DB pilots China sustainable trade finance deal – The Asset

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Deutsche Bank (DB) has helped Huaneng Tiancheng Financial Leasing (Huaneng Leasing) launch a 3-year 187-million-yuan (US$27.25 million) account receivable financing facility as part of a deal that marks the bank’s first sustainable trade finance transaction aligned to the Common Ground Taxonomy (CGT).
The proceeds of the deal will finance Huaneng Leasing’s direct leasing for two wind power development projects in China.
This transaction falls under Scenario 1 outlined in the CGT with clear overlaps between EU and China green taxonomies that can be considered comparable within the scope and for the purpose of the CGT. The transaction also aligns to UN Sustainable Development Goals 7 and 9, related to renewable energy and infrastructure development.
Upon completion, total green electricity capacity of the two wind power projects will reach 100 megawatts altogether, generating 270 million kilowatt hours of green electricity per year, which will reduce over 0.226 million tonnes of carbon dioxide equivalent of greenhouse gases per year.
The underlying wind farm projects have also been partially financed by senior debts from Asian Development Bank (ADB) under the multilateral institution’s Green Financing Platform, following ADB’s environmental and social management system requirements.
“Successful execution of ESG transactions in China that meet global ESG [environmental, social and governance] standards is critical for bridging the remaining gaps between Chinese ESG standards and international ESG taxonomies,” says Kamran Khan, head of ESG for Asia-Pacific at Deutsche Bank. “This is important for Asia and the global ESG market because China’s green finance market is one of the largest in the world.”
International investors have been sensitive to differences in standards and approaches to green financing in global markets, and have sought more clarity and a unified approach. In order to address this need, the CGT was published by the International Sustainable Finance Platform Taxonomy Working Group co-chaired by the EU and China in November 2021.
The CGT is a key milestone in providing clarity about the commonality and differences between the EU’s and China’s green taxonomies. It is expected to play a pivotal role in increasing comparability of sustainable finance taxonomies and definitions of green and sustainable activities globally.
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