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Under the "dual carbon" strategy, Inner Mongolia, as an important energy base and ecological security barrier in China, has an urgent need and practical demand for green development. Green finance is an important measure to achieve green development. In recent years, Inner Mongolia has been based on local green resource endowment advantages, actively innovating green financial services, and continuously improving the financial support for green and low-carbon development in Inner Mongolia, turning resources into assets and green mountains into gold mountains, and continuously helping to create a beautiful landscape on the northern frontier of the motherland.

Focusing on resource advantages, innovating green financial products

What kind of incentive effect would be produced if the loan interest rate of enterprises is linked with ESG (Environmental, Social, and Governance)? The first commercial ESG-linked loan of natural beneficiary type in the country, launched by the Inner Mongolia branch of the Bank of China, has given the answer.

In July this year, the first commercial ESG-linked loan of natural beneficiary type in the country was implemented in Inner Mongolia, with the Inner Mongolia branch of the Bank of China providing 100 million yuan of financial support for Inner Mongolia Shengmu Gaokexue Animal Husbandry Co., Ltd. This ESG-linked loan will mainly be used to support Shengmu Gaokexue's investment in desert control, ecological restoration, green production, and biodiversity protection, which can effectively help the enterprise improve its ESG management level and motivate the enterprise to achieve multiple benefits of ecological protection, economic and social development.

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ESG is an acronym for Environmental (green environmental protection), Social (social worker responsibility), and Governance (compliant governance), which is an emerging investment concept and enterprise evaluation standard. Against the background of increasingly severe global climate change and environmental issues, green finance has become an important force to promote the green transformation of the economy and sustainable development. The Inner Mongolia branch of the Bank of China actively responds to the national green development policy, innovates financial service models, links loan interest rates with enterprise ESG performance, and achieves a deep integration of finance and environmental protection.

"The model links the loan interest rate with the enterprise's ESG performance, which can play a role in multiple incentive mechanisms. It not only allows the enterprise to obtain medium and long-term working capital loans but also motivates the enterprise to increase investment in environmental protection, social responsibility, and corporate governance, and guides financial resources to be more accurately invested in green industries," said a person in charge of the Inner Mongolia branch of the Bank of China.

In fact, Inner Mongolia, combining its resource advantages and development needs in forest and grassland carbon sinks, new energy power generation, and traditional industry transformation, actively explores green financial innovation products that are suitable for it, successively launched 21 green credit products such as "Energy-saving Easy Loan," "Green Industry Loan," "Ecological Restoration Loan," and "Clean Loan," and explored to solve the financing difficulties of green enterprises with various guarantee methods such as grassland carbon sink revenue rights, public welfare forest compensation revenue rights, and carbon emission rights pledges, forming a good demonstration and driving effect.

Using policy tools to continuously optimize the green financial development environment

The implementation of a single green financial innovation product behind the scenes cannot be separated from the continuous optimization of the green financial development environment in the region. In recent years, the Inner Mongolia branch of the People's Bank of China has actively and proactively promoted carbon emission reduction support tools and special re-lending policies for supporting the clean and efficient use of coal to government departments and financial institutions, promoting the implementation of various monetary policy tools.

Since the implementation of the "dual carbon" tool-related policies, Han Xiangguo, the deputy governor of the Inner Mongolia branch of the People's Bank of China, said, "We have promoted financial institutions in the jurisdiction to actively use carbon emission reduction support tools to provide financial support for low-carbon industries such as clean energy and energy conservation and environmental protection, as well as for carbon emission reduction technology improvement and other links. Since the implementation of the policy, financial institutions in the region have cumulatively used 45.42 billion yuan of carbon emission reduction support tools, issued 75.71 billion yuan of carbon emission reduction loans, and supported 239 enterprises."The People's Bank of China Inner Mongolia Autonomous Region Branch has successively issued documents such as the "Notice on Financial Support for the Green and Low-Carbon Transformation and Development of Inner Mongolia," the "Notice on Further Strengthening Green Finance Work," and the "Financial 'Loan' Action Plan to Drive Green Development," guiding financial institutions to continuously establish the concept of green development and promote the rapid development of green credit business.

Under the opportunity of the policy window period, places like Baotou and the Xilingol League have actively promoted green financial services in line with their own industrial needs. Baotou City, focusing on the "zero-waste city" pilot, the forestry and grassland carbon sink (Baotou) pilot zone, and the climate investment and financing pilot city construction, as well as building a national new energy and advanced high-energy-consuming industry integration development cluster, has guided financial institutions to innovate green financial products and optimize financial services.

The People's Bank of China Xilingol League Branch firmly grasps the policy window period, using the carbon emission reduction support tool as a leverage point, gathering policy synergy and tool assistance, comprehensively sorting out the financing needs of the wind power, photovoltaic, and other new energy industries in the jurisdiction, and providing low-cost capital guarantees for chain enterprises in a timely manner, promoting the region to initially form a wind power industry chain development model centered on wind power construction and operation, dominated by wind power main machine manufacturing, and supported by energy storage.

Increase financial supply, green loans revitalize the local economy.

In the Xilingol League Sunitezuo Banner, on the vast land, more than a hundred large wind turbines stand in rows. With its vast and flat terrain and a long duration of effective annual wind speed, it is an ideal place for wind energy development.

Inner Mongolia Energy Group Co., Ltd., which sees the potential for wind power development, has long wanted to develop a wind power project here. However, developing a wind power project requires fixed equipment procurement, land leasing, construction and installation, and other costs, with huge initial investment costs. The project leader said, "New energy power generation projects generally have large investment amounts and long return cycles. Relying solely on the company's own funds cannot meet the project progress requirements."

In response to the funding difficulties, financial institutions such as the Agricultural Bank of China Xilingol League Branch have provided great support. "With the help of the People's Bank of China's carbon emission reduction support tool, our bank has reduced the cost of funds, thereby providing lower interest rate funding support for the project, and the loan term for enterprises is also longer, which provides good support for the long-term stable operation of green power generation projects," said Zheng Juting, General Manager of the Corporate Department of the Agricultural Bank of China Xilingol League Branch.

Walking into Shuangliang Silicon Materials (Baotou) Co., Ltd., in the modern production workshop, rows of single crystal furnaces about eight or nine meters high are neatly arranged, and the vertical pulling heads on the semicircular furnace seats keep rotating, heating and melting the high-purity polycrystalline silicon material in the furnace, and crystallizing and pulling the rods into cylindrical silicon rods bit by bit.

As a new energy industry, since its establishment in Baotou, financial institutions under its jurisdiction have actively supported the development of the enterprise. It is understood that the green loan balance obtained by the enterprise currently reaches 1.57 billion yuan. In communication with the reporter, the person in charge of the enterprise said that in recent years, financial institutions have provided great support to the company in terms of loan terms and interest rates. At present, the enterprise is still facing challenges such as expanding production capacity and industry development fluctuations, and there is great potential for further cooperation with financial institutions in the future.

Innovation leads, and the area is driven by points. Under the nourishment of green finance, the greening of regional economy continues to extend and upgrade. In response to the 16 key industrial chains established in the region, such as modern coal chemical industry, wind power equipment, photovoltaic equipment, new energy vehicles, and hydrogen energy, Inner Mongolia has carried out 1+N financial service work, forming a financial service mechanism supported by 2 main banks and many auxiliary banks for key industrial chains. At the end of the second quarter of 2024, the loan balance of core enterprises and upstream and downstream enterprises in the 16 key industrial chains in the region reached 386.88 billion yuan, an increase of 68.2 billion yuan year-on-year.Turning "Green" into "Gold", a green loan revitalizes the local economy, and Inner Mongolia is striving to write a big article on green finance.

The concept of transforming "green" into "gold" refers to the process of converting environmentally friendly practices and initiatives into economic benefits. This is achieved through the use of green loans, which are financial instruments specifically designed to support environmentally sustainable projects and businesses. In Inner Mongolia, a region in China known for its vast grasslands and rich natural resources, the government and financial institutions are working together to promote green finance and stimulate economic growth.

Green loans play a crucial role in this process by providing the necessary funds for businesses and projects that focus on environmental protection, conservation, and sustainable development. These loans are typically offered at lower interest rates and with more favorable terms compared to traditional loans, making them an attractive option for businesses looking to invest in green initiatives.

By offering green loans, financial institutions in Inner Mongolia are not only supporting the growth of environmentally friendly businesses but also encouraging other businesses to adopt green practices. This, in turn, helps to create a more sustainable and eco-friendly economy in the region.

Moreover, the promotion of green finance in Inner Mongolia has several benefits for the local economy:

1. Job creation: Green projects and businesses often require a skilled workforce, which can lead to the creation of new jobs in the region. This can help to reduce unemployment and improve the overall economic situation.

2. Improved environmental quality: By supporting projects that focus on environmental protection and conservation, green loans can help to improve the overall quality of the environment in Inner Mongolia. This can lead to better air and water quality, as well as the preservation of natural habitats and biodiversity.

3. Enhanced reputation: As Inner Mongolia becomes known as a region that actively promotes green finance and sustainable development, it can attract more businesses and investors interested in environmentally friendly practices. This can further boost the local economy and create new opportunities for growth.

4. Long-term economic stability: By focusing on sustainable development and environmental protection, Inner Mongolia can ensure that its economy remains stable and resilient in the face of global environmental challenges. This can help to protect the region's natural resources and ensure that they continue to provide economic benefits for future generations.

In conclusion, the promotion of green finance in Inner Mongolia is a strategic move that can help to revitalize the local economy while also protecting the environment. By offering green loans and supporting environmentally friendly businesses and projects, the region can create new job opportunities, improve environmental quality, enhance its reputation, and ensure long-term economic stability. As Inner Mongolia continues to write this big article on green finance, it is setting an example for other regions and countries to follow in the pursuit of sustainable development and economic growth.