targets announced by the Chinese government of reaching an emission peak in 2030 and carbon neutrality in 2060 unlock a new low-carbon era that will drive the transition of the national economy and society. Under this circumstance, more and more Chinese financial institutions are upgrading from being ‘supporters’ to ‘performers’ with initiatives in the pursuit of green transition which will form an interrelated and healthy cycle. As more and more financial institutions join the green finance trend, profound change will be seen in the investment and financing environment. In China, many banks are reducing their support for high-carbon projects in traditional markets.

As a responsible ECA that upholds the principle of sustainability, SINOSURE attaches great significance to addressing climate change and the green transition. In the past three years SINOSURE provided support for green trade and projects to the scale of $63 billion. The insured value in the sectors of clean energy, green transportation and energy saving and environment protection totalled $33.8 billion. In 2020 SINOSURE provided insurance for photovoltaic exports of $11.3 billion, an increase of 20.9% year on year.

Another case in point were the world’s largest 23,000 TEU dual-fuel container vessels insured by SINOSURE and delivered to French CMA CGM Group this July. The vessels are praised as being ‘Green Giants on the sea’ with engines that can make use of both LNG and oil, reducing emissions of carbon, nitrogen oxide and sulphur by 20%, 85% and 99% respectively.

SINOSURE has recently further enhanced operational measures to promote the green transition. Firstly, top-level design has been reinforced by integrating a green action plan into the ECA’s ‘Fourteenth Five-year Plan’, upon which a long-term mechanism is established. Secondly, communications with governments were further strengthened to better serve the ‘Green Silk Road’. Thirdly, we keep improving policies to support green business (such as photovoltaic and wind power). Fourthly, we remain focused on the assessment of environmental, climate change-related and social risks. Green labelling has been used in classification of our clients and projects to better evaluate projects and help clients identify and mitigate the related risks.

The green era is just around the corner. As professional risk management tools, ECAs will surely have greater parts to play and perform important roles as boosters and gatekeepers in building a global low-carbon ecology.