16 November 2017: A report on China’s development of green finance notes that the process could determine the level of green development in China, while also exerting considerable influence on the green transition of the world economy at large. The report was released by the International Institute of Green Finance (IIGF) from the Central University of Finance and Economics (CUFE) in China, and the UN Environment’s Inquiry into the Design of a Sustainable Financial System.
The progress report titled, ‘Establishing China’s Green Financial System,’ takes stock of China’s development in green finance, including with regard to policies, products, and market infrastructure. The report also offers recommendations for future development.
China has made “major progress” on green financial products, institutions, standards and methods, the report finds.
The report notes that in August 2016, seven Chinese institutions jointly released the ‘Guidelines for Establishing the Green Financial System.’ Those guidelines address: the importance of a green financial system; green lending; the role of the securities market in supporting green investment; public-private partnerships (PPP); green insurance; environmental rights trading market; supporting local government initiatives to develop green finance; promoting international cooperation in green finance; and preventing financial risks and strengthen implementation. Since the release of the guidelines, the report finds, China has made “major progress” in areas including green financial products, institutions, standards and methods, and has played an increasingly important role in facilitating international cooperation in green finance.
The authors note that the Green Finance Committee (GFC) of the China Society of Finance and Banking is managing two thirds of all financial assets in China, and is playing a key role in facilitating the release of new policies, promoting the notion of green finance, product innovation and capacity-building. According to the report, China has also: established five distinct green finance pilot zones to explore different development models for the local green financial system against different backgrounds; included the theme of ecological civilization in the 13th Five-Year Plan; and publicized green investment and financing concepts extensively at the national level. The institutions who released the guidelines are: the People’s Bank of China, the Ministry of Finance, the National Development and Reform Commission, the Ministry of Environment Protection, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission.
The report also indicates that China has become a new growth driver in the global green bonds market, with the issuance of 36 green bonds worth RMB77.67 billion (US$11.7 billion) in the first half of 2017. Of these bonds the number and size of bonds grew 278% and 28% respectively, compared with 2016, and many provinces and cities have established regional green development funds, the report says.
Among its recommendations for the future, the report calls for: setting up statistical systems for green finance; encouraging listed companies to disclose more environmental information on a voluntary basis through the design and development of green stock indices; enhancing data availability in the research and development process of green insurance products; and creating cross-department and public environmental data-sharing platforms.
During the UN Climate Change Conference (UNFCCC COP 23) held in Bonn, Germany, in November 2017, UN Environment and the World Bank Group launched a ‘Roadmap for a Sustainable Financial System’ that proposes an integrated approach to be used by all financial sector stakeholders (both public and private) to accelerate the transformation toward a sustainable financial system. In September 2016, the Group of 20 (G20), chaired by China, put green finance on its agenda and included green finance in the its Hangzhou Summit Communiqué that was adopted by the G20 leaders. [Publication: Establishing China’s Green Financial System: Progress Report 2017: Summary] [UN Environment Press Release] [Guidelines for Establishing the Green Financial System] [SDG Knowledge Hub Story on Sustainable Finance Roadmap]