Nature Related Sustainable Finance in China 2025

State grid’s innovative green financing for SMEs using nature-based collateral 1. The State Grid Shanghai Municipal Electric Power Company (SMEPC) has developed a model to help SMEs in its supply chain to access green financing by leveraging environmental performance data (Figure 14):46 Credit facility enhancement by verified GHG emission scoring granted by the state grid: As the supply chain leader, SMEPC provides nature-related data of an SME, while ratings provider Yingda provides a GHG emission score. This environmental performance evaluation is considered an intangible asset to increase the amount of credit an SME can access. 2. Policy guarantee backstop: Policy-backed guarantees replace physical collateral for carbon-compliant SMEs, enabling access to green financing. 3. Product linkage collaboration: Partnering with six banks to establish a green fast-track approval channel, the initiative integrates carbon evaluation, guarantee eligibility and credit products into an online platform, which enables parallel processing of evaluation, credit granting and loan disbursement. Since June 2024, the “Electric-carbon Low-interest Loan” programme has: 1. Provided financing guarantees to 373 SMEs. 2. Facilitated 60+ new financing matchings through precision pairing. 4. Reduced average lending rates by over 0.5% .3. Unlocked RMB 150 million in total credit lines. 47 This approach does not only facilitate the green transition of SMEs but also introduces a valuable method for creating new collateral and managing biodiversity risks in supply chains. Figure 14: Green financing model for SMEs in state grid’s supply chain These innovative approaches help address the challenge of lack of viable business models by creating a more conducive environment for nature finance and increasing the scalability of biodiversity- related investments.SMEs in the supply chain Data providerFinancial institution Loan service provider SMEPC Green scenariosYingda GHG emissionWhite list State grid Data for carbon emission management/monitoringGHG emission scoring Green scenarios, e.g. construction by using low-carbon techniquesrecommend SMEs aligning with green policyCredit facility increase provides low-interest loanShanghai Administration Centre for Policy Financing guarantees funds for SMEs Policy provider A Brief Review Nature-Related Sustainable Finance in China: 22