The global green bond markets are booming, but the capital mobilized to date is far from enough to finance the worldwide transition to low-carbon economy.
At yesterday’s China-UK Green Finance Forum in Beijing, Climate Bonds and Bank of China have shared its recommendations on scaling up green capital flow, highlighting the importance of connecting international green bond markets with China.
Developing terms of green definitions, information flows, market infrastructure and market access all set the platform for the next phase of growth.
Background to the Green Finance Taskforce
China and the UK have been progressively increasing their cooperation around green finance at G20, ministerial and financial levels.
The China-UK Green Finance Collaboration Taskforce, established by Green Finance Committee of China Society for Finance and Banking and the City of London’s Green Finance Initiative, is tasked with increasing financial cooperation between the two nations and growing green investment and opportunities.
Five Workstreams have been established to examine best practice and policy options around five main aspects:
- Assessing environmental risk,
- Green asset backed securities,
- Analyzing funding costs via ESG risks and assessments,
- Greening the Belt and Road, and
- Scaling-up green capital flows.
Climate Bonds Initiative and Bank of China co-chair the "Scaling-up green capital flows" Workstream. Other workstream co-chairs include Central University of Finance and Economics International Institute of Green Finance, UNPRI, China Industrial Bank, Bank of England, ICBC, HSBC, Renmin University of China Research Center of Ecological Finance and City of London.
Yesterday’s Beijing Forum was convened to review the main research achievements of the Task Force Workstreams and also discuss future collaboration, as a part of the 9th China-UK Economic and Financial Dialogue.
The UK-China Green Finance Task Force interim report Globalising Green Finance: Turning Green Momentum into Actions was released at the Forum.
What’s our view on scaling up?
Climate Bonds and Bank of China put forward a series of interim recommendations at the Forum.
In the section titled “Facilitating International Capital Flows to Grow China’s Green Bond Market” in the interim report, produced by the Climate Bonds Initiative in collaboration with Bank of China, the following challenges faced with domestic issuers and international investors:
Challenges to Green Bond Issuance from China:
- Lack of awareness among potential green bond issuers
- Capital costs for Chinese issuers may not be as low as expected
- Approval process and quota limitation
Challenges for international investors participating in the onshore green bond market:
- Differences between China’s green definitions and internationally accepted green definitions
- Lack of information on China’s green bond market
- Controlled domestic market access
- Capital flow controls
- Inadequate hedging tools
- Unfamiliar with domestic credit ratings
Nine Core Recommendations:
- Raising Chinese issuers’ awareness through market education activities and demonstration issuance
- Improving international investors’ understanding of China’s green bond market through investor roadshows and engagement platforms
- Developing green bond database and indices
- Establishing and using internationally accepted green bond standards and certification scheme
- Simplifying approval process
- Providing clearer policy guidance on market entering schemes
- Providing clear policy signal and guidance to reduce investor perception on capital controls
- Developing RMB hedging instruments
- Improving domestic credit ratings practice
Who’s saying what?
Co-chairs and guests also exchanged views on future green finance collaboration leading up to the 9th China-UK Economic and Financial Dialogue scheduled for later this year:
Chen Yulu, Deputy Governor of People’s Bank of China, emphasized that the development of green finance in China is still at an early stage, more effort should be put into improving product yield and maturity mismatch, promoting cross border capital flow, and bringing together think tanks to work towards these goals. Multinational as well as bilateral framework such as the China-UK Green Finance Taskforce play an important role.
Speaking on prevention of environmental risks translate into financial risks, Ma Jun, Chief Economist of the PBoC Research Bureau and Chair of Green Finance Committee of China Society for Finance and Banking, suggested that the market can look into developing a stress test design akin to bank stress tests, setting threshold of carbon price level or sea water level as adverse scenario.
Climate Bonds CEO Sean Kidney noted that, apart from working on reduction of the friction between different green bond definitions, encouraging better use of proceeds disclosure and compliance with the best practice of external review would be positive developments.
Chinese regulators may also foster green bond market growth by giving preferential treatment such as green windows to international investors, a fast track to facilitate approval process of investment funds and a Green Bond Connect scheme to be built on the basis of China-Hong Kong Bond Connect.
Martyn Roper, Minister and Deputy Head of Mission, British Embassy in Beijing, commented that more work need to be done on mainstreaming green investment and making it more commercially attractive.
This might require investors taking more proactive ESG strategy and industries improving their information disclosure.
From a broader perspective, Sir Roger Gifford, Chairman of City of London Green Finance Initiative, stressed that finance without going green is meaningless, only financial activities in support of green development are truly finance.
What’s Next?
The final Climate Bonds/Bank of China report will be published at the 2017 UK-China Economic and Financial Dialogue to be held later this year.
We’ll keep you posted.
'Till next time,
Climate Bonds
在北京：气候债券倡议组织和中国银行向中英绿色金融工作组汇报促进绿色资本流动的研究成果。积极填补向低碳经济过度面临的全球融资缺口，实现环境可持续发展，是中英双方的共同愿景。
全球绿色债券市场正在快速增长，但是所调动的资本远不足以支持全球向低碳经济过度的融资需求。
昨天，2017年中英绿色金融论坛在北京举行，气候债券倡议组织和中国银行在会上分享了对于扩大绿色跨境资本流动的建议，突出了国际绿色债券市场与中国对接的重要性。通过推动国内与国外绿色定义融合、增强信息交流，改善市场基建及市场准入等多方面行动，为全球绿色债券市场下个阶段的发展夯实基础。
中英绿色金融工作组背景
中英两国一直致力于加强在绿色金融领域的合作，包括在二十国集团、政府部门以及金融部门层面。 中英绿色金融工作组由中国金融学会绿色金融专业委员会和伦敦金融绿色金融倡议组织组建，旨在促进中英两国推进绿色金融合作，增加绿色投资机会。
中英绿色金融工作组分为五个议题小组，围绕以下五个方面讨论最佳实践和政策建议：
- 环境压力测试
-绿色资产支持证券（ABS）
- ESG评估
-一带一路中的绿色投资
-促进绿色债券的跨境资本流动
气候债券倡议组织与中国银行是“促进绿色债券的跨境资本流动”议题小组的联合主席，其他议题小组联合主席包括中央财经大学绿色金融国际研究院、联合国责任投资原则组织、兴业银行、英格兰银行、工商银行、汇丰银行、中国人民大学和伦敦金融城。
昨天在北京举行的论坛讨论了中英绿色金融工作组的主要研究结果，并探讨了未来合作方案，以纳入第九次中英经济财金对话内容。论坛发布了中英绿色金融工作组的中期报告《推动绿色金融全球化：将绿色潜力转化为行动》。
气候债券倡议组织对扩大绿色跨境资本流的建议？
在中期报告中，气候债券倡议组织与中国银行共同撰写的《推动绿色跨境投资，发展中国绿色债券市场》部分分析了中国绿色债券发行人与国际绿色债券投资者所面临的挑战：
中国发行人在境外发行绿色债券的挑战：
-潜在发行人缺乏发行绿色债券的意识
-发行人资金成本或高于预期
-审批流程和配额限制
国际投资者参与中国境内绿色债券市场的挑战：
-中国的绿色定义与国际普遍接受的绿色定义之间存在差异
-中国绿色债券市场的信息不足
-中国债券市场准入障碍
-资本管制
-缺乏对冲工具
-对国内信用评级不熟悉
九大建议：
-通过示范发行向其它潜在发行人展示经验
-加深国际投资者对中国境内绿色债券市场的了解
-发展绿色债券数据库和绿债指数
-推动境内外绿色债券标准的融合
-简化审批流程
-为绿色债券投资者进入市场提供明确的政策指引
-释放明确的资金流动管制政策信号和加强指导，减少投资者的担忧
-开发人民币对冲工具
-完善国内信用评级实践
各方观点
昨天会上，中英绿色金融工作组议题小组牵头方与来自金融系统和行业组织的嘉宾们交流对未来绿色金融合作方案的看法，以纳入第九次中英经济财金对话内容。
中国人民银行副行长陈雨露指出，中国绿色金融发展还处于初始阶段，在多个不同方面仍然需要加大推动力度，包括改善绿色金融产品收益率和期限错配的问题、促进跨境资本流动、鼓励智库机构提供建议等。此外，多边或双边国家的一些合作框架，例如中英绿色金融工作组，对实现上述目标发挥重要作用。
针对防止环境风险转化为金融风险，中国人民银行研究局首席经济学家及中国金融学会绿色金融专业委员会主任马骏建议，在设计环境压力测试方面，市场可以借鉴银行压力测试的做法，设置碳价格或海平面变化程度的临界值，作为不利场景的测试基准。
气候债券倡议组织首席执行官 Sean Kidney提出，除了降低不同绿色债券定义之间的差别给市场发展带来的阻力，鼓励完善募集资金用途的信息披露，促进外部审查方面的最佳实践，中国监管机构还可以通过给投资者提供便利措施的方式促进绿色债券市场的发展，如建立投资基金申请进入市场的快速通道，在内地-香港债券通机制下建立绿色债券通等
英国驻华使馆公使兼副馆长罗廷表示我们需要主流化绿色投资，使其更具商业吸引力。这可能需要投资者采取更积极的ESG策略，改善信息披露
伦敦金融城绿色金融倡议组织的主席 Roger Gifford 爵士强调不是“绿色”的金融是没有意义的，只有支持绿色发展的金融活动才是真正的金融。
下一步？
由气候债券倡议组织与中国银行共同撰写的最终报告会在今年年底举行的2017年中英经济财金对话上发布。
敬请期待下一次更新。
气候债券倡议组织
免责声明: 本文所提供的信息不构成任何投资建议，气候债券倡议组织并不是投资顾问。气候债券倡议组织并没未提供任何关于投资优缺点的建议。投资决定完全取决于投资者自身。气候债券倡议组织对任何个人或机构的任何投资以及代表任何个人或机构的第三方机构的任何投资概不负责。
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.
The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.
Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.
A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.
