User:CL.07/sandbox

The article I will be looking at is sustainable finance, and the reason for this is because I have an interest in green finance which does not exist on wikipedia. However, it does redirect you to sustainable finance which I feel undermines what green finance really does specifically for the environment and loops it in with a much more general term. Same can be said where I saw eco-investing getting related to green finance which are two different things.

The section that I want to focus on in particular in this article is Sustainable Finance in Hong Kong. I want to broaden up this section similar to Sustainable Finance in China instead of just Hong Kong since I am writing my project 2 on a similar topic.

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Sustainable Finance in China:

Development of Sustainable Finance in China

China, as one of the world's largest economies and a global leader in environmental challenges, has taken significant strides in the development of sustainable finance. The country's journey toward integrating environmental, social, and governance (ESG) criteria into its financial system is characterized by a commitment to addressing climate change, promoting green investment, and adopting international best practices.

Catalyst of Sustainable Finance in China

Green Bond Market in China:

A pivotal moment in China's sustainable finance journey was the emergence of green bonds. In 2015, the People's Bank of China and the National Development and Reform Commission issued guidelines for green bond issuance. These guidelines established the framework for certifying and regulating green bonds, ushering in a new era of green investment in the country. The guidelines looked to help classify projects and set eligibility criteria within six environmental sectors. By the end of 2022 China had a cumulative labelled green bond volume of USD489bn (RMB 3.3tn). In June 2020, the People's Bank of China (PBoC), China's central bank, China securities and Regulatory Commission (CSRC), and National Development and Reform Commission released a Green Bond Endorsed Project Catalogue draft which looked to build an overarching guideline for green bonds in China. China has since become the world's largest issuer of green bonds, with both domestic and international issuers seeking to fund environmentally friendly projects. Notable examples of issuers include the Industrial and Commercial Bank of China (ICBC), which among the 40 green Kung Fu bond issuers ranked the largest with USD 6.75bn.

Promotion of Green Finance Policies in China

China's commitment to sustainable finance is reinforced by its strategic policy decisions. In 2016, the People's Bank of China launched a green finance pilot program in five provinces, followed by the Green Credit Issuance Guidelines, encouraging financial institutions to support green projects and integrate ESG criteria into their lending practices. In June of 2022, China's National Development and Reform Commission released its 14th 5 year plan on renewable energy development (2021-2025), to accelerate renewable energy expansion. The plan looks to increase renewable energy generation by 50% and looks for a target of 3.3 trillion kWh as compared to 2020's 2.2 trillion kWh and hopes to reduce emissions by 2.6 gigatons annually. China's National Energy Administration has also furthered this goal by introducing policies supporting renewable energy development, facilitating investments in wind, solar, and hydroelectric power.

China's National Energy Administration (NEA) is committed to supporting renewable energy development through a variety of policies, including feed-in tariffs (FiTs), renewable portfolio standards (RPS), investment subsidies, and grid access. These policies have helped to make China the world leader in renewable energy development, and are attracting significant investment in renewable energy projects. The China Development Bank issued green bonds worth 10 billion yuans to improve the environmental protection efforts of the Yellow River and advance social development of regions. These efforts reflect China's aim to align its financial system with green development goals and transition toward a low-carbon economy.

Development of ESG reporting in China

China has also made strides in ESG reporting and transparency. Chinese companies listed on the Hong Kong Stock Exchange (HKEX) are increasingly disclosing their ESG performance, demonstrating a commitment to corporate responsibility [unpri]. As of Septemeber 2019, 89% of 276 H-share companies issued ESG reports, and this number is expected to rise withe disclosure regulation [unpril]. In 2016, the HKEX introduced a mandatory "comply or explain" ESG reporting requirement for listed companies, ensuring greater transparency and accountability [unpri]. An exemplar of this trend is Ping An Insurance, which became the first Chinese asset owner to join Climate Action 100+, an influential global initiative advocating for the largest corporate greenhouse gas emitters to take necessary action on climate change [unpril].

"Hong Kong’s Financial Secretary, Paul Chan, delivered the 2023-24 budget on 22 February 2023 with the promotion of a green economy, sustainable development and China’s “3060 Dual Carbon Targets” at the forefront."

Financial Regulatory Framework's in China:

The China Securities Regulatory Commission (CSRC) has actively engaged in establishing a regulatory framework for sustainable finance, making China's financial markets more inclusive of ESG factors. The CSRC issued guidelines for ESG disclosure by listed companies, promoting responsible business practices and information transparency [unpri]. Moreover, the China Insurance Regulatory Commission (CIRC) has encouraged insurance companies to invest in green industries, demonstrating a concerted effort to align the insurance sector with sustainability goals [unpri].

International Collaboration:

China recognizes the importance of international collaboration in sustainable finance. In 2015, China established the Green Finance Committee (GFC) to promote the development of green finance and align with international green finance principles. This platform was created in response to China hosting the G20 and has only grown since its founding. The GFC has actively engaged with global organizations such as the Green Finance Initiative (GFI) in the United Kingdom, contributing to a greater understanding of green finance's international dynamics.

Next Generation of China for Sustainable Finance

China's dedication to sustainable finance is extending to multiple fronts, demonstrating a holistic approach to green development. The ambitious Belt and Road Initiative (BRI), a flagship project spanning numerous countries, is increasingly embracing green finance principles, prioritizing eco-friendly investments across its vast infrastructure and development endeavors. This shift aligns the BRI with sustainability goals, emphasizing clean energy, climate resilience, and biodiversity protection in partner nations. The Green Investment Principles for the BIR were launched in 2018 and looked to create a plan that calls for assessment and disclosure of strategies for managing climate risk, setting new green investment targets, and a commitment to decreasing investment in carbon-intensive practices. Simultaneously, the People's Bank of China is diligently crafting a green taxonomy to standardize the classification of environmentally responsible projects and assets, enhancing transparency and reducing the risk of greenwashing. China is further solidifying its commitment by establishing a Green Finance Research Center, which will act as a global hub for sustainable finance research, fostering international collaboration. Notably, China's 14th Five-Year Plan introduces a comprehensive sustainability approach that permeates various sectors, encompassing agriculture, mining, transportation, and more. China's active engagement in international collaborations is poised to influence global green finance standards, driving increased transparency and accountability in sustainable investments.

Sources:

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