ADB approves $50m green loan for sustainable OSB factory and biomass plant in PRC

ADB’s financing has been independently verified by ERM as meeting the Green Loan Principles, confirming its alignment with international best practices for climate and environmental sustainability.

The Asian Development Bank (ADB) has signed a $50 million green loan (CNY 353.63 million) with Shouguang Luli Wood Inc. (Luli Wood) to support the construction of a cutting-edge oriented strand board (OSB) factory, associated facilities, and a captive biomass power plant in Jiangxi Province, People’s Republic of China (PRC). The financing will also cover working capital needs, helping advance sustainable forestry and renewable energy within the country’s expanding circular bioeconomy.

Supporting a Greener, More Resilient Wood Industry

The PRC’s wood and raw material supply chains face mounting sustainability challenges. Only 1% of forests are certified as sustainably managed, and the country remains heavily dependent on imported timber, which makes up more than half of national demand. The traditional wood panel market is dominated by plywood — a product that requires large, old-growth trees and often leads to inefficient resource use and pressure on natural forests.

ADB Country Director for the PRC, Asif Cheema, underscored the global value of this investment:

“Climate stability and healthy natural ecosystems are fundamental global public goods, and this project is a tangible example of how the private sector can be catalyzed to actively safeguard them. By championing a circular bioeconomy, we are reducing emissions, preserving forests, and setting a new benchmark for the forestry sector.”

OSB Production: A Circular and Sustainable Alternative

Luli Wood’s OSB manufacturing model is designed to shift the sector toward sustainability. Unlike plywood, OSB uses small-diameter trees, wood waste, branches, and twigs that would otherwise be discarded. Around 10% of raw inputs come from fast-growing bamboo, further diversifying sustainable sourcing.

The OSB factory is paired with a biomass power plant that uses the production’s own waste as fuel. This closed-loop system generates both steam and electricity needed for operations — slashing fossil fuel reliance and maximizing resource efficiency.

ADB’s financing has been independently verified by ERM as meeting the Green Loan Principles, confirming its alignment with international best practices for climate and environmental sustainability.

Climate, Economic, and Social Impact

The project is expected to deliver substantial environmental and socio-economic benefits:

• ~200,000 tons of CO₂ emissions reduced annually through cleaner production and renewable energy use.

• 1,500 jobs created, boosting local employment opportunities.

• Increased incomes for thousands of smallholder farmers who supply wood waste and small trees.

• A gender action plan integrated into the project to expand women’s participation in Luli Wood’s value chain, operations, and workforce.

Strengthening Global Sustainability Standards

Luli Group Vice Chairman Xue Mingliang welcomed the partnership, stating:

“Partnering with ADB is a powerful endorsement of our vision. We have built a fully integrated, green supply chain — from sustainable forestry to finished homes — and are committed to setting a new industry standard. This collaboration is a key milestone in our journey to becoming an international leader in sustainable wood processing.”

Founded in 2001, Luli Wood is among the PRC’s largest OSB producers. The company holds FSC (Forest Stewardship Council) and PEFC (Programme for the Endorsement of Forest Certification) chain-of-custody certifications, verifying responsible sourcing and traceability from raw materials to final products. Luli Group itself ranks among the top 500 private companies in the PRC, recognized for its diversified business portfolio and sustainability leadership.

The ADB–Luli Wood partnership marks a significant step toward scaling climate-aligned manufacturing and sustainable forestry practices across the region.