Ping An Board Secretary Richard Sheng Speaks at COP27: Ping An Assists China’s Energy Transition and Combats Climate Change Risk with Financial Innovation
(Hong Kong, Shanghai, 21 November 2022) - Ping An Insurance (Group) Company of China, Ltd. (“Ping An” or the “Group”, HKEx:2318; SSE:601318) is using financial innovation to support China’s energy transition and combat climate change risk, said Richard Sheng, Secretary of the Board of Directors. Mr. Sheng, speaking via videoconference, joined a seminar on green and sustainable finance at the China Pavilion of the 27th Conference of the Parties of the United Nations Climate Change Conference (COP 27).
“Climate is a common challenge faced by all mankind,” said Mr. Sheng. “As estimated, in order to achieve carbon neutrality, China needs direct investment amounting to more than RMB100 trillion, presenting financial institutions with opportunities to undertake the mission of creating social value while improving revenues.”
Managing the risks related to climate change is an important part of the Group's long-term development strategy. In its second Taskforce on Climate-related Financial Disclosures (TCFD) report in 2021, Ping An disclosed the bank’s credit and investment portfolio and the corresponding risk exposure in eight high-carbon emission sectors: coal power, steel, cement, non-ferrous metal, paper making, aviation, petrochemical, and chemical. Ping An has made a visionary move to invest in green and low carbon assets and reduce the proportion of high-carbon emitting assets to mitigate the financial risks related to climate change. It is supporting China’s goals of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060.
For China, as the second largest economy in the world and the largest importer and consumer of energy, energy security is critical, said Mr. Sheng. “A secure transition of energy is a trend with rather high certainty,” he said. “Ping An is fully harnessing its advantage in long-term capital from insurance,” said Mr. Sheng. “In coherence with the long cycle of green projects, it gives fresh impetus to low-carbon development while obtaining steady income.”
“Ping An has leveraged its strength of integrated finance and has also scaled up the investment in green industries in terms of investment mix,” said Mr. Sheng. As of September 30, 2022, Ping An’s green investment and financing totaled approximately RMB319.8 billion. As of the end of June 2022, Ping An Capital’s carbon neutrality equity investment totaled RMB25.6 billion, including RMB13.2 billion related to clean energy. In November 2021, Ping An Capital served as investment consultant for Ping An Life’s RMB2 billion investment in CGN Wind Power, which is developing clean energy projects such as wind and photovoltaic power. After investing, Ping An Life holds a stake of 2.16% in the company.
Insurance is one of the major sectors of the financial industry confronting climate change risks, said Mr. Sheng. Ping An’s pursuit of innovation in insurance products aims to make insurance an economic “shock absorber” and a social “stabilizer”. For example, Ping An has combined Catastrophe Parametric Insurance and index insurance, which makes use of heavy rainfall and typhoon data as parameters for insurance payouts. Once the compensation conditions are met, the compensation amount can be determined without on-site inspection, which helps accelerate post-disaster reconstruction and resumption of business operations. In 2022, Ping An also piloted forest carbon sinks remote sensing index insurance in six provinces: Hebei, Guangxi, Hunan, Anhui, Guangdong and Guizhou. It provided carbon sink risks protection with RMB34.28 million for 340,000 mu (22,667 hectares) of forest land.
According to Ping An’s 2021 TCFD report, less than 2% of the estimated RMB7.92 trillion in Ping An’s assets in investment and banking services were related to the eight major high-carbon emission, or “brown”, sectors. While supporting the transition of traditional coal-powered and high-carbon emitting clients, Ping An has also helped to raise their awareness of emission control and consumption reduction, and offered technology to monitor emission data and better navigate the path of transition. Ping An will continue to enhance the accuracy and precision of climate risk assessment, while fulfilling its corporate social responsibility as a financial institution. The Company will also dynamically adjust the control of high-carbon industries and support for green industries according to relevant national policies and market conditions. It will promote quality industrial and social transformation through its professional financial products and services to empower sustainable development.