Industrial Bank : Green Bond Framework for Industrial Bank Co., Ltd. (Version 2020.10)

Green Bond Framework for Industrial Bank Co., Ltd.

October 2020

Version 2020.10

Table of Content
Purpose ......................................................................................	2
Assertions from the Management .................................................................	2
Background ...................................................................................	3
Rationale of IB Green Bond......................................................................	4
UN Sustainable Development Goals (SDGs) .......................................................	4
Framework Overview ...........................................................................	6
1.	Use of Proceeds ..........................................................................	6
2.	Process for Project Evaluation and Selection ..................................................	8
	I. Preliminary Screening ....................................................................	8
	II. Review and Approval ....................................................................	9
3.	Management of Proceeds ..................................................................	9
	I. Planning for Use of Proceeds .............................................................	9
	II. Management of Separate Ledger.........................................................	10
	III. Use of Unallocated Proceeds ...........................................................	10
4.	Reporting ...............................................................................	11
	I. Use of Proceeds Reporting ..............................................................	11
	II. Environmental Impact Reporting .........................................................	11
External Review ..............................................................................	12

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Purpose

This Green Bond framework (the "Green Bond Framework") has been prepared to demonstrate how Industrial Bank Co., Ltd. ("IB" or the "Bank") will issue offshore Green Bonds to finance and/or refinance new and existing projects and businesses with environmental benefits in alignment with:

• The Green Bond Principles 2018 (GBP 2018), International Capital Market Association (ICMA)1
• The Guidelines for Establishing a Green Finance System, the People's Bank of China (PBoC), Ministry of Finance, National Development and Reform Commission (NDRC), Ministry of Environmental Protection, China Banking Regulatory Commission), China Securities Regulatory Commission (CSRC), China Insurance Regulatory Commission (CIRC)
• Green Industries Guidance Catalogue 2019, National Development and Reform Commission (NDRC), Minister of Industry and Information Technology (MIIT), Minister of Natural Resources (MNR), Minister of Ecology and Environment (MEE), Minister of Housing and Urban- Rural Development (MHURD), the People's Bank of China (PBoC), National Energy Administration (NEA)
• Green Bond Categories 2015, the People's Bank of China (PBoC)1

Bonds issued under IB's Green Bond Framework may be certified by Climate Bonds Initiative (CBI).

Assertions from the Management

For each Green Bond (the "Green Bond") it will issue as per this Green Bond Framework, IB's management asserts that it will:

1. Disclose the intended Eligible Green Asset categories in the Use of Proceeds section of the Green Bond's documentation,
2. Establish an internal process for Asset Evaluation and Selection,
3. Establish an appropriate tracking process for the Management of Proceeds,
4. Make and keep readily available up-to-date Reporting on the use of proceeds and the environmental performance of the Green Assets.

1. IB would ensure its Green Bonds to be aligned with any new official versions released regarding these guidelines.

Background

Founded in August 1988 and Headquartersed in Fuzhou, Fujian Province, Industrial Bank is one of the first batch of joint-stock commercial banks approved by the State Council and the People's Bank of China, and the first Equator Bank in China. On February 5, 2007, IB was listed on Shanghai Stock Exchange (Stock Code: 601166). At present, with a registered capital of RMB20.77 billion, IB has become a national joint-stock commercial bank with sound governance, distinctive characteristics, great strength and quality service, staying stably among Global Top 50 Banks.

Over the last 30 years, IB has been advocating the philosophy of "Sincere Service, Growing Together" and endeavored to offer comprehensive, top-quality, and high-efficient financial service for customers. By adhering to the road of differentiated development, IB continually strengthened its competitive edges. By the end of 2019, the total assets of IB reached RMB 7.15 trillion, operating income was RMB 181.3 billion, the net profits attributable to the parent company across the year amounted to RMB 65.9 billion.

The group-based and integrated operation was pushed forward stably. It has established China Industrial International Trust, Industrial Bank Financial leasing, AEGON-Industrial Fund, Industrial Consumer Finance, Industrial Research and Industrial Digital Finance, becoming one of the commercial banks with the most financial licenses in China.

Market position and brand influence kept rising. In 2020, IB ranked No. 4 in terms of a combination of various indicators including growth rate, profitability, cost-to-income ratio and asset quality among "Top Performance PRC Banks" by The Banker; No. 57 among "Forbes Global 2000" by Forbes; No. 7 in terms of Core Tier-1 Capital among "Top 100 PRC Banks" by China Banking Association; "Best Supply Chain Finance Bank" and "Best Green Finance Bank" awarded by Asia Money; and "Best Sustainable Bank in China" among the Finance Asia's Country Awards by FinanceAsia.

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Rationale of the IB Green Bonds

IB has evolved and advanced its corporate governance philosophy from "shareholders' interests foremost" to "giving consideration to the interests of stakeholders", and to "harmonious unification of economy, society and environment and sustainable development of bank".

IB was the first commercial bank in China to fully embrace sustainable development and Green finance. In 2007, the Bank attended the United Nations Environment Programme (UNEP) Global Roundtable and signed the "UNEP Statement by Financial Institutions on the Environment & Sustainable Development". The Bank announced the adoption of the Equator Principles in 2008, becoming the first bank in China that integrated an advanced international environmental and social risk management framework into its daily business. In 2015, the Bank became the first financial institution in China to sign the "Statement by Financial Institutions on Energy Efficiency" initiated by the G20 Energy Efficiency Finance Task Group. In China, as the Vice Secretary- General of the Green Finance Committee (GFC) established under China Financial Forum, the Bank has been proactively promoting green finance as part of the national agenda, contributing to the drafting of key policies such as the Green Bond Issuance Guidelines by the PBoC; Guidelines for Establishing the Green Financial System by seven ministerial agencies including the PBoC and Ministry of Finance; and participating in GFC's activities such as policy promotion, research, capacity building and international cooperation.

In 2019, IB's green financing portfolio has achieved the Bank's mid-term goal of exceeding RMB1 trillion and exceeding 10,000 of green finance corporate clients. Focus areas for IB's green finance projects include renewable energy, clean transportation and sustainable water and wastewater management.

IB was the first green financial bond issuer in China. In 2016, IB issued three green bonds in the China Interbank Market: RMB10bn 2.95% due Jan-18, RMB20bn 3.20% due Jul-18 and RMB20bn 3.40% due Nov-21. With another two onshore bonds issued in 2018 (RMB30bn 3.99% due Oct-21 and RMB30bn 3.89% due Nov-21) and one issued in 2019 (RMB20bn 3.55% due Jul-22), IB has a total of RMB100bn onshore outstanding green financial bond by the end of 2019. IB has also issued its first offshore green bonds (USD600mi due Nov- 21 and EUR 300mi due Nov-21) in 2018. Funds raised are funding projects in

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