The Chinese government initiated some requirements of companies listing in mainland China in 2008. Companies in heavily polluting industries (including coal, oil and gas extraction) were required to demonstrate satisfactory environmental management performance.

Greenpeace China has reviewed a number of forestry IPOs in Asia, following the listing of Samling in Hong Kong (prospectus available here). Greenpeace’s report “In the Green or in the Red? Environmental concerns and risks for forestry listings in Hong Kong” reviewed the listing requirements of Hong Kong which do not include the ‘Green IPO‘ requirements of the mainland Chinese authorities.

The Samling IPO also presented reputational risk for the western investment banks promoting the share offering. In particular, HSBC, which had developed one of the most advanced foresty sector policies, was criticised for not applying the policy across its advisory activities. NGOs ran an advert in the International Herald Tribune calling for HSBC and Credit Suisse to drop Samling as a client for being in breach of their forestry guidelines.

This example demonstrated the original limited scope of application of the Equator Principles to project finance, and fuelled discussions around how to cover more of a bank’s activities and ensure application globally. This led to the development of initiatives such as the strategic review of the Equator Principles and the development of theĀ Climate Principles, however there has been limited progress during the distraction of the financial crisis.