China's Guidelines for Establishing the Green Financial System

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China's Guidelines for Establishing the Green Financial System aim to mobilise and incentivise more capital to invest in green sectors, while restricting investment in polluting sectors. It includes a series of policy incentives, such as re-lending operations by the People’s Bank of China, specialized green guarantee programmes, interest subsides for green loan-supported projects, and the launch of a national-level green development fund. The Guidelines encourage commercial banks and other financial institutions to evaluate their loans and the exposures to assets in high environmental risk areas, and to analyse both the credit risk and the market risk in a quantitative way. The Guidelines also spell out the important role of the securities market in financing green investment and require a unification of the domestic green bond standards. They call for the development of green insurance and trading of environmental rights, the drafting of laws and regulation introducing a mandatory pollution liability insurance system, and a gradual establishment of the mandatory environmental information disclosure system for listed companies and bond issuers.

Before the release of the Guidelines for Establishing the Green Financial System, China established green credit guidelines. In 2018, the Asset Management Association of China, supervised by China Securities Regulatory Commission issued Guidelines for Green Investment, the first official policy guidance for Chinese investors on integrating ESG factors.