In the 14th Five-Year Plan for Green Finance, the Bank clearly defines the principles governing the development of green finance and proposes four major goals of the Group to develop green finance. Therefore, the plan provides top-level policy guidance for the Bank to comprehensively implement the concept of green development and actively address global climate change.

Strategic Goals of BOC to Develop Green Finance during the 14th Five-Year Plan Period

• Striving to become the bank of choice for green finance services

• Achieving leapfrog development of green finance business

• Properly managing environmental (climate), social, and governance (ESG) risks associated with customers

• Exploring and progressively reducing carbon footprints of group-wide operations and asset portfolios

Striving to become the preferred bank for green finance services

The Bank proactively embraces the new paradigm of sustainable development and the latest trend of economic transformation, creates a green finance system that aligns with its core mission of high-quality development in terms of policies, systems, and business expansion efforts, and positions green finance as its new hallmark.

Policy system

BOC has put in place a "1+1+N" green finance policy system, with the 14th Five-Year Plan for Green Finance as the strategic guide and different levels of basic policies to steer green development practices.

The 14th Five-Year Plan of BOC for Green Finance (Revision in 2024)

• In 2024, the Board of Directors of the Bank reviewed and adopted the 14th Five-Year Plan of BOC for Green Finance (Revision in 2024), which sets out the Group's four key objectives for developing green finance. The plan raises the target values of existing quantitative indicators and introduces 10 key quantitative indicators related to green credit, green bonds, and more, forming a comprehensive set of development indicators for green finance. It also enhances various aspects, including top-level design, organizational management, green finance products and services, regional development and international cooperation, customer ESG risk management, green operations and information disclosure, talent development, incentives and constraints, and the establishment of a data verification system.

The Green Finance Action Programme of Bank of China Limited

• The programme puts forward more than ten implementation initiatives in terms of top-level design, business development, customer ESG risk management, and green operations, among other aspects.

Specific policies on green finance

• The Green Finance Programme of Bank of China Limited for 2024 was formulated, putting forward 45 specific work requirements for green finance across the Bank in the year.

• The Bank has developed a policy support package covering 13 areas such as performance appraisal and incentive reinforcement, optimization of economic capital cost management, differentiation of related authorizations, and staff cost allocation, establishing pillars for its green finance policy system.

Conducting all-around performance appraisal

The performance appraisal mechanism for green finance was further improved. Appraisal targets were set to the Senior Management, Head Office departments, domestic and overseas branches, and comprehensive operation companies, ensuring that the Head Office and branches could remain consistent in terms of guidance, standards, targets, and pressure and to cover management requirements for many areas such as business development, customer ESG risk management, and green operations.

Strengthening industry guidance

More credit support was given to main green industries, by putting them under the active growth category. The Industry-specific Credit Policies of Bank of China Limited clearly sets out requirements for customer ESG risk management. The Bank has released more than 100 industry-specific credit policies covering agriculture, forestry, animal husbandry and fishery, mining and metallurgy, oil, gas and chemical engineering, construction and real estate, transportation and logistics industries, etc. It has also specified requirements for biodiversity conservation in credit policies for key industries like wind power generation, pumped-storage hydropower, and coal.

Providing differentiated authorizations

For industries with high ESG risks, such as steel, cement, electrolytic aluminum, and coal chemical, it is clearly stipulated that under certain conditions, credit applications shall be submitted to the Head Office for approval. Authorization will be expanded for green industries in the active growth category.

Optimizing economic capital cost management

Economic capital costs are assessed and incentive or disincentive measures are adopted according to the actual performance in green loans, loans for carbon-intensive industries, and other related indicators.

Providing tailored pricing support

Discounted prices are available for eligible green loans.

Specific policies on green finance (continued)

Improving the fast lane for approval

A fast lane for credit approval should be established, through which eligible green credit projects will be given priority in terms of application initiation and acceptance, due diligence, scheduling, approval, and disbursement. In other words, projects are entitled to fast approval and quality services throughout the process.

Innovating risk mitigation measures

Risk mitigation policies have been rolled out for green finance-related collateral such as carbon emission rights, pollution discharge rights, energy consumption rights, and water use rights.

Intensifying personnel training

The Green Finance Talent Programme of BOC underpins the high-quality development of green finance business intellectually.

Strengthening capability building

Green finance training courses have been conducted for different levels of persons. The Bank has worked to create an online green finance training system covering eight modules and offering more than 100 courses.

Introducing dedicated personnel expenses

Special personnel expenses are introduced to reward individuals with outstanding performance in green finance.

Offering honorary awards

The "BOC Special Merit Award" for green finance is created to give honorary awards to individuals with outstanding achievements.

Carrying out competitions and other activities

A number of activities such as the open competition to select the best candidates for innovative breakthroughs and outlet efficiency evaluation are conducted to encourage innovation in products and management practices as well as business expansion related to green finance.

Enhancing green awareness

The Green Action Initiative for Employees of BOC, Green Action Guide for Employees of BOC, and Carbon Neutrality Programme for BOC Head Office Building, BOCHK Building, and Office Buildings of Domestic Tier-1 Branches in 2024 are implemented to disseminate knowledge about green operations, advocate saving electricity, paper, and water, and promote an eco-friendly, low-carbon working culture and lifestyle among all employees.