The Chinese central bank is driving the expansion of the green bonds market via measures designed to improve the ratings and verification system.
The People’s Bank of China and the China Securities Regulatory Commission have jointly issued the “Green Bonds Ratings and Verification Conduct Guidelines (Provisional)” (绿色债券评估认证行为指引（暂行）), which outline standards for the qualifications of ratings and verification entities, as well as rating and verification contents and opinions.
The Guidelines emphasise the need for ratings and verification entities to possess set qualifications, as well as outlines inspection systems and punishment systems for such organisations with a view to “preventing ratings and certification entities from submitting false information and other breaches of professional ethical conduct, as well as severe omissions in ratings and verification reports.”
According to the Guidelines green bond ratings and assessment will be divided into the two phases of pre-issuance and post issuance, with pre-issuance rating and assessment focusing on whether the green bond framework of issuers is compliant, including whether green projects, green project selection and decision-making procedures are compliant, and whether environmental benefit targets are rational.
Post-issuance assessment will focus on whether the above contents have been effectively implemented, and focus on evaluation of the usage of funds raised, compliance with information disclosure requirements, as well as the extent to which environmental benefit targets have been satisfied.