China’s Banking Regulator Issues Green Finance Guidelines

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The China Banking and Insurance Regulatory Commission (CBIRC) has issued a new set of green finance guidelines that expand the requirements for environmental, social and corporate governance (ESG) risk assessments by Chinese financial institutions.

On 1 June CBIRC issued the “Banking and Insurance Sector Green Finance Guidelines” (银行业保险业绿色金融指引), which require that Chinese banks and insurers “advance green finance from a strategic high-point.”

The Guidelines require that banks and insurers expand their ESG risk assessments from clients to the upstream and downstream contractors as well as suppliers.

The Guidelines also call for the boards of banks and insurers to “undertake independent green finance responsibilities and bear responsibility for the confirmation of green finance development strategies.” Senior management will be responsible for the formulation of green finance targets, the establishment of mechanisms and procedures, as well as the clarification of professional duties and authorities.

“This is the equivalent of clarifying the responsibilities of green finance work to each person, and will be of benefit to the undertaking and execution of related work,” said Sun Tianjin (孙天印), chair of the Green Finance Research Centre at Tsinghua University to 21st Century Business Herald.

State-owned media referred to the release of the Guidelines as a “major milestone” in the development of Chinese green finance, making reference for the first time to the need for banks and insurers to focus on ESG risk while advancing efforts to achieve carbon neutrality.

The new Guidelines from CBIRC follow the release of other green finance guidelines over the past decade include:

  • The “Green Credit Guidelines” (绿色信贷指引) in 2012.
  • The “Green Finance Statistical System” (绿色融资统计制度) in 2014.
  • The “Green Credit Implementation Situation Key Assessment Indices” (绿色信贷实施情况关键评级指标) in 2016.