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Green Finance: Seeking a Way Out of China’s Pollution Crisis

huang_chaoni_trucostI am excited about what lies ahead for green finance in China now that the Green Finance Committee was launched last week. The GFC comprises an elite group from China’s financial community including the top tier regulators, banks, asset managers, insurers and thought leaders. It marks a big step forward in China’s interest in green finance.

A month ago, China was shaken by a documentary called Under the Dome made by Chai Jing, a well-known journalist. With over 200 million viewers across in China in one week, the film has once again reminded everyone about the severity of air pollution in the country. Environmental challenges such as climate change, water scarcity, waste and pollution are threatening economic growth and social stability in China.

Green finance is a way out from under the ‘dome.’ Under the leadership of China’s central bank, the People’s Bank of China (PBOC), the GFC will identify practical steps to achieve economic growth and environmental improvements through reform of China’s financial system.

At the GFC launch, PBOC deputy governor Pan Gongsheng said the bank and other key government organizations are taking serious measures to develop green finance. Governor Pan emphasized the role of China’s finance sector to direct the flow of capital away from sectors and businesses with high environmental impacts. The bank also encourages financial innovation that takes the environment into account and supports the growth of sectors that deliver the solutions to today’s environmental challenges. “The Green Finance Committee is addressing the needs of China’s societal development and it is a vital milestone of China’s journey in green finance. It also accelerates the country’s economic upgrade,” he said.

The launch meeting also saw Dr. Ma Jun, chief economist of PBOC’s research bureau, elected as chair of the GFC. The committee’s members include the Industrial and Commerce Bank of China, Agricultural Bank of China, China Construction Bank, China Development Bank, the People’s Insurance Group of China, China Investment Corporation and China Galaxy Securities, along with 25 other financial institutions and organizations and another 54 non-executive members. In addition, the GFC also includes six international expert organizations: the International Finance Corporation, World Bank, UN Environment Programme, Principles of Responsible Investment, International Institute for Sustainable Development and Trucost.

According to Ma Jun, the GFC will focus on by six areas, namely green finance services, responsible investment, fiscal and financial policy support, financial and legal infrastructure building, promotion of green sectors and awareness raising. Each area has a working group that will conduct research on international best practices, environmental externalities valuation, green bonds, environmental lender liability, financing models for the green sectors and information disclosure.

Chaoni Huang
Chaoni Huang is the head of business development, Asia, for Trucost. She joined Trucost in 2012. Prior to Trucost, Chaoni was a senior environment, social, and governance investment analyst at MSCI in London and Beijing. Chaoni has an honours degree in economics from the University of Warwick (UK) and is fluent in English, Mandarin and Cantonese.
 
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