Huaneng Tiancheng Financial Leasing has secured a three-year 187 million yuan (US$27.8 million) account receivable financing facility to fund its direct leasing for two wind power projects in China.
The deal marks Deutsche Bank’s first sustainable trade finance transaction aligned with the Common Ground Taxonomy (CGT). It falls under Scenario 1 outlined in the CGT with clear overlaps between the European Union and China green taxonomies that can be considered comparable within the scope/for the purpose of the CGT. The transaction also aligns with UN Sustainable Development Goals 7 and 9, related to renewable energy and infrastructure development.
The CGT provides clarity about the commonality and differences between the green taxonomies of the EU and China. It is expected to play a pivotal role in increasing comparability of sustainable finance taxonomies and definitions of green and/or sustainable activities globally.
“Huaneng Leasing has been a long-standing client of Deutsche Bank China, with a clear commitment to providing comprehensive financial services that support clean energy development,” says Peter Qiu, president of Deutsche Bank China. “The transaction demonstrates how we support our clients’ sustainability transition by harmonizing the varying green finance standards between different markets.”
Upon completion, the two wind power projects will have about 100 megawatts of green electricity capacity, generating 270 million kilowatt-hours of green electricity per year and reducing over 0.226 million tonnes of carbon dioxide equivalent annually.
The underlying wind farm projects have also been partially financed by senior debts from Asian Development Bank (ADB) under the multilateral institution’s green financing platform.
“Successful execution of ESG transactions in China which meet global ESG standards is critical for bridging the remaining gaps between Chinese ESG standards and international ESG taxonomies,” says Kamran Khan, head of ESG for Asia-Pacific at Deutsche Bank. “This is important for Asia and the global ESG market because China’s green finance market is one of the largest in the world. This Huaneng Leasing transaction exemplifies Deutsche Bank’s focus on executing world-class, benchmark-setting ESG transactions in Asia.”
Deutsche Bank had committed to facilitate €200 billion (US$208.66 billion) in sustainable financing and investment by the end of 2025 but has now become more ambitious, bringing the target forward to year-end 2022, after the bank already reached €157 billion by the end of 2021.