The People’s Bank of China and six other agencies jointlyissue
“Guidelines for Establishing the Green Financial System”
On August 31, the People’s Bank of China, along with six other governmentagencies, 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 advancethe development concepts of innovation, harmony, greenness, openness andsharing, and promote the establishment of China’s green financial system.
The Guidelines stress that the primary purpose of establishing the green financial system is to mobilize and incentivizemore 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 theChinese economy, promote technological progress in environmental protection, new energy, energy saving and other fields, and accelerate the development of new growth drivers and enhance the potential for economic growth.
The Guidelines include a series of policy incentives 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 bondindices, 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 environmentalrights, 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, in order crowd-in more social capital for green investment.
The Guidelines require a further expansion in international cooperation on greenfinance, continued promotionof global consensus on green finance under the G20 framework, a progressive opening of the greensecurities 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 coordinationon 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 greenfinance.
