Under the background of "double carbon" goal, finance plays a key role in carbon neutral transformation. Carbon market is the link between green finance and the realization of "double carbon" goal, and the construction of a unified national carbon trading market cannot be separated from financial support.
Recently, the "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market" pointed out that "cultivating and developing a national unified ecological environment market." "Build a unified national trading market for carbon emission rights and water rights, and implement unified and standardized industry standards and trading supervision mechanisms."
How can green finance help achieve the goal of "double carbon"? What other standards and regulatory mechanisms need to be improved? In this regard, many insiders interviewed by 21st century business herald believe that the development of green finance still faces many challenges, including the need to unify the standard system of green finance, the need to further optimize the financing structure of green finance, the need to improve the infrastructure of the stock market of green finance, and the financial risks in the green transformation.
Recently, at the "2022 Tsinghua Wudaokou Global Financial Forum", Wang xin, director of the Research Bureau of the People’s Bank of China, said that financial support for ecological environment and green low-carbon transformation mainly involves six aspects, including improving relevant standard systems, improving accounting and information disclosure requirements, deepening the development of relevant financial instruments and markets, strengthening incentive and restraint mechanisms, strengthening international cooperation in financial support for ecological environment and low-carbon transformation, and preventing financial risks of climate change and biodiversity loss.
At the above-mentioned forum, Zhu Min, president of Tsinghua University National Finance Research Institute and former vice president of the International Monetary Fund, proposed to "build zero-carbon finance in China". Zhu Min believes that in the process of developing green finance to zero-carbon finance, a new financial model that fundamentally changes China’s economic structure and economic form is needed, and calls for the construction of a structural monetary policy consistent with carbon neutrality.
Under the tide of carbon neutrality, it is a great challenge to serve the real economy and carbon neutrality, and it is also an opportunity and a starting point for China to build a new China model financial system in the process of carbon neutrality. Vision china
Since 2016, the Bank of China has explored and formed a green financial system with green financial standard system, environmental information disclosure framework, green financial incentive and restraint mechanism, green financial products and services system and green financial international cooperation as its "five pillars" by giving full play to the "three functions" of financial support for green development.
However, in Zhu Min’s view, a new financial model that fundamentally changes our economic structure and economic ecology is needed to support the carbon neutrality of the whole economy from the narrow sense of environmental protection to the fundamental zero carbon.
Under the tide of carbon neutrality, it is a great challenge to serve the real economy and carbon neutrality, and it is also an opportunity and a starting point for China to build a new China model financial system in the process of carbon neutrality. Zhu Min believes that China’s financial industry should seize this opportunity and build its own zero-carbon financial system in the process of supporting the real economy.
Zhu Min further stated that the Bank of China should construct a structural monetary policy of China model consistent with carbon neutrality. That is to say, in the traditional macro-policy, we should accelerate the structural tools and policies of carbon neutrality, correct market mistakes through non-neutral price-based and quantitative monetary policies, correct the distortion of the relative price of the financial system, support the transformation of carbon neutrality, and maximize social utility.
In fact, the structural tools mentioned by Zhu Min have practical experience in China’s financial supervision. In 2021, the Bank of China launched a carbon emission reduction support tool and a special refinancing to support clean and efficient use of coal.
In addition, He Ping, vice president of Tsinghua University School of Economics and Management and head of the finance department, believes that to realize market-oriented green finance, a unified carbon market needs to be established, and all carbon-related things need to be priced uniformly. All enterprises that adopt green emission technologies, the gains from emission reduction should be directly reflected in the financing cost and the financial services and products they are using.
He Ping explained that green finance is a "market-oriented means" to achieve the goal of double carbon. From the definition of strict marketization, green financial products, including green loans and green bonds, are quasi-financial products at present, because the pricing inside is not market-oriented. He believes that this is the place where the green financial market needs to be improved most in the future.
As one of the "five pillars" of the central bank’s green financial system, green financial standards are the key link in the top-level design of green financial policy system, and the identification caliber of green projects is an important link in the formulation of green financial standards.
In recent years, China has continuously promoted the construction of green financial standard system.
In April 2021, the Central Bank of China, the National Development and Reform Commission and the China Securities Regulatory Commission jointly issued the Catalogue of Projects Supported by Green Bonds (2021 Edition), which came into effect on July 1, 2021, unifying the scope of supported projects and gradually realizing the convergence of domestic and international standards and norms, which is conducive to promoting the further development of green bonds.
In the same year, the People’s Bank of China also issued the first batch of green financial standards, including two industry standards, namely "Guide to Environmental Information Disclosure of Financial Institutions" and "Environmental equity finance Tool", which started the preparation of China’s green financial standards and filled the gaps in green financial industry standards in related fields.
However, the industry generally believes that under the existing green or sustainable financial system, the definition standards and disclosure requirements of green and sustainable finance are not clear enough.
"Financial institutions still cannot clearly identify the’ transformation’ activities in economic activities and high-carbon or’ brown’ activities." In an exclusive interview with 21st century business herald, Ma Jun, director of the Green Finance Committee of the Chinese Finance Association and president of the Beijing Institute of Green Finance and Sustainable Development, said that some financial institutions were "afraid" to provide financial services for the transformation activities due to the above reasons.
Ma Jun suggested that the regulatory authorities should take the lead in formulating a transitional financial framework, and give clear requirements and guidance in terms of transitional standards, disclosure requirements and incentives. He also put forward five elements that a transitional financial system should have: defining transitional activities; Clarify how to disclose transformation activities; Clarify the financial support tools for transformation; Incentive mechanism and ensuring fair transformation.
In addition, the investment and financing structure of China’s green finance needs to be improved. Recently, "China Investment Development Report (2022)" from China Jiantou pointed out that China is a country with indirect financing, and green credit accounts for 90% of the total scale of green financial products in China, and there is an imbalance in the development of green finance. It is necessary to establish a more diversified green financial system in the future.
Wind statistics show that among the new green financing in China from 2018 to 2020, green credit accounts for 90%, while green bonds and green equity financing account for 7% and 3% respectively. Whether in green financial projects and standards or products and services, green trust, green insurance and green financial leasing are still relatively few.
Zhang Zhiqian, director of China Jiantou Investment Research Institute, told 21st century business herald that compared with mature market countries, the proportion of green bonds in green financing in China is low, and there is still great room for development in the future.
Zhang Zhiqian further stated that to develop green finance and promote green economic transformation, it is necessary to establish a diversified green financial system, which is far from enough by the spontaneous power of the market and financial institutions alone, but also requires the financial industry regulatory authorities to actively play the role of macro-control and guidance.
Information disclosure of financial institutions is also regarded as the key to green finance by the industry.
"International competition has actually begun in the standard disclosure rules, because everyone realizes that this is the most important formulation of new global rules since the industrial revolution. Whoever occupies the commanding heights of the rules will occupy the future. This is also global competition, and at the same time, building a global capital market in the process supports the entire carbon-neutral transformation." Zhu Min said.
After five years’ efforts, TCFD has constructed a set of disclosure suggestions, including corporate strategy, corporate governance, risk management, indicators and objectives, and put forward a series of principles and suggestions on corporate disclosure in response to climate change and carbon-neutral transformation in many aspects. Now there are more than 2,600 response standards, which are ready to be implemented according to this standard, so disclosure is ahead.
Recently, the Task Force on Nature-Related Financial Disclosures (TNFD), initiated by the United Nations Development Programme (UNDP), the United Nations Environment Programme (UNEP), the World Wide Fund for Nature (WWF) and composed of 35 financial institutions and enterprises, has formulated and published the Nature-Related Financial Information Disclosure Framework (Beta).
Different from TNFD framework, TCFD only helps organizations to identify and report climate-related risks, excluding other risks in the natural environment such as biodiversity, while TNFD framework includes biological nature, water, soil and air, and mineral consumption related to other aspects of nature.
China’s Environmental Information Disclosure Guide for Financial Institutions clearly covers four types of institutions: commercial banks, asset management institutions, trust companies and insurance companies, and encourages financial institutions to disclose environmental information at least once a year. The Bank of China suggested that disclosure should be carried out according to the needs of green financial products, but did not mention the specific time of environmental information disclosure of financial institutions.
In recent years, China has carried out a series of pilot projects on environmental information disclosure of financial institutions, and achieved remarkable results. Some pilot areas have achieved full disclosure of environmental information of financial institutions within their jurisdiction.
For example, the pilot work of environmental information disclosure of financial institutions in Greater Bay Area, which was launched at the beginning of last year, made a qualitative and quantitative analysis report on the environmental-related governance structure, policy system, risks and opportunities, environmental impact of investment and financing activities, green financial innovation and other contents of 13 corporate banking institutions in eight cities in the region by compiling the Environmental Information Disclosure Report, which covered a large number of small and medium-sized financial institutions and accumulated effective experience for comprehensively promoting environmental information disclosure of financial institutions. In addition, by means of financial technology, Chongqing released the 2020 Climate and Environmental Information Disclosure Report of 71 financial institutions in 38 districts and counties through the Internet platform such as "Yangtze River Green Finance Big Data Integrated Service System". (Intern Cao Ying also contributed)
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