The Green Finance Committee of China Society for Finance and Banking and Finance for Tomorrow, the Paris EUROPLACE’s initiative dedicated to green and sustainable finance, held the first China-France Green Finance Joint Conference on October 19 in Shanghai, China.
With the support from the People’s Bank of China and Banque de France, this conference initiated the bilateral cooperation on green finance between China and France. Both countries are strongly committed to promoting the establishment of a green financial system, with a view to contributing to the implementation of Paris Agreement and the UN Sustainable Development Goals.
Participants from China and France include representatives from both central banks, associations, financial institutions, green companies and academic institutions. Hong Kong Green Finance Association (HKGFA) is part of the China delegation. European Commission representatives also took part in the discussions. This conference explored topics of mutual interest, including:
developing green taxonomy;
promoting environmental/climate information disclosure by financial institutions;
exploring feasibility to develop green supporting policy measures; and greening investments in the Belt and Road.
Ma Jun, Chairman of China Green Finance Committee and Chairman and President of Hong Kong Green Finance Association, said in the opening remarks that “China and France has already been involved in many international collaborative platforms on green finance, such as the G20 and the Network for Greening the Financial System (NGFS), and it’s the high time that both countries sit down and work on some topics for bilateral collaboration.”
Philippe Zaouati, Chair of Finance for Tomorrow, CEO of Mirova, and Member of the EU HLEG on Sustainable Finance, said “The four topics are all very important to strengthen the collaboration on green finance between China and France which can be an accelerator of the EU-China cooperation.”
While recognizing the fast development of green financial market in both countries and other parts of the world, more efforts are needed to further scale up green finance e.g. via development and harmonization of green finance taxonomies. “China developed its taxonomy of green bonds in 2015 and is now working on a new revision”, said Ma Jun, “the new draft has raised the standards of green projects in some sectors and included new areas such as green buildings and green agriculture in the main categories for green bonds.” The European Commission has also been working to develop a common green finance taxonomy, which may be released in 2019.
In China where taxonomies on green finance already exist, there are discussions on the possibility of reducing the risk weight for green loans to encourage green lending. However, even without a national taxonomy, country authorities could encourage financial institutions to assess the default rates of green and brown assets, and explore internal measures to support green assets and panelize brown assets.
Participants believe that another effect way to encourage financial institutions to develop green finance is to enhance environment/climate information disclosure. Both countries have put forward requirements on environmental/climate information disclosure by listed companies, including financial institutions, and could collaborate on further improving information disclosure by financial institutions.
As the largest green financial markets in the world, China and France are keen to promote green investment in the Belt and Road region, especially infrastructure investments that are carbon locking. But many B&R countries lack of the capacity or resources to do so. Chaoni Huang, Vice President and Secretary General of HKGFA said “B&R is a golden opportunity to bridge the infrastructure gap and achieve the goals set out in the Paris Agreement and the 2030 Agenda for Sustainable Development. Hong Kong will play a key role to attract international investors to participate in B&R opportunities but sustainability considerations become a necessity.” Ma Jun commented that “China and France could work together to encourage financial institutions and corporates to sign up to the Green Investment Principles for the Belt & Road.”
Both parties agreed to further enhance collaboration on green finance in the following areas:
- Enhancing knowledge sharing on environment/climate scenario analysis and stress testing;
- Encouraging banks from both countries to study the differences in defaults rates of green and brown assets using banks’ internal data, which would be useful for further policy initiatives;
- Boosting collaboration on sustainable infrastructure investment for the Belt & Road, e.g. via encouraging financial institutions to adopt the Green Investment Principles for the Belt and Road;
- Strengthening cooperation on green finance transactions via, e.g. encouraging Chinese institutions to issue green bonds in Europe and French companies to issue Green Panda Bonds in China; and
- Sharing knowledge on the issuance of green bonds by governments.
Members of Hong Kong Green Finance Associations are welcomed and encouraged to take part in the China-France bilateral cooperation on green finance.
Source: China Green Finance Committee and Finance for Tomorrow