Banks should realize their social responsibility and offer substantial support to the green credit policy, says an article in Beijing Youth Daily. The following is an excerpt:
Pan Yue, deputy director of the State Environmental Protection Administration (SEPA), announced a joint effort by his department, the People's Bank of China and the China Banking Regulatory Commission against polluters by controlling their financing channels.
According to their "green credit" policy, businesses would be challenged in their application for bank loans if they fail environmental assessments or do not observe environmental regulations.
On the other hand, businesses making an effort to protect the environment would get more support from banks.
This latest move is aimed at pressing polluters to reduce their emissions rather than treating the pollutants later. And it encourages businesses with financial incentives, which might be more attractive and practical than administrative orders.
However, a vital factor for the success of the "green credit" policy depends on the attitude and commercial practices of banks.
Banks are only required to comply with the policy but it could also influence their commercial interests.
Even with the participation of the banking watchdog, it is still possible that some commercial banks may lend to polluters.
A sense of social responsibility should be inculcated in banks to stimulate them to play an active role in the green credit policy. The banks should realize that they would also be responsible for deterioration of the environment should they lend to polluters.
Legal stipulations, administrative rules and inter-bank supervision would be an effective way to remind banks of such awareness.
Non-government organizations in some Western countries have voiced objections to banks lending to polluters with notable results.
The environmental department should publicize banks that finance polluting factories alongside the polluters.
(China Daily August 1, 2007)