ADB Supports Chinese Bank's Lending for Green Buildings

The Asian Development Bank (ADB) is providing CNY300 million in partial credit guarantees to Shanghai Pudong Development Bank, or SPD Bank, to support private-sector financing of energy-efficient buildings across China.


SPD Bank is the first Chinese partner in a program set up by ADB to encourage financial institutions to lend to companies seeking to retrofit old buildings so that they use less energy or to construct so-called green buildings which are designed, constructed, and maintained to optimise energy and water efficiency over the buildings’ lifespan. Retrofitting buildings typically leads to energy savings of 20%-40%.


Under the CNY800 million Energy Efficiency Multi-project Financing Program, ADB is partnering with Johnson Controls, a private sector energy management company listed on the New York Stock Exchange. Johnson Controls identifies buildings with energy savings potential while  ADB shares the project credit risks with the financial institutions.


The Chinese government is keen to reduce the greenhouse gases that have accompanied the country’s rapid rise in energy consumption in recent years. Given the PRC’s rapid urbanization, improving the energy efficiency of buildings will help significantly in cutting the gases that contribute to climate change. However, companies have found it hard to access the finance to do that given they can offer little collateral to back their loans, while banks themselves have little experience in project finance for energy-efficiency projects.


“By sharing credit risk with our partner bank under this program, we aim to ease the financing bottleneck and expand critical private sector investment in energy-saving green buildings in industry, commercial, and also social infrastructure, such as sectors schools and hospitals in the People’s Republic of China,” says Hisaka Kimura, Senior Investment Specialist in ADB’s Private Sector Operations Department. “Doing that will have a long-lasting and cumulative effect on the PRC’s bid to slash greenhouse gas emissions.”


SPD Bank, listed on the Shanghai Stock Exchange, was the first domestic bank in the PRC to offer a full range of green credit solutions to companies.


“SPD Bank has declared that it will build itself into the first low-carbon bank in the PRC, guided by an innovation-driven strategy,” said Liu Xinyi, Executive Vice President of the bank. Recognising the huge potential of green construction in the PRC, SPD Bank is supporting
cooperation with ADB to boost the development of green buildings using innovative finance.” As a responsible corporate citizen, we will try our best to contribute to the sustainable development of our society,” Liu says.


Michael Harris, Vice President and Managing Director, Global Energy Solutions of Johnson Controls Building Efficiency Asia said: “The PRC’s 12th Five-Year Plan’s Energy Saving and Emission Reduction Plan makes energy saving and emissions reduction the focus of development
in the construction, industry, and transportation sectors.”




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