Green Finance initiatives in China - - PowerPoint PPT Presentation

Green Finance initiatives in China

中 央 财 经 大 学 绿 色 金 融 国 际 研 究 院

International Institute of Green Finance, CUFE

1

1

3

Background of Institute

研 究 院 前 身

• Independent Think Tank founded in Sept. 2016
• Predecessor: Research Center for Climate and Energy Finance, founded

in Sept. 2011.

• 35+ staff members, expanding rapidly since establishment in 2016
• Standing member of the Green Finance Committee, China Society for

Finance & Banking

• Key member of the Green Securities Committee, Securities Association
• f China
• Key member of the Investment and financing Committee, China

Environmental Protection Industry Association

Close ties with a number of Chinese government branches Most competitive Chinese green finance database, including green bond database and local green finance database; Most comprehensive database on ESG for Chinese listed companies and Bond issuers

中央财经大学绿色金融国际研究院

International Institute of Green Finance, CUFE Key Strategic Advantages

Reputation in Academia and industry, both domestic and international Professional consultancy services to FIs, companies and independent

• rganisations

Main Activities

Application

• Treatises
• Research reports

Publications Policy recommendations Education Cooperation Communication

• Departments of the State Council
• Local governments
• Product innovation: Green

Selection Index, Green Leading Stock Index, Green Bond Index, etc.

• Green bond verification
• Academic guidance
• International Youth Reseach Society of

Green Finance

• Joint research projects with

international institutions, such as UNEP, EIB, UN PRI, etc.

• Organize academic forums and high-

level round-table discussion

• Journal: Green Finance in China

Key Partners and projects

Domestic

Green financial policy suggestions Environmental Information disclosure work Carbon market research Soil Remediation and industrial boilers research Urban green finance research Green banking consultancy Green bond verification Consultancy for extablishing green financial system ESG related research and index products Beautiful China ESG100 Stock Index

Key Partners and projects

International

SDG finance standards National development banks and climate compatiable infrastructure Research on Asian sustainable finance Urban green finance BRI green fiannce Green commodity finance ESG and economic performance Green bond quality Green retail banking Green stock, bond and index Green finance standards China-UK Green Finance Taskforce

01

Progress in China's Green Finance Development

7

Progress in Green Finance Policy

1

Policy Framework continuously being perfected Cornerstone: Guidelines for Establishing the Green Financial System A package of green finance policy Local Practices Green Credit Green Securities Green Funds and Green PPP Environmental Rights Trading Environmental Risk Analysis Green Insurance Green Financial System in China International Cooperation Specialized policy

• n green bonds,

green credits and green investment Policy on establishing local green financial systems Regulation on Liability of environmental pollution Green Finance Standardization Monetary Policy such as MPA and MLF

Stead Increase in Green Credit

2

• Up to June 2019, total green credit balance has

exceeded 9.47trillion RMB

Outstanding performance in Green Bonds

Up to September 2018, total amount of green bond reaches 435.27 billion(193 issuance), among which green ABS takes 26.82billion(21 issuance)

Active Innovation in Green Insurance

• 30 provinces has started pilots work in mandatory

environmental pollution liability insurance

Rapid development in Green Funds and PPP

• In July 2018, China Asset Management

Association issued Green Investment Guideline(Trial)

• PPP model is widely used in green industry

NDRC offcially anounced the trail lauch of a national carbon market which ideally will cover 1700 enterprises in electricity industry, accounting for 3.5 billion tons of carbon emission(39% of the whole nation's total emission)

A Step forward towards establishing a National Carbon Market Green Finance Index

• Green bonds and green stock index adopting ESG

concept offered referances to principle investors. Progress in Green Finance Policy

3

Innovative pilots for Green Finance

◼ Avoid severe green financial

risks by establishing a mechanism involving risk monitoring, Early Warning, Prevention and damage control.

Financial Risk Prevention

◼ Best practices get duplicated in

areas such as goverment guidance, green financial product innovation, mechanism innovation, risk prevention.

Duplicable practices

◼ Progress

has been made in project database, information disclosure, credit reporting system and green finance standardization.

Green Finance Infrastructure Positive impact

Environmental Issues such as air and water quality have been effective addressed in the pilots, contributing greatly to the eco civilization.

4

Challenges

The challenges for the next step

Different standards to be harmonized Policy Coordination to be perfected Awareness and capacity to be improved Quantitative analysis in environmental risks and benefits to be strengthened Innovation in green financial products to be expanded Insufficient environmental information disclosure in the financial market

Harmonization of green finance related standards Take part in seeking the common language in global green finance development Standardize environmental information disclosure and life- circle fund management

Key to improve information disclosure: (1)Improve environmental risk and benefits analysis capacity of verification institutes. (2) Expand information disclosure to the whole life circle of fund raising and using.

Innovate green financial products and services

Seize the right timing for innovation in products and services to widen financing channels and lower financing cost.

Expand green finance pilots

Expand the scope of the pilots work to more provinces and cities and encourage localized supporting policy

5

Way to pace forward

02

Cooperation between China and Europe

13

Central Banks and Supervisors Network for Greening the Financial System (NGFS)

• 8 countries initiated and 42 member countries joined, among which 12 of them are BRI countries including

United Arab Emirates, Morocco, Malaysia(Up to June 2019)

1

Green Finance Cooperation between China and Europe

• Reaffirmed the commitment to the Paris Agreement and the Montreal Protocol;
• Agreed the key step was reform in carbon pricing and fossil fuel subsidies;
• Promised to strengthen cooperation to motivate private capital to sustainable and green economy
• White paper No.1 , The Need for A Common Language in Green Finance, released on COP23. It suggested a

common framework for green finance standards between China and the EU, laying the foundation for a future harmonized standard which helps cross border green bond investment.

• White paper No.2 , The Need for A Common Language in Green Finance, released on COP24. It offers an

idea of a “translation” mechanism to harmonize the differences between standards in China and the EU.

Harmonization of Green Finance Standards between China and the EU 21st EU- China Summit, 2019

15

China - UK

• UK-China Green Finance

Taskforce launched in the 9th China-UK Economic and Financial Dialogue(EFD), 2017

• Green Investment Principle for

BRI, 2018(made by the Taskforce)

• $400m green loan facility

annouced in the 10th China- UK EFD, 2019 China - Germany

• Flagship:Sino - Germany EC Park

➢ Founded in 2013; ➢ Fixed asset reached to 53bn RMB in 2019. ➢ About 600 companies registered China - France

• Green finance first highlighted in the

5th High Level Economic and Financial Dialogue(HED) ,2017

• Commitment to a post-2020 global

biodiversity framework in the 6th HED,2018

• China - France Green Finance Joint

Conference launched in Oct, 2018

1

Green Finance Cooperation between China and Europe

China - Luxembourg

• ICBC listed its first green bond on

Luxembourg exchang in 2017

• China Construction Bank Corporation

(CCB) - €500 million green bond issued

• n Luxembourg Green Exchange in

2018

• Shanghai exchange & Luxembourg

exchange - The Green Bond Channel

1

Green Finance Cooperation between China and Europe Given the fragile ecosystem and low environment resilience, it's vital to develop green finance. With undeveloped infrastructure and industries as well as many social problems, BRI countries are in need of sustainable development.

GIP for BRI To fund green projects within framework of BRI Since 2015, Agricultural Bank of China, ICBC, Bank of China, China Construction Bank, and other large financial institutions have issued green bonds, climate bonds, and sustainable development bonds at the Luxemburg Stock Exchange.

• Reinforced the concept of low carbon and sustainable

development, helping improve investment environment and social risk management

• Big banks, funds, and financial institutes from the UK,

France, Germany, Luxembourg, Japan, Hong Kong, Singapore, United Arab Emirates, Pakistan, Kazakhstan, Mongolia have joined in. Green bonds

03

Cooperation opportunities in green finance between China and Hungary

17

1

Environmental Urgency “The death rate from air pollution in Hungary is said to be the second-highest in the world coming just behind China. As many as 10,000 people die prematurely in the country each year because of diseases linked to air pollution” (Euronews).

Nearly 4 in 10 people have poor- quality drinking water (OECD). 80% of Hungary’s residential buildings lack modern, efficient heating systems (OECD). emissions are starting to increase again as level of car

• wnership in

Hungary rises(OECD). Soil pollution: industrial waste and farmers’ poor agricultural practices (i.e., the use of numerous pesticides)(OECD).

https://www.euronews.com/2019/01/21/air-pollution-in-hungary- accounts-for-thousands-of-premature-deaths-a-yea

the main environmental challenges facing Hungary : 1. Fragmented environmental responsibilities at the central level and shortage of local capacity 2. Heavy reliance on fossil fuels 3. Low energy efficiency of buildings 4. Old and fast-growing vehicle fleet 5. Serious air pollution-related health risks 6. Wastewater treatment coverage among the lowest in the OECD 7. Lagging eco-innovation performance 8. Declining participation among the public in decision making 9. Lack of integration of biodiversity considerations into most sectoral policies

https://www.oecd.org/environment/country-reviews/highlights-hungary-2018-performance- review.pdf

2

Economic Pressure

Without EU funding, the Hungarian economy would only be capable of an annual growth rate of 1-1.5%.

• “We have undervalued our labor.”
• - Mihály Kupa, former Hungarian Minister of Finance.
• “Hungary’s economy is on a steady downward path.”
• -István Csillag, former Minister for Economics and

Transportation.

• Current growth rates pale in comparison even to the 4.9%

growth that Hungary saw in 2004.

3

Solution: “Green is Gold”

• Market opportunities

√ High share of renewables, particularly biomass, in the energy mix √ Substantial environmental tax revenues untapped for green industries √ Significant public environmental investment supported by EU funds √ Declining waste generation, increasing recycling and recovery √ Extensive network of protected areas

• - OECD’s third Environmental Performance Review of

Hungary

• Policy signals

△New Green Program - the Magyar Nemzeti Bank, February 11, 2019 → plans in pipeline

3

Solution: “Green is Gold”

Green Goals

• Issuing Green finance policies to redirect bank funding
• Establishing environmental risk management systems

in the banking sector

• Promoting long-term funding through green bonds
• Supporting green retail finance (for customer and SME)
• Facilitating research and training
• Defining green financial products (standard)
• Implementing green office

Green Project Areas

• Renewable energy
• Energy efficiency
• Pollution prevention and control
• Environmentally sustainable architecture and animal

husbandry

• Biodiversity conservation in land and water
• Clean transport
• Sustainable water management and wastewater

management

• Adaptation to climate change
• Products and technologies of “eco-efficient” or circular

economy

• Green buildings

4

The first European country to sign MOU within BRI framework The first European country to implement Chinese billigual language education The first country in Central and Eastern Europe where Bank of China set up an RMB clearing house The first country in Central and Eastern Europe to set up a China-focused governmental body within the tourism industry The first country in Central and Eastern Europe to issue panda bonds

Strong Foundation for Bilateral Ties

5

Dynamic Trade Links

Economy & Trade

2018 ✓ In the first quarter of 2018, the bilateral trade volume between China and Hungary amounted to US $2.62 billion. ✓ US $328 million of Chinese direct investment stock in China ✓ 24 economic and trade agreements ✓ 19 Economic Joint Commission meeting

Bilateral Trade

6

Exploration of cooperation potentials

• Mutilateral cooperation and enpowerment

from international initiatives. 1. Knowledge sharing under the common frame work of NGFS 2. Institutes from both sides to join more networks such as UN PRI, TCFD, SEB, GIP

• Bilateral dialoges and activation of market

exchanges 1, China story of the top - down approach in greening the financial system. 2, Joint force in green financial products

• innovation. Eg: green panda bond, green

sovereign bond etc.

• Involvement in Green finance standardization

1. Capacity building in establishing domestic green finance standards 2. Together push forward a harmonized global standard for cross - border green capital flow

• Encouragement for acadamic collaboration
• 1. CH-HU Green Finance Forum
• 2. Talents exchanges.
• 3. Joint research and policy suggestions.
• 4. Transfering academic results to market products.

谢谢 Thanks

Subscribe our newsletter at : https://www.greenfinanceinchina.com/ More about our knowledge on green BRI: https://green-bri.org/