PBoC to Introduce Mandatory Disclosure of Climate-related Information

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PBoC to Introduce Mandatory Disclosure of Climate-related Information

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PBoC plans to implement mandatory disclosures of climate and carbon emission information, and further improve the classification of green bonds in collaborations with the EU and the US, said Governor Yi Gang at a conference hosted by the Bank for International Settlements (BIS), as reported by 21st Century Business Herald on June 5. The central bank will first push major commercial banks in the country to disclose climate-related information, followed by Chinese listed companies. In the meantime, PBoC is working closely with the Financial Stability Board (FSB) and encouraging domestic banks and institutions to join the Task Force on Climate-related Financial Disclosures (TCFD). In the future, PBoC will set a deadline and ensure the smooth progress of the green transformation of commercial banks.

PBoC has launched climate-related stress testing in the Chinese financial sector to identify and assess financial institutions that are most subject to climate change impacts. It has been conducting the review on all its 4,024 banks in 2021, and will continue to carry out the tests and publish the results of climate-related stress testing in the future. Moreover, PBoC is also evaluating the impact on inflation forecasts from the economy’s transition to green energy.

Major banks started mentioning climate risk stress tests more frequently in their periodic reports from 2020. The Bank of China [3988:HK] stated in its 2020 annual report that it would carry out climate and environmental risk stress tests for several high-carbon industries and sensitive factors, and its London branch finished assessment and management of climate risks of financial services last year. Industrial and Commercial Bank of China [1398:HK] pledged to promote environmental information disclosure and formulate the environmental risk stress testing standards under the guidance of PBoC. China Construction Bank [0939:HK] also stated that it incorporated environmental and climate-related risks into its comprehensive risk management system, and published its stress testing procedure.