The head of the Chinese central bank has outlined key focal areas for its efforts to spur the development of green finance in China in the near-future.
Speaking at the 2021 Financial Street Forum on 21 October in Beijing, Yi Gang (易纲), head of the People’s Bank of China (PBOC), said that Chinese regulators would better guide market funds to support green development, highlighted four work areas in particular including:
- Improving category-based green standards. Yi pointed to the amendments to the “Green Bond Support Project Catalogue” (绿色债券支持项目目录) in 2021, as well as plans by China to jointly issue the “Sino-European Green Finance Joint Category Catalogue” (中欧绿色金融共同分类目录) in the near future with the European Union, and efforts to expedite green fund cross-border flows.
- Strengthening climate information disclosures. PBOC recently formulated and issued the “Financial Institution Environmental Information Disclosure Guide” (金融机构环境信息披露指南) with reference to international experience and common standards, in order to provide guidance to financial institutions on disclosures of information on areas such as emissions.
- Managing transition risk in relation to climate change. PBOC is currently in the process of arranging for climate risk stress testing. Financial institutions are also called upon to use environmental risk analysis to actively assess and manage related risk.
- Improvements to carbon emissions pricing standards. Yi pointed to the recent start of official operation of China’s national carbon market. “Fully employing the role of the market will be of benefit to maximising the incentives and constraints of carbon emission prices,” said Yi. “Financial institutions can engage in active research and exploration.”
PBOC is also in the process of researching and releasing carbon emissions support instruments, and providing low cost funds to qualified financial institutions to support green energy development and strengthen overall energy supply.