Methodology

The green and sustainable finance second-party opinion report published by China Chengxin Green Finance International (CCXGFI) provides systematic and forward-looking assessments of an issuer's Environmental, Social, and Governance (ESG) performance, based on the issuer’s relevant finance framework or any specific sustainable project. Our methodology is designed to ensure consistency and rigor, utilizing a structured approach supported by standardized procedures and robust indicators.

1. Multi-Layered Evaluation Framework
   

   In general, CCXGFI employs a four-level scorecard matrix structured through AHP (Analytic Hierarchy Process), comprising 4 first-tier indicators, 9 second-tier indicators, 18 tertiary indicators, and 33 quaternary indicators. Each layer of the matrix is composed of carefully selected indicators, with consideration given to the issuer’s industry context, scale of operations, and regional factors. By evaluating both qualitatively and quantitatively, these layers are expected to reflect the depth and breadth of our analysis of the issuer’s sustainability and social responsibility efforts.

• • • Stage 1: Assessing Core Principles Alignment
      

      This foundational layer examines the issuer’s alignment with the Green Bond Principles 2021 (June 2022 Appendix 1), Social Bond Principles 2023, Sustainability Bond Guidelines 2021, The Green Loan Principles 2023, and Social Loan Principles 2023, specifically regarding the use of proceeds, project evaluation and selection processes, management of proceeds, and reporting. This stage determines the issuer’s overall commitment to sustainability and responsible financing.

1. 1. 1. Use of proceeds: We review how the issuer allocates proceeds and ensure that project categories align with established sustainability principles.
      2. Project Evaluation and Selection: We assess the issuer’s organizational structure and selection process to ensure a logical structure and adequate oversight.
      3. Management of proceeds: Best practices include clear management methods and allocation processes, with an emphasis on transparency and accountability.
      4. Reporting: We scrutinize the issuer’s reporting plans and content, focusing on the frequency, clarity, accuracy, and consistency of disclosures.

• • • Stage 2: Relevance to Internal Sustainable Development Strategy
      

      At this level, we evaluate the extent to which sustainability principles are integrated into the issuer’s governance structures and strategic decision-making processes. This includes a thorough evaluation of policies, community commitments, and alignment of core operations with sustainability goals.

• • • Stage 3: Feasibility of Environmental and/or Social Objectives
      

      This layer focuses on the practical implementation of sustainability strategies. Our analysis covers the alignment of the issuer’s projects with relevant national, industry, and regional policies, and evaluates their effectiveness by delivering actual environmental and social benefits.

1. • • Stage 4: Effectiveness of Risk Management
       

       The final stage of our methodology assesses the issuer’s risk management framework, focusing on the identification and mitigation of potential environmental and social risks. We evaluate the issuer’s internal control systems and their capacity to manage and minimize any adverse impacts, ensuring that sustainability objectives are met in a responsible manner.

2. Scoring and Rating Process

   In the scoring process, each indicator is assigned a score (ranging from 0 to 1) based on the degree to which the sustainable finance framework complies with the relevant market requirements. The weighted average score is then calculated, forming the basis of the final rating assigned to the evaluated company.