the middle of last year, there is still a long way to go.

Altogether, the SEPA has submitted more than 30,000 names of companies with environment breaches to the central bank. Only 38 have been investigated and 12 banned from accessing further loans.

"The successes were only ‘partial' and far from the goal the agency had set for itself," said Pan. "The reason is that some provinces are not following the green credit plan, and even if they are, it's only superficial.

"High polluting and energy-consuming companies are protected by local governments. Some of them make a lot of money very quickly, so it's hard to cut their credit."

According to Pan, there are four technical problems standing in the way of the banks' ability to promote the policy. First, a considerable number of small and medium-sized polluting companies seldom apply to banks for loans and either raise funds independently or through private financing. They are not covered by the green credit policy.

Second, the information exchange mechanism and its efficiency still needs to be improved.

"For example, some local environmental watchdogs have failed to update information on environmental breaches, and this has affected the effect of the green credit campaign," said Pan. "Besides, there was no feedback from commercial banks on related information and the staff in commercial banks did not have a good knowledge of policies, regulations and laws related to environment protection. All these factors have prevented the campaign from going deeper."

Third, the feasibility of the policy is questioned since there are no guidelines for the implementation of the policy and no standards for environmental risk assessment.

Fourth, there is no incentive mechanism for promoting the campaign.

"At present, there is still a lack of supporting economic policies for companies that did a good job in environment protection, and banks don't see the need to support environmentally friendly projects," said Pan.

Developing solutions

The SEPA is working to solve the aforementioned problems in order to guarantee the comprehensive implementation of the green credit policy from three aspects, said Pan.

First, the SEPA will improve the information sharing and exchange mechanism between environmental regulators and financial institutions.

Second, the SEPA will provide more guidance to commercial banks and policy-oriented banks in their credit work. It will work out guidelines for the implementation of the policy to instruct banks about investment in environmentally friendly industries and projects.

According to Pan, the SEPA will classify companies in terms of environmental breaches and risks, in order to facilitate the banks' credit work.

Third, the SEPA will work on environmental policies, including those related to environment tax, ecological compensation, "green security" (a policy that demands highly polluting companies to pass environmental inspection when applying for an IPO or refinancing), "green trade," and "green insurance" (which aims to insure all industries with pollution risks).

The adoption of these solutions will help cultivate a policy environment for the green credit program to take root and prevent environmental destruction even as the economy continues to grow, said Pan.