China’s Peak Body for Institutional Investors Issues Clarification Notice on Carbon Bonds

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The peak body for institutional investors on China’s interbank market has issued a new directive clarifying conditions for the issuance of carbon bonds, amidst efforts by the Chinese government to drive the growth of green finance.

On 18 March the National Association of Financial Market Institutional Investors (中国银行间市场交易商协会) issued the “Notice on Clarifying Mechanisms in Relation to Carbon Neutrality Bonds” (关于明确碳中和债相关机制的通知)

The Notice provides greater clarity on the definition of carbon neutrality bonds, as well as outlines four core areas where green bonds must satisfy requirements, including funds usage, project assessment and selection, management of fund raising and information disclosures.

The Notice repeatedly stresses the disclosure duties of all parties when it comes to the issuance and trading of carbon neutrality bonds.

The issue of the Notice comes after the Chinese central bank made the expansion of green financing one of its key work tasks for both 2021 and the 14th Five Year Period running from 2021 to 2025.

As of 20 March at least three Chinese lenders have launched carbon neutrality financial products, including Industrial Bank Co., Ltd., Bank of China and the China Development Bank.

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