Huaneng Leasing Benefits From Deutsche Bank's Sustainable Trade Finance Matched With China's Common Ground Taxonomy

Published on: 15 June 2022
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Huaneng Tiancheng Financial Leasing Co., Ltd. has launched a three-year CNY187 million account receivable financing facility with Deutsche Bank.

The use of proceeds to fund Huaneng Leasing's direct leasing for two wind power development projects in China marks Deutsche Bank's first sustainable trade finance transaction aligned to the Common Ground Taxonomy (CGT).

This transaction fits under CGT Scenario 1 since there are clear overlaps between EU and Chinese green taxonomies that can be considered equivalent within the scope and for the CGT. The acquisition also supports UN Sustainable Development Goals 7 and 9, which deal with renewable energy and infrastructure development.

Peter Qiu, President of Deutsche Bank China, said:

"Huaneng Leasing has been a long-standing client of Deutsche Bank China, with a clear commitment to providing comprehensive financial services that support clean energy development. We are honoured to act as the lender in financing Huaneng Leasing and these important clean energy projects. The transaction demonstrates how we support our clients’ sustainability transition by harmonising the varying green finance standards between different markets. Leveraging our expertise and experience in ESG and green finance framework design, Deutsche Bank is uniquely well-positioned to help clients in China to achieve their ESG targets.”

When completed, the two wind power plants will have a total green electricity capacity of 100MW, generating 270 million kWh of green electricity per year and reducing over 0.226 million tCO2e of GHG per year.

Following ADB's Environmental and Social Management System ("ESMS") criteria, the underlying wind farm projects were also partially financed by senior debts from the Asian Development Bank (ADB) under the multinational institution's Green Financing Platform.

Kamran Khan, Head of ESG for the Asia Pacific at Deutsche Bank, said:

"Successful execution of ESG transactions in China that meet global ESG standards is critical for bridging the remaining gaps between Chinese ESG standards and international ESG taxonomies. This is important for Asia and the global ESG market because China’s green finance market is one of the largest in the world. This Huaneng Leasing transaction exemplifies Deutsche Bank’s focus on executing world-class, benchmark-setting ESG transactions in Asia.”

Deutsche Bank had promised to facilitate 200 billion euros in sustainable finance and investment by the end of 2025, but the bank has now increased its ambition and pushed the deadline ahead to the end of 2022, after reaching 157 billion euros by the end of 2021.

Differences in standards and methods for green financing in global markets have irritated international investors, who have wanted more transparency and a uniform strategy.

In November 2021, the International Sustainable Finance Platform (IPSF) Taxonomy Working Group, co-chaired by the EU and China, produced the Common Ground Taxonomy (CGT) to meet this need.

The CGT is a watershed moment in establishing the similarities and differences between the EU and China's green taxonomy. It is expected to play a significant role in improving the global comparability of sustainable finance taxonomies and definitions of green and/or sustainable activities.

Jinyan Wang, Vice President of Tiancheng Financial Leasing said:

"With the vision of being a strong practitioner and the best performer in the industrial finance sector, we are devoted to the consistent innovation and development of a comprehensive financial service model for the clean energy industry. Riding on the trend of narrowing gaps between China’s green finance rules and international standards, we continue to promote the integration of our green finance practices with domestic and foreign green finance standards. We are also deeply involved in building the green leasing system, proactively participating in the leading green finance standards systems globally, and exploring opportunities in sustainable development and ESG. Together with partners such as Deutsche Bank, Tiancheng Leasing will continue promoting the sustainable development of the clean energy industry by closely integrating industry expertise with innovative financial products. ”

Source: Deutsche Bank

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