The plan, backed by five government agencies, includes the introduction of a carbon market and two-way cross-border participation in green finance and climate-friendly investment.
Five Chinese government agencies have released new guiding opinions to promote the field of ‘climate investment and finance’ in China, including through the establishment of a carbon emissions trading market mechanism.
The guidelines were jointly published by the Ministry of Ecology and Environment, the NDRC (National Development and Reform Commission), the PBOC (People’s Bank of China), the CBIRC (China Banking and Insurance Regulatory Commission) and the CSRC (China Securities Regulatory Commission).
Under the guiding opinions, the agencies will work to improve financial regulation to support and incentivise financial institutions in developing climate-friendly and green finance products. Financial institutions will also be encouraged to provide financial support for commercially viable climate-friendly projects.
Climate-friendly corporates will also be offered support to obtain financing through the capital market. A market-based mechanism will also be established to encourage participation from SMEs and the public in climate action.
A third-party verification system will be established to ensure designated projects, as well as financial products and services, are actually climate-friendly.
Under the guidelines, the agencies also commit to accelerating the formulation of a climate information disclosure standard for projects, entities and funds, as well as to creating a centrally-managed climate investment and finance statistics and monitoring platform.
Credit rating agencies will also be encouraged to integrate ESG factors in their rating methodologies, in order to help direct capital flows towards addressing climate change and other sustainable development areas. This approach will promote “social supervision” over the climate performance of financial institutions, corporates and regional governments, the guidelines say.
The agencies will also promote the construction of a carbon emissions trading scheme, gradually expanding the scope of participants to include financial institutions as well as individuals. Financial products and services underpinned by carbon emissions allowances will also be developed, including carbon futures.
China will seek to strengthen cooperation with international financial institutions and foreign enterprises in the field of climate investment and finance, and support the cross-border transfer of eligible green financial assets in China, allowing them to trade in offshore markets.
Domestic financial institutions and enterprises will also be able to engage in climate finance business overseas, including through the establishment of yuan-denominated green investment funds and green loan funds overseas.
Foreign financial institutions will be encouraged to issue green bonds in China, and to increase investments domestic green assets, using the yuan as the cross-border settlement currency.
The guiding opinions, available here, come a month after President Xi Jinping committed China to become carbon neutral by 2060.