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25 Feb State Council Issues Guidelines to Enhance Green Finance Development
State Council on February 22 published guidance about establishing a green low-carbon and circular development economic system, as reported by Caixin on the same day. In the finance area, the guidance requires to enhance the domestic green finance development, such as green credits, green direct financing, and green insurance, and strengthen the assessment of green finance performances of financial institutions. Moreover, the guidance asks to unify green bond criterion and build a green bond rating standard; promote climate investment and financing; push for the alignment with international green finance standards and a two-way open-up of the green finance market; optimize the trading system of pollution emission rights, water rights, and carbon emission rights, lowering transaction costs and improving efficiency; and support qualified enterprises in green industries to IPO.
In September 2020, Chinese President Xi Jinping made a promise to peak the country’s carbon emission by 2030 and achieve carbon neutrality by 2060. This marks the transformation toward a low-carbon economy. Green Finance is beneficial for the sustainable development of economic society. Under such promotion policies, financial institutions will provide more green loans for projects related to energy conservation, environment protection, clean production, and clean energy. However, so far, the development of China’s green finance is still immature. For example, although green credit and bonds occupy a large proportion of the market, green insurance and other financial products are apparently insufficient. Green finance needs the inclusion of more financial institutions and private investments.