China's central bank and the UN Environment Programme (UNEP) launched the final report of the bank's Green Finance Task Force, which estimates that US$320 billion worth of investment will be needed annually to meet China's environmental targets, and recommends measures to create the incentives for private-sector financing.
22 April 2015: China’s central bank and the UN Environment Programme (UNEP) launched the final report of the jointly convened Green Finance Task Force, which estimates that US$320 billion worth of investment will be needed annually to meet China’s environmental targets, and recommends measures to create the incentives for private sector financing.
The Green Finance Task Force was established by the People’s Bank of China (PBC) in collaboration with a UNEP project, ‘Inquiry into the Design of a Sustainable Financial System.’
The report of the task force, titled ‘Establishing China’s Green Financial System,’ recommends policies in four areas: creating and further developing specialized investment institutions such as, for example, a ‘China Ecological Development Bank’ and green industry funds; providing fiscal and financial policy support through instruments such as green bonds and discounted interest rates on loans for environmental projects; adapting financial infrastructure to accelerate the growth of carbon markets and provide information through ‘green ratings’ of projects and ‘green stock indices;’ and strengthening the legal infrastructure to clarify the environmental liabilities of banks and establish mandatory environmental disclosure requirements for listed companies.
The report is supported by 16 background papers on various aspects of the recommendations, as well as a proposed road map.
Introducing the task force’s findings, PBC Chief Economist Ma Jun estimated that China’s fiscal resources can cover only 15% of the investment needed toward sustainable development, and said the financial system must play the role of channeling private capital into the green sectors. He commented that existing environmental policies in the financial sector have been mostly designed as restrictive measures that place constraints on loans to high-pollution, energy-intensive companies, and that corresponding incentive measures are now needed to promote projects in energy-saving technologies, environmental protection, clean energy and clean infrastructure, in order to facilitate economic restructuring. [Publication: Establishing China’s Green Financial System] [Links to Background Papers] [UNEP Press Release]