G20 and green finance

Under my country’s initiative, green finance issues were included in the G20 agenda for the first time this year, and a green finance research group was established and the G20 green finance comprehensive report was launched. In this report, the definition, purpose and scope of green finance, and the challenges it faces are clarified, and suggestions are made for the development of green finance in various countries to support global sustainable development.

From the first appearance of green finance issues in the G20, to the joint publication of the "Guiding Opinions on Building a Green Financial System" by seven ministries including the People's Bank of China, my country has become the world's first economy to establish a green financial policy system.

The People's Bank of China emphasized that the main purpose of building a green financial system is to mobilize and encourage more social capital to invest in green industries, while at the same time more effectively curbing polluting investments. Constructing a green financial system will not only help accelerate my country’s economic transition to a green economy, but also promote technological progress in the fields of environmental protection, new energy, and energy conservation, and accelerate the cultivation of new economic growth points.

From a global perspective, green finance, as a new financing method that has emerged in recent years, is becoming an important driving force for the global realization of green growth and sustainable development. Whether from top-level design or private participation, China's green financial system is becoming a global leader in green finance.

For example, Internet finance giant Ant Financial recently opened carbon accounts for 450 million users of its Alipay, which is by far the world's largest personal carbon account platform.

Recently, seven ministries and commissions including the People's Bank of China and the Ministry of Finance jointly issued the "Guiding Opinions on Building a Green Financial System" (hereinafter referred to as the "Opinions") to comprehensively deploy China's green financial system and solve the problem that green industry financing is difficult and expensive.

Ma Jun, chief economist of the Research Bureau of the People's Bank of China and director of the Green Finance Professional Committee of the Chinese Finance Society, believes that the release of the "Opinions" signifies that my country has reached a high degree of consensus from the highest strategic level to the relevant ministries and commissions.

"China is ushering in the golden age of green finance development. "Zeng Gang, director of the Banking Research Office of the Institute of Finance of the Chinese Academy of Social Sciences, said that while my country is constructing and improving its own green financial system, it also actively participates in the formulation of global green financial rules and contributes to the realization of green and low-carbon development in the global economy." Wisdom".

Establish a National Green Development Fund

Strong commitment from the central government

Just before the opening of the G20 summit, the world’s top two economies with carbon emissions accounting for 38% of the world——China and the United States formally approved to join the Paris Climate Change Agreement (hereinafter referred to as the Paris Agreement) almost simultaneously ).

"To achieve my country's goal of environmental pollution control and the international commitment to peak carbon emissions by 2030, it is estimated that 3 trillion to 4 trillion yuan of green investment will be needed each year. However, the industry estimates that fiscal funds can only cover about 15%. Therefore, most of the green investment needs to come from social funds. "Ma Jun pointed out in an interpretive article that the "Opinions" will become an important and positive policy signal to guide the financial industry and enterprises to carry out green investment and financing.

"In the past, my country's green finance was mainly limited to green credit. "Ma Jun said, but many green projects, especially new projects, first need equity financing, because it needs capital to further debt financing. Therefore, we must establish some green equity funds to promote equity financing of green projects. Many green projects are relatively new. Technically speaking, the people feel that the risks are relatively high, and they are also facing policy uncertainty. Due to these uncertainties, private funds are reluctant to invest in these projects. If government-backed funds are involved in investing in these projects, it will greatly reduce the resistance of private funds to the risks of such projects and make them willing to follow the investment.

Ma Jun believes that the "Opinions" proposed for the first time that it will "establish a national green development fund to invest in green industries, and reflect the country's guiding and policy signaling role for green investment". From an international point of view, China’s establishment of a green development fund at the national level is a rare type of strong commitment by the central government to green development.

A comparable case is the British Green Investment Bank established in 2012. Although this institution is called a "bank", it cannot absorb deposits or issue bonds, so it is in fact a green fund.

The country with the largest labelled green bond issue

Grow from zero to hero within one year

In the "Bonds and Climate Change: Market Status Report 2016" jointly released by SynTao Green Finance and Climate Bonds Initiative (Climate Bonds Initiative), China is the largest issuer of climate bonds. In the labelled green bond market, China also plays a leading role. China is also the largest issuing country of labelled green bonds since the beginning of 2016.

According to statistics, up to now, China has issued nearly 120 billion yuan of green bonds, accounting for 45% of global green bonds issued in the same period. Euromoney executives commented on the development momentum of China's green bond market that China has grown from zero to "hero" (grew from zero to hero) within a year.

Li Yifeng, deputy general manager of the bond financing department of Haitong Securities, analyzed that the biggest driving force for promoting the green bond market is the authority's support for green bonds and investors' recognition of green bonds. At present, the performance of these two aspects is very positive. The competent authority has relatively fast review of green bonds, and investors have recognized them, and their interest rates are generally lower than bond market rates.

It is understood that China is the first government-backed institution (ie, the Green Finance Professional Committee of the Chinese Finance Society) to issue its own green bond definition standards. At the end of 2015, the People's Bank of China and the Professional Committee of Green Finance of the Chinese Society of Finance issued the announcement of green financial bonds and the "Green Bond Project Support Catalog (2015 Edition)", launching the Chinese green bond market. Since then, the National Development and Reform Commission and the two stock exchanges have successively issued guidelines on green corporate bonds and green corporate bonds.

Ma Jun said that the development of the green bond market has many benefits, such as opening up new financing channels for green companies and projects, solving the maturity mismatch between banks and companies, providing investors with new asset classes, and through reputation effects Strengthen the issuer's green investment behavior, etc.

Liang Xiaojing, senior manager of the Asset and Liability Management Department of Shanghai Pudong Development Bank, also said that my country’s interest rate marketization has basically been completed, and banks have more diversified channels for debt expansion. Green bonds are a type of financial bonds, and its issuance will help improve the asset-liability structure.

Participation of all parties in the market

Improve "green" gold content and credibility

"my country's green bond market is currently being promoted from top to bottom, which is different from the bottom-up development of social responsibility funds in foreign countries. "Cao Jin, Director of Innovation Business of Hesheng Assets, said that as an investor, he is optimistic about the long-term development of green bonds, but the short-term investment assessment is still focused on yield and safety. He believes that the low interest rate of green projects is indeed beneficial to the reduction of financing costs for the green industry, but it also means that the return rate of investors is insufficient, which may be contrary to the original intention of investors. Therefore, it is necessary for the regulatory authorities to take measures such as interest discounts to attract investors to choose the green market.

Liu Wei, deputy director of the bond business department of the Shanghai Stock Exchange, suggested that the quality of green bond issuance is more important than quantity, and the green bond market should be "standardized start and healthy development". I hope that every single green bond will be green Standards and standards are achieved in terms of certification, sustainability evaluation, and future green performance evaluation.

Wang Hua, the vice president of Lyon Business School and the principal of the Asian campus, also pointed out that green bonds are an area where the financial sector and the environmental protection community intersect. All parties in the market should jointly participate in the construction of the green bond ecosystem and formulate a clearer" Green " standards, improve the gold content and credibility of the "green" label.

Ma Jun stated that in the "Opinions", several development directions for the next step in improving the green bond market were also proposed, including "establishing and improving domestic standards for the definition of green bonds", the purpose of which is to prevent supervision The risk of arbitrage will also help reduce investors’ search for green bonds’ "cost;" research and explore third-party evaluation and rating standards for green bonds, so as to ensure that third-party certification and green ratings can objectively and effectively evaluate green bonds. The environmental benefits of bond issuers and supporting projects, and strengthen the issuers’ motivation to improve environmental information disclosure.

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Green bond evaluation framework released

Help investors invest money in real green projects

Comprehensive report of this newspaper Oriental Jincheng International Credit Rating Co., Ltd. and Trucost, a global environmental consulting company, have jointly launched the China Green Bond Evaluation Framework. The evaluation framework was established after comprehensive consideration of current policies and regulations. It aims to form a consensus on the environmental impact of green bonds from all walks of life, and provide confidence and protection for the interests of issuers, investors and policymakers. The evaluation framework is also supported by the Green Finance Professional Committee of the People's Bank of China.

The evaluation framework comprehensively analyzes the issuer’s past green credit records and information disclosure (including the positive and negative environmental impacts of the project, risk control measures, project follow-up arrangements, etc.), and divides the green bonds issued by it into 5 levels , And continue to follow up during the bond duration.

The green bonds that have received the highest evaluation (G5) should achieve the best performance in project environmental risk control and long-term environmental goal completion. The higher the level, the better the environmental goals disclosed can be achieved, the better the compliance of environmental regulations, the better the transparency of disclosure and the better credit records.

According to the introduction, the main users of the evaluation framework are credit rating agencies, but they have certain reference value for the second-party opinions and third-party certifications involved in green bonds. The evaluation framework is provided free of charge, and feedback from all relevant parties is welcome.

Jin Yongshou, general manager of Oriental Jincheng, stated that the "Guiding Opinions on Building a Green Financial System" issued by the People's Bank of China and other seven ministries and commissions on August 31 proposed to unify the definition of green bonds and encourage third-party green assessments. The green bond evaluation framework jointly released this time provides a set of clearer evaluation and analysis tools, which will help investors invest green funds in truly green projects rather than "green washing" projects.

Trucost CEO Rid Mattison said: "For the continued prosperity of this market, it is important to build investor confidence and provide protection for issuers. Therefore, we hope that our assessment framework can achieve this goal and ensure that the financial industry helps China's economic green transformation. "

Original title: my country ushered in a golden period of green finance development