Chinese Central Bank to Launch Climate-related Financial Disclosure Requirements, Drive Green Transformation of Domestic Lenders

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The governor of the People’s Bank of China (PBOC) says it will implement ambitious new climate change disclosure requirements in collaboration with international financial bodies, as part of broader efforts to drive the “green transformation” of Chinese lenders.

“PBOC plans to implement mandatory disclosures of climate-related information, spur China’s main domestic commercial banks in the disclosure of carbon information, and subsequently spur related disclosure activities by domestic listed companies,” said PBOC head Yi Gang (易纲), on 4 June at the 2021 Green Swan Conference held by the Bank for International Settlements (BIS).

Yi Gang said that in order to identify and assess those organisations that are most susceptible to the impacts of climate change, PBOC, had already conducted related pressure testing of the Chinese financial system, with results to be “disclosed at an appropriate time in the future.”

The PBOC governor flagged future measures to expedite the “green transformation” of commercial banks in China, while also highlighting the need for Chinese regulators to be mindful of potential risk issues.

“In future, the People’s Bank of China will set a timeframe for the green transformation of commercial banks,” Yi said.

“This transformation requires stable implementation, in order to avoid sudden actions that trigger crisis…the People’s Bank of China needs to be alert to these situations arising, and ensure that green transformation is steady and successful.

“The People’s Bank of China is currently attempting to assess the green assets and green products of commercial banks, and in future could give consideration to a risk weighting for the green level of assets.

“Chinese commercial banks are active when it comes to the formulation of green standards and climate assessments, and are working hard to make progress when it comes to details.”

Yi Gang also stressed the international and collaborative nature of China’s drive for greater green financing.

“The People’s Bank of China is currently cooperating with the European Union in the area of green loans and green bonds, and at the same time further disclosing relevant climate information under the TCFD (Task Force on Climate-related Financial Disclosures) framework,” he said.

“China’s domestic green bond standards are 80% consistent with those of the EU, and we will endeavour to explore international, commonly-accepted standards.”

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