In 2014, the China Green Finance Task Force Report came up with detailed efforts to create a green and sustainable financial system in China.
The novel project was a collaborative effort done by the research bureau of the People Bank of China PBOC and the United Nations Environment Program Inquiry (UNEP).
Around 40 experts from different fields like academics, ministries, financial regulators, financial institutions, banks, and international export scholars, contributed to this report, and all of them were gathered by the UNEP inquiry program so that China can get a certain push to implement the strategies required to build a green financial system.
The very China Green Finance Task Force report is nothing but the result of the process and the entire implementation, where the Research Bureau of the People Bank of China highlighted an effective framework for which they got recommendations from various reliable sources.
The following are the key recommendations of the main Green Finance report:
1. At number one, we have specialized investment vehicles that talk about the importance of building specialized financial institutions such as Green Banks, green funds, or development banks.
Green banks are nothing but dedicated banks which will be responsible for gathering the finance for the green project to run at both local and national levels.
Green funds are investment funds that will only be gathered for projects related to green finance, such as renewable energy, energy efficiency, and other projects.
If we come to talk about development banks, this is basically a policy where big institutions like the Asian Infrastructure Investment Bank or the Silk Road Fund are encouraged to consider environmental risk management systems and utilize green investment in overseas projects as well.
These mediums of financing will be enough to provide long-term and cost-effective financing for sustainable green projects. Not only this, but it will also help attract private capital so that it can supplement the public funding to accomplish the SDGs.
2. The second recommendation talks about financial and fiscal support and highlights the need for the financial aspect as an important tool to accelerate green finance. Such tools are discounted green loans, green initial public offerings, and green bonds.
Green bonds are nothing but promoting the issuance of bonds that will especially be used for environmentally friendly tasks, projects, and concepts.
The green initial public offerings are the simplified sign-up process for green Enterprises that support the Green project and let them access the equity market via it.
Discounted green lawns are the loans where the prime source is the government agencies. These subsidized loans can also help mitigate the shortage of costs required for the green initiatives to be implemented.
All the above-mentioned financial and fiscal support are really needed to reduce the capital cost of the green projects. This will also incentivize private sector participation.
3. At number 3, we have a financial infrastructure that talks about the need to develop a well-organized financial infrastructure in order to channel green finance and move a step ahead to accomplish the SDGs.
This recommendation highlighted the need to enhance liquidity by expanding the carbon Markets and trading schemes so that more companies can be covered under them.
It also recommended building tools and systems that can make a proper assessment of the environmental performance of projects and borrowers.
Not only this, but it also promoted bringing stock in this area and encouraged individuals to create it to track the progress of listed companies and relevant profiles having strong contributions to environmental projects.
A centralized database was also proposed here, which will be managed by the Ministry of Environment in order to improve the reporting and assessment of the project while reducing transactional costs.
4. Number four talks about legal infrastructure or a framework that can help in establishing transparency and accountability of the environmental project. For example, this infrastructure will ensure that compulsory insurance is made in order to tackle the environmental damages and the risks associated with it.
It also urges disclosure requirements, that is, the associated Financial Institutions and mandating companies are required to disclose environmental information and the sustainability projects in which they are working.
It also talks about an important aspect: that the liable lender will be the soul bearer if they are financed for any environmentally harmful activity.
All in all, these are the recommendations from the report, and the mentioned implications will ensure that the environmental risks are reduced and that sustainability practices are seamlessly included within the financial sector.
Background Reports
Theoretical Framework
International Experience
Detailed Recommendation Papers
Green Banking
Green Funds
Development Banks
Green Loans
Green Bonds
Green IPO
Emissions Trading
Green Credit Rating
Green Stock Index
Environmental Cost Analysis
Green Investor Networks
Green Insurance
Legal Liability
Environmental Disclosure Requirements
