annual report on bank of china’s green bonds...

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Annual Report on Bank of China’s Green Bonds

Bank of China (“BOC”) Green Bonds enables BOC to support environment friendly projects and companies which

are particularly active in terms of environment preservation, energy transition or climate change mitigation. As

stated in the Offering Circular as well as Bank of China Green Bond Management Statement (“the Management

Statement”)1, we hereby provide BOC Green Bonds Annual Report, disclosing the allocation of the bond proceeds

as well as the expected environmental impacts of the Eligible Green Projects as of 31st December, 2017.

Outstanding BOC Green Bonds

Issue Date

Maturity

(year) Currency

Amount

(million)

CNY Equivalent Amount

(million)

Green Bond 1

2016/7/5 3 USD 500 3,348

2016/7/5 3 USD 750 5,021

2016/7/5 5 USD 1,000 6,695

2016/7/5 5 EUR 500 3,701

2016/7/5 2 CNY 1,500 1,500

Green Bond 2 2016/11/3 3 USD 500 3,392

Green Bond 3

2017/11/15 5 USD 500 3,315

2017/11/15 3 EUR 700 5,449

2017/11/15 3 CNY 1000 1,000

Bond Details and Proceeds Allocation

Green Bond 1 was issued in the offshore market through Luxemburg Branch and New York Branch in July 2016.

The total amount equated to CNY 20,265 million, and the net proceeds equated to CNY20,224 million. As of

December 31, 2017, all of these net proceeds had been utilized to fund 8 metro projects, 3 wind power generation

projects, 1 waste water treatment project and 1 solar power generation project.

Green Bond 2 was China Green Covered Bond and issued in the offshore market through London Branch in

November 2016. The total amount equated to CNY 3,392 million, and the net proceeds equivalents to CNY 3,381

million. As of December 31, 2017, all of these net proceeds had been utilized to fund 9 wind power generation

projects, 2 waste water treatment projects and 1 solar power generation project.

Green Bond 3 was certified by Climate Bond Initiative (CBI) and issued in the offshore market through Paris Branch

in November 2017. The total amount equated to CNY 9,763 million, and net proceeds equated to CNY9,753 million.

1 available at http://www.boc.cn/en/investor/ir10/

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As of December 31, 2017, 92% of net proceeds had been utilized to fund 11 metro projects, 2 wind power

generation projects.

All the BOC Green Bonds are in alignment with Green Bond Principles (GBP) published by the Executive Committee

of Green Bond Principles, with the International Capital Market Association (ICMA) serving as Secretariat.

Impact Reporting

Below shows the expected environmental impacts in detail. Due to the confidential considerations for our loan

clients, the impact results are disclosed on a portfolio basis. For each of the indicators in the table, the project-by-

project results include only the pro-rated share (as a percentage of the issuer's share of the total financing) of the

total projects’ results; these individual pro-rata project impacts are then aggregated to indicate the overall impact

of the funded projects in a certain category.

The environmental impacts are calculated in categories. The impacts of the Renewable Energy Projects refer to the

UNFCCC CDM methodology ACM 0002 Grid-connected electricity generation from renewable sources (version

17.0)2. Noted by * in the table below.

For Waste Water Treatment Projects, the environmental impacts are calculated based on the capacity of the

treatment effectiveness (waste water treatment = treatment capacity of the facility * (influent quality - effluent

quality)). Noted by ** in the table below.

The impacts of the Clean Transportation Projects are calculated based on ACM0016 Mass rapid transit projects

(version 4.0)3. Noted by *** in the table below.

Renewable Energy

（Wind&Solar）

Allocated amount

(CNY million)

Annual

generation(MWh)

Renewable energy

capacity added(MW)

Annual GHG emissions

reduced*(CO2 tonnes)

1,239.10 699,850.52 639 615,948

Waste Water Treatment Allocated amount

(CNY million)

Annual pollution prevention**(tonnes)

COD NH3-N

500 1,343 90

Clean Transportation

(Electrified Metro)

Allocated amount

(CNY million)


reduced*** (CO2 tonnes)

18,485.36 68,748

2 available at http://cdm.unfccc.int/filestorage/D/5/Y/D5YFS9I3VKBT18MQNGX0LPZ6U7AWCO/ACM0002_%28v17%200%29_clean.pdf?t=bGt8b2tiaTVtfDDXyk1Kj1cAVtGwMe6a7-hX 3 available at http://cdm.unfccc.int/filestorage/3/J/I/3JIUSA5XE4QH127BPK0WFN6DMZVYRT/EB85_repan10_ACM0016_ver_04.0.pdf?t=Z3V8b2tiaHJkfDBMg0eSxJTDh6CNRcIIWBxk

http://cdm.unfccc.int/filestorage/D/5/Y/D5YFS9I3VKBT18MQNGX0LPZ6U7AWCO/ACM0002_%28v17%200%29_clean.pdf?t=bGt8b2tiaTVtfDDXyk1Kj1cAVtGwMe6a7-hX

http://cdm.unfccc.int/filestorage/D/5/Y/D5YFS9I3VKBT18MQNGX0LPZ6U7AWCO/ACM0002_%28v17%200%29_clean.pdf?t=bGt8b2tiaTVtfDDXyk1Kj1cAVtGwMe6a7-hX

http://cdm.unfccc.int/filestorage/3/J/I/3JIUSA5XE4QH127BPK0WFN6DMZVYRT/EB85_repan10_ACM0016_ver_04.0.pdf?t=Z3V8b2tiaHJkfDBMg0eSxJTDh6CNRcIIWBxk

http://cdm.unfccc.int/filestorage/3/J/I/3JIUSA5XE4QH127BPK0WFN6DMZVYRT/EB85_repan10_ACM0016_ver_04.0.pdf?t=Z3V8b2tiaHJkfDBMg0eSxJTDh6CNRcIIWBxk

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Use of Proceeds

All the net proceeds of the Green Bonds will be allocated to Eligible Green Projects in the following categories:

• Renewable energy: the production and transmission of renewable energy, and the manufacturing of

renewable energy appliances and products; renewable energy includes solar energy and wind energy;

• Clean transportation: electric, public, rail, non-motorised, multi-modal transportation, infrastructure for clean

energy vehicles and reduction of harmful emissions, and rolling stocks or vehicles carrying fossil fuel products will

be excluded; and

• Sustainable water and wastewater management: sustainable infrastructure for purposes of water collection,

storage, treatment or distribution, or for flood protection or drought resilience.

Project Evaluation and Selection

BOC will follow the procedures below to evaluate and select the Eligible Green Projects:

1. Preliminary Screening

Domestic and overseas branches of BOC shall conduct a preliminary screening of potential projects in accordance

with the criteria and standards set out in BOC’s internal regulations and the Eligible Green Project categories as

described in the “Use of Proceeds” section in this Statement, and form a list of nominated projects which will be

submitted to the Headquarters for review.

2. Review and Approval

The Headquarters shall review each of the nominated projects for approval as Eligible Green Projects. The approved

projects will form an Eligible Green Project list.

3. Update and Maintenance

The Headquarters shall review the Eligible Green Project List on a quarterly basis and determine if any changes are

necessary (for example, if a project has amortized, been prepaid, sold or otherwise become ineligible). The

Headquarters shall organize domestic and overseas branches to nominate new projects, and approve the eligible

ones to replace projects that have amortized, been prepaid, sold or otherwise become ineligible.

Management of Proceeds

Due to its global network, BOC will allocate the net proceeds of the Green Bonds to Eligible Green Projects across

various domestic and overseas markets. BOC has established an effective mechanism to manage the proceeds,

ensuring that the proceeds from the Green Bonds will be used to fund the Eligible Green Projects.

1. Planning for Use of Proceeds

Prior to the issuance of Green Bonds, BOC shall evaluate the recent and pipeline capital spending and develop a

preliminary Eligible Green Project List in accordance with the procedures as described in the “Project Evaluation

and Selection” section in this Statement to ensure that the Green Bond proceeds can be allocated to Eligible Green

Projects in a timely manner.

2. Management of Separate Ledger

BOC shall record the source and allocation of proceeds in a separate ledger to ensure that all the net proceeds of

the Green Bonds are used to fund Eligible Green Projects. The ledger shall contain detailed information of the

capital source (including the issue amount, the coupon rate, the issue date and the maturity date of the Green

Bonds) and the capital allocation (including the project name, the borrower description, the project category, the

balance, the release date, the repayment date, and the interest rate of the loan). BOC will review and update the

ledger on a quarterly basis. Any proceeds allocated to the projects that have amortized, been prepaid, sold or

otherwise become ineligible shall be reallocated to newly nominated and approved Green Projects.

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3. Use of Unallocated Proceeds

Unallocated proceeds shall not be invested in greenhouse gas (GHG) intensive or highly polluting or energy

intensive projects. The unallocated proceeds could be temporarily invested in Green Bonds issued by non-financial

institutions in domestic or international markets, and in money market instruments with good credit rating and

market liquidity, or kept in cash until they are allocated to Eligible Green Projects.

Reporting

As long as the Green Bonds are outstanding, BOC will make and keep readily available up-to-date information on

the allocation of the proceeds and the environmental performance of the funded Eligible Green Projects on an

annual basis on its official website (http://www.boc.cn/en/investor/ir10/) and through other channels where

feasible, such as annual reports or social responsibility reports. BOC intends to maintain the transparency of

information disclosure following the best practices recommended by GBP, 2017. The following contents will be

disclosed annually:

1. A brief description of the Eligible Green Projects to which the Green Bonds proceeds were allocated, and the

amount and percentage allocated to each of the categories;

2．An attestation report issued by a specialized certification body assuring allocation of proceeds; and

3. The expected environmental impacts figures of the Eligible Green Projects to which the Green Bonds proceeds

have been allocated will be based on the financing share of the projects. BOC will adopt some quantitative

performance measures of certain categories, where feasible, and disclose them on an aggregated portfolio basis.

The environmental impact section will be reviewed by a specialized certification body.

In addition, BOC will confirm that the use of proceeds of the Green Bonds issuance conforms to this Statement on

its official website (http://www.boc.cn/en/investor/ir10/) on a quarterly basis.

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Appendix 1

Green Bond 1

Table 1 Detailed Information of Green Bond 1

ISIN code Currency Tenor

(year)

Coupon

type

Amount

(million)

CNY Equivalent Amount

(million) FX rate

XS1437622548 USD 3 Fixed 500 3347.50 6.695

XS1437622621 USD 3 Floating 750 5021.25 6.695

XS1437622977 USD 5 Fixed 1,000 6695.00 6.695

XS1437623355 EUR 5 Fixed 500 3701.40 7.4028

XS1437844100 CNY 2 Fixed 1,500 1500.00 1

Table 2 Proceeds Allocation in Terms of Category

Category Allocated amount (CNY million) Proportion

Renewable Energy 1,200 6%

Clean Transportation 18,524 92%

Sustainable water and wastewater

management 500 2%

Total 20,224 100%

Table 3 Proceeds Allocation in Terms of Location

Location Allocated amount (CNY million) Proportion

Northern China 17,714 88%

Eastern China 1,594 8%

Western China 291 1%

Overseas 626 3%

Total 20,224 100%

Green Projects Examples

As of December 31, 2017, the proceeds of Green Bond 1 had been utilized to fund 13 Eligible Green Projects. Two

projects were selected for field investigation. The details of the field investigation of the 2 projects are as follow:

Project I: A wind power generation project located in the east

of Inner Mongolia Autonomous Region of China, a

concession project with a generation capacity of 399MW. So

far, this Project has already been put into operation. It is

learnt from the on-site investigation that the total installed

capacity of this project is 399MW with the grid-connect

volume of 788,293MWh in 2017. Equivalently, the Project

could reduce CO2 emission of 0.71 million tons.

Project II: A Water treatment project located in the eastern

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China, consisting of the expansion of an Urban Sewage

Treatment Plant together with the laying of supporting pipeline

(the “Urban Sewage Treatment Project”) and the Rural Sewage

Treatment Project. So far, the Urban Sewage Treatment Plant

and Rural Sewage Project have both been completed. Based on

the on-site investigation, the treatment capacity of the Urban

Sewage Treatment Project in 2017 is 31.39 million tons. The

direct reduction of pollutants are as follows: COD : 1486.28

tons / year, NH3-N : 253.32 tons / year.

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Table 4 Environmental Impacts of the Renewable Energy Projects on a Portfolio Basis

Signed

amount4

Share of total

portfolio financing5

Eligibility for

green bonds

RE

component

Allocated

amount6

Average portfolio

lifetime

Annual

generation

Renewable energy

capacity added


reduced*

CNY million % % % CNY million year MWh MW tonnes of CO2 equivalent

Renewable Energy 1,199.96 68.68 100 100 1,199.96 20 943,279.86 639 818758.51

Table 5 Environmental Impacts of the Pollution Prevention and Control Projects on a Portfolio Basis

Table 6 Environmental Impacts of the Clean Transportation Projects on a Portfolio Basis

Signed amount Share of total

portfolio financing

Eligibility for

green bonds Allocated amount

Average portfolio

lifetime Annual GHG emissions reduced

CNY million % % CNY million year tonnes of CO2 equivalent***

Clean Transportation 18,524.50 12.94 100 18,524.50 20 118,887.24

4 This represents the amount legally committed by the issuer for the project or component that is eligible for green bond financing. 5 This is the share of the total project cost that is financed by the issuer. 6 This represents the amount of green bond proceeds that has been allocated to disbursements to the project. 7 Chemical Oxygen Demand 8 Ammonia Nitrogen


portfolio financing

Eligibility for

green bonds Allocated amount

Average portfolio

lifetime Annual pollution prevention**

CNY million % % CNY million year tonnes

Pollution prevention

and control 500.00 69.07 100 500.00 20

COD7 NH3-N 8

1,026.55 174.96

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Appendix 2

Green Bond 2


ISIN Code Currency Tenor

(year)

Coupon

type

Amount

(million)

CNY Equivalent

Amount (million) FX rate

XS1512929842 USD 3 Fixed 500 3,391.60 6.7832


Category Allocated amount(CNY million) Proportion

Renewable Energy 3,072 91%

Sustainable water and wastewater

management 310 9%

Total 3,381 100%


Location Allocated amount (CNY million) Proportion (%)


Eastern China 203 6%

Western China 1,005 30%

Central and Southern China 459 14%

Total 3,381 100%


As of December 31, 2017, the proceeds of Green Bond 2 had been utilized to fund 12 Eligible Green Projects. One

project from each category was selected for field investigation. The details of the field investigation of the 2 projects

are as follow:

Project I: A wind power generation project located in the east

of Inner Mongolia Autonomous Region of China, a

concession project with a generation capacity of 49.5MW. So

far, this Project has already been put into operation. It is

learnt from the on-site investigation that the total installed

capacity of this project is 49.5MW with the grid-connect

volume of 99,320 MWh. Equivalently, the Project could

reduce CO2 emission of 89,457.52 tons.

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Project II: A Water treatment project located in the eastern

China, consisting of the expansion of an Urban Sewage

Treatment Plant together with the laying of supporting pipeline

(the “Urban Sewage Treatment Project”) and the Rural Sewage

Treatment Project. So far, the Urban Sewage Treatment Plant

and Rural Sewage Project have both been completed. Based on

the on-site investigation, the treatment capacity of the Urban

Sewage Treatment Project in 2017 is 38.88million tons. The

direct reduction of pollutants are as follows: COD : 1944 tons /

year, NH3-N : 369.36 tons / year.

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Signed

amount9

Share of total portfolio

financing10

Eligibility for

green bonds

RE

component

Allocated

amount11

Average portfolio

lifetime

Annual

generation

Renewable energy

capacity added


reduced*


Renewable Energy 3071.86 36.84 100 100 3071.86 20

938,201.92 882 799,952.63

Table 5 Environmental Impacts of the Pollution Prevention and Control Projects on a Portfolio Basis

9 This represents the amount legally committed by the issuer for the project or component that is eligible for green bond financing. 10 This is the share of the total project cost that is financed by the issuer. 11 This represents the amount of green bond proceeds that has been allocated to disbursements to the project. 12 Chemical Oxygen Demand 13 Ammonia Nitrogen

Signed

amount

Share of total portfolio

financing

Eligibility for green

bonds Allocated amount

Average portfolio

lifetime Annual pollution prevention**

CNY million % % CNY million year tonnes

Pollution prevention and control 309.64 20.11 100 309.64 20 COD12 NH3-N 13

3,208.47 403.59

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Appendix 3

Green Bond 3

The use of proceeds, project evaluation and selection, management of proceeds, and reporting in relation to BoC’s

management during Green Bond 3 duration is in accordance with the Climate Bond Standard.


ISIN code Currency Tenor Coupon

type

Amount

(million)

CNY Equivalent

Amount (million) FX rate

(year)

XS1720540134 USD 5 Floating 500 3,315 6.629

XS1720540217 EUR 3 Floating 700 5,449 7.7836

XS1720540308 CNY 3 Fixed 1,000 1,000 1


Category Allocated amount (CNY million) Proportion

Renewable Energy 180 2%

Clean Transportation 8,776 90%

Unallocated 797 8%

Total 9,753 100%


Location Allocated amount (CNY million) Proportion


Southwestern China 851 9%

Overseas 180 2%

Unallocated 797 8%

Total 9,753 100%


As of December 31, 2017, the proceeds of Green Bond 3 had been utilized to fund 13 Eligible Green Projects. One

project was selected for field investigation. The details of the field investigation of the project are as follow:

Project I：An urban rail project locates in northern China

is the main line of the city which commuting between the

northeast and southwest of the city. The total length of

the line is 29.51km with 22 stations. It is learnt from the

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on-site investigation that the annual volume of the

passenger flow is 102.17million persons, which reduces

CO2 emissions of 43,869.1 tons per year. The subway line

is expected to alleviate the heavy traffic of the city, and

to speed up the transportation of urban passengers.

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Signed

amount14

Share of total

portfolio financing15

Eligibility for

green bonds

RE

component

Allocated

amount16

Average portfolio

lifetime

Annual

generation

Renewable energy

capacity added


reduced*


Renewable Energy 180.10 19.34 100 100 180.10 20 58,551.47 116 40,466.95

Table 5 Environmental Impacts of the Clean Transportation Projects on a Portfolio Basis


portfolio financing

Eligibility for

green bonds Allocated amount Average portfolio lifetime Annual GHG emissions reduced

CNY million % % CNY million year tonnes of CO2 equivalent***

Clean Transportation 8,775.78 1.55 100 8,775.78 20 26,165.80

14 This represents the amount legally committed by the issuer for the project or component that is eligible for green bond financing. 15 This is the share of the total project cost that is financed by the issuer. 16 This represents the amount of green bond proceeds that has been allocated to disbursements to the project.

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