Beijing Launch of 3rd Annual Report on Green Bonds and Green Finance
Joint Climate Bonds & CCDC report, supported by HSBC
Climate Bonds Initiative and China Central Depository & Clearing Co. Ltd (CCDC), with the support of HSBC, have launched the China Green Bond Market 2018 report, analysing the key developments in the world’s second-largest market, focusing on green bond issuance, policy development and wider market growth.
At a glance
Total green bond issuance from China reached USD42.8bn (CNY282.6bn), representing a 12% increase year-on-year, cementing the country’s position as the second largest green bond market in the world.
The year saw improving quality of green bonds with fewer of them financing non-aligned projects and a significant improvement in the transparency of Chinese green bonds.
Major Chinese banks including the world’s largest, ICBC, issued certified green bonds reflecting a commitment to international best practice in green investment markets.
- USD42.8bn (CNY 282.6bn) green bonds were issued in 2018, of which USD31.2bn (CNY210.3bn) aligned with international definitions
- Internationally-aligned green bonds from Chinese issuers account for 18% of global issuance
- At USD9.6bn Industrial Bank Co. Ltd. was the second largest green issuer in 2018 globally, behind US-based Fannie Mae at USD20.1bn
- 86% of green bonds benefited from at least one external review
- Low-carbon transport was the single largest theme
- 11% of 2018 issuance was Climate Bonds Certified, including benchmark size issuance from ICBC London Branch, Bank of China, London and Tokyo Branches, China Construction Bank and Industrial Bank Co. Ltd.
Catalysts for scale
China is expected to accelerate growth in green finance market through ramping up policy support and further regulatory development.
The report outlines three broad catalysts for growth including:
- Deepening of the green securitisation market
- Growing green bond issuance at the local level
- Further opening up of China’s green bond market
Who’s saying what?
Liu Fan, Vice President, China Central Depository & Clearing Co. Ltd. (CCDC):
“In 2018, with the green development concept taking root and becoming a common practice, as well as market-related institutional arrangements continued to improve, China's green bond market advanced steadily in the direction of standardisation. China is still the second largest green bond market globally in 2018.”
“CCDC, as the core financial infrastructure of the China bond market, and the executive committee member of the China Green Finance Committee, has contributed to the China green bond market in terms of laying foundations and innovation. This included establishing the ChinaBond Green Bond Index Series, and collaborating with CECEP to build a green bond environmental impact disclosure benchmark system.”
“All these steps have played a positive role in improving the transparency of the China green bond market and promoting the development of green economy. We will continue to implement the green development concept, and to safeguard the development of the China green bond market through the enhancement of financial infrastructure services.”
The last word
We'll leave the final comment to Sean Kidney:
“China has been the global leader in regulatory measures to support green finance. The rest of the word has a lot to learn; Europe is catching up as are ASEAN and Latin American nations.”
“The nations that are leading on green finance now have an opportunity to work together to drive capital on a global basis to achieve Paris climate goals and other urgent environmental objectives.”
“Institutional investors in Europe, North America, Japan and even Australia have also indicated an enthusiasm to work with governments and regulators on sustainable finance and addressing environmental challenges.”
“Taken together these directions can help funnel green investment in the 2020s to where the climate and low carbon growth priorities lay. China, with its green finance leadership, has created an enormous opportunity for investment both domestically and along the Belt and Road. This report reflects the scale of that opportunity."
‘Till next time,
Download the English version of the report here.
Download the Chinese version of the report 点击下载中文报告.