1. Terminology & Definitions：
· Green Investment
Investment activities that take into account climate and environmental considerations and generate positive environmental benefits, such as carbon emission reduction, water saving, energy conservation and efficiency improvement, environmental protection, etc.
· Belt and Road
The Silk Road Economic Belt and the 21st Century Maritime Silk Road, often referred to as the Belt and Road Initiative, Belt and Road or BRI, is an initiative promoted by the Chinese government to enhance infrastructure and economic connectivity in and between countries along the Belt and Road. However, BRI is a dynamic concept, and is also open to countries outside the region.
For more information on the Belt and Road, please visit:
http://www.beltandroadforum.org/english/index.html
https://eng.yidaiyilu.gov.cn/
· Operations
In the GIP the term “operations” refers to a chain of activities ranging from the daily running of a business to project development, financing, construction, outsourcing, and decommissioning, which are directly or indirectly related to investments along the Belt and Road.
· ESG
ESG stands for Environmental, Social and Governance. Investopedia defines ESG as a set of criteria used by socially responsible investors to screen potential investments. Environmental criteria look at how a company performs as a steward of the natural environment. Social criteria examine how a company manages relationships with its employees, suppliers, customers and host communities. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.
For more information on ESG, please visit:
https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp
https://www.unpri.org/esg-issues
· Equator Principles
The Equator Principles (EPs) is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects and is primarily intended to provide a minimum standard for due diligence and monitoring to support responsible risk decision-making. The EPs apply globally, to all industry sectors and to four financial products 1) Project Finance Advisory Services; 2) Project Finance; 3) Project-Related Corporate Loans; and 4) Bridge Loans.
For more information on Equator Principles, please visit:
http://equator-principles.com
· Principles for Responsible Investment
The Principles for Responsible Investment are a set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice.
For more information on Principles for Responsible Investment, please visit:
https://www.unpri.org/about-the-pri
· Sustainable Banking Network
The Sustainable Banking Network (SBN) is an International Finance Corporation-supported community of financial sector regulatory agencies and banking associations from emerging markets committed to advancing sustainable finance in line with international good practices. 35 countries are currently represented at SBN.
For more information on Sustainable Banking Network, please visit:
www.ifc.org/sbn
· Task Force on Climate-related Financial Disclosures
The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB) in December 2015. The TCFD seeks to develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, with an objective to provide useful information to lenders, insurers, and investors.
For more information about the TCFD, please visit:
https://www.fsb-tcfd.org/about/#
· Environmental Risk Management Initiative for China's Overseas Investment
The Environmental Risk Management Initiative for China’s Overseas Investment was jointly launched by the Green Finance Committee of China Society for Finance and Banking and six other industrial associations in China in September 2017. The Initiative was developed to encourage and guide efforts by Chinese financial institutions and enterprises to accelerate the progress towards key sustainability goals, such as greening the BRI, achieving targets of the SDGs and the Paris Agreement, and implementing the Guidelines for Establishing the Green Financial System, by adopting responsible investment principles and improving environmental risk management in overseas investment.
2. What is the GIP?
The GIP is a set of principles for greening investment in the Belt and Road. It includes seven principles at three levels, i.e. strategy, operations and innovation.
Principle 1 and Principle 2 are designed to encourage signatories to incorporate sustainability and ESG factors into corporate strategies and management systems, aiming to call for implementation starting from the highest level and throughout the whole organization whenever possible.
Principle 3 and Principle 4 focus on communication with stakeholders at the operational level. Specific measures that signatories could take to contain environmental and social risks include environmental risk analysis, information sharing and conflict resolution mechanism.
Principles 5 to 7 are set to encourage signatories to utilize cutting-edge green financial instruments and green supply chain practices, and to improve organizational capacity through knowledge sharing and collective actions.
3. Why do we need the GIP?
The Belt and Road Initiative currently consists of more than a hundred countries located in Asia, Europe and Africa. It is a dynamic concept and the number of countries under the initiative is still growing.
Countries included in the Belt and Road region have great potential for economic development as well as for GHG emission reductions. Given the huge gap in infrastructure in the Belt and Road countries, the newly built infrastructure must be climate-resilient, environment-conscious and community-friendly for the world to achieve the goals of the SDGs and Paris Agreement. It is therefore important to have a set of green investment principles to guide financial institutions and corporations in their investments and operations in the Belt and Road region.
4. How does the GIP distinguish itself from other responsible investing initiatives?
The GIP has been developed based on the shared principles of existing responsible investment initiatives, such as the Equator Principles, the Principles for Responsible Investment, and the Environmental Risk Management Initiative for China’s Overseas Investment. However, the GIP has its own characteristics:
(1) Signatories of the GIP include not only financial institutions (banks, institutional investors, funds, etc.), but also corporations, because it takes both to effectively manage environmental and social risks.
(2) Geographical focus of the GIP is countries covered by BRI spanning across Asia, Europe and Africa. Most of the countries are emerging economies who are critical in delivering global climate change targets and in achieving the UN 2030 Agenda for Sustainable Development.
(3) Themes addressed by the GIP include ESG issues, environmental information disclosure, green financial instruments, and green supply chain management.
5. What firms should sign up to the GIP?
Organizations, including financial institutions and corporations that operate in or hold assets related to the Belt and Road region, especially those whose investments and operations have considerable environmental and social impacts, should becoming signatories to the GIP.
6. Why doesn’t the GIP categorize projects and countries based on their risk levels?
The GIP is a set of general principles to guide financial institutions and corporations to adopt best practices of environmental and social risk management, green finance and supply chain in their investments and operations, it does not categorize projects based on their size and impacts, nor does it differentiate countries according to maturity of their laws and regulations. For such categorization and corresponding risk management practices, signatories are advised to refer to the Equator Principles.
7. Can service providers sign up to the GIP?
We welcome the support of third-party service providers such as consulting firms in legal, accounting, financial advisory, design and environmental areas. We have drafted a side letter of support for firms of this type who wish to express their support to signatories of the GIP in developing green and low-carbon investments in the Belt & Road. We welcome supporting firms to work with the GIP signatories and the Secretariat in developing tools and methodologies for implementing the GIP.
8. How will the GIP be implemented by its signatories?
The GIP signatories are expected to incorporate the principles into their corporate strategy and decision-making processes. In practice, the GIP Secretariat will work with partners and signatories to develop guidance and tools to support implementation. Training will also be provided to facilitate the adoption and implementation of the GIP.
9. What if some of the GIP contents are not applicable to certain signatories?
Signatories should implement and report against each of the seven principles according to the guidance that the Secretariat publishes. The Secretariat will prepare supporting material including support for a diverse range of signatories to help them implement the GIP effectively.
10. Will the GIP be legally binding?
No. The GIP is a set of voluntary principles which are not legally binding. The signatories are expected to adopt and apply these principles in their investments and operations in or related to the Belt and Road region.
11. What are the benefits of signing on to the GIP?
Signatories to the GIP will benefit from a common platform, promoted to decision-makers, from which they can demonstrate their commitment to green investment in projects along the Belt and Road. Signatories will also benefit from the GIP Secretariat services, which will include access to green projects for the Belt and Road, capacity building events, as well as tools and case studies for implementation of the principles. Signatories will also have the opportunities to contribute to the future revisions of the GIP.
12. What support will the Secretariat provide to signatories of the GIP?
The Secretariat will develop material to support the effective implementation of the GIP by signatories, including:
• Implementation tools/guidance/case studies
• Reporting frameworks
• Capacity building material and knowledge sharing activities
• Green Project database
The success of the secretariat function is dependent on reliable engagement from signatory institutions. GIP signatories are expected to provide a reliable and responsive point of contact for the secretariat to engage with.
13. What is the disclosure and reporting requirements for the GIP?
In the first year, the Secretariat expects signatories to provide qualitative information on the adoption and implementation of the GIP into business strategy and corporate planning. The Secretariat will use this information to promote the GIP and to help target capacity building material.
After the first year, the Secretariat will develop reporting templates in consultation with signatories to formalise reporting arrangements. It is our expectation that these disclosure efforts will align with other frameworks of international principles.
14. Does the GIP get reviewed/revises regularly?
Yes. The Secretariat, with offices in Beijing and London, will lead reviews and update of the GIP, in direct consultation with signatories and industry experts, as the Belt and Road Initiative continues to evolve. It is important that the GIP is nimble enough to change with the Belt and Road, while incrementally increasing their ambition.
The GIP represents a journey for green investment in the Belt and Road region, not a destination. We expect that the Belt and Road Initiative will evolve over time. Therefore, the systems supporting the GIP need to be nimble and flexible enough to move with the changes to the Belt and Road Initiative.
15. Will the GIP be available in other languages?
Yes. The GIP will be available in Arabic, Chinese, English, French, Portuguese, Russian and Spanish. Nonetheless, only Chinese and English versions are official.