As published by The People’s Bank of China. Original article available from: http://www.pbc.gov.cn/english/130721/3131759/index.html
The People’s Bank of China, along with six other government agencies, issued the “Guidelines for Establishing the Green Financial System” (Yinfa 2016 Doc No 228), with the approval of the State Council. The Guidelines – issued jointly by the People’s Bank of China, the Ministry of Finance, the National Development and Reform Commission, the Ministry of Environmental Protection, China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission – will provide an essential next step for implementing the overall strategy of promoting ecological civilization, formulated by the Central Party Committee and the State Council. They will also advance the development concepts of innovation, harmony, greenness, openness and sharing, and promote the establishment of China’s green financial system, as well as bringing more private capital into green economy and ecological civilization development, and sending a positive signal to the market.
The Guidelines stress that the primary purpose of establishing the green financial system is to mobilize and incentivize more social (or private) capital to invest in green sectors, while restricting investment in polluting sectors. The green financial system will help facilitate a green transformation for the Chinese economy, promote technological progress in environmental protection, energy saving and other fields, and will accelerate the development of new growth drivers and enhance the potential for economic growth.
The Guidelines include a series of policy measures to support and incentivize green investment. These incentives include, among others, re-lending operations by the People’s Bank of China, specialized green guarantee programs, interest subsides for green loan-supported projects, and the launch of a national-level green development fund.
The Guidelines also spell out the important role of the securities market in financing green investment, require a unification of the domestic green bond standards, support qualified green companies to raise funds via IPOs and secondary placement, support the development of green bond indices, green equity indices and related products, and require a gradual establishment of the mandatory environmental information disclosure system for listed companies and bond issuers.
The Guidelines call for the development of green insurance and trading of environmental rights, as well as the drafting of laws and regulations for introducing a mandatory pollution liability insurance system. They also support the development of various carbon finance products, and promote the development of the markets for emission rights, energy rights, water rights, and other environmental rights, as well as financing tools based on these rights.
The Guidelines notably emphasize the role of local governments in supporting the development of green finance, and encourage local authorities to establish specialized green guarantee mechanisms and green development funds.
The Guidelines require a further expansion in international cooperation on green finance, continued promotion of global consensus on green finance under the G20 framework, a progressive opening of the green securities market, and an enhancement of the level of “greenness” of China’s outward investment.
Looking forward, relevant government departments in China should adhere to the responsibilities assigned by the Guidelines, and faithfully implement all their requirements. They should also strengthen policy coordination on green finance development, improve regulations related to green finance, and enhance the publicity of green finance concept, with a view to achieving a healthy development of China’s green finance.