Could China become a leader in green finance?

Experts gathering in London have argued over whether China could dominate the green financing market in years to come.

The event, hosted by Imperial College London, brought together academics in the field to discuss how this crucial, and topical, area can help prevent dangerous climate change. Only yesterday, the Seychelles announced an innovative conservation finance deal to protect vast areas of the country’s marine wildlife.

And while China is seemingly touted as an emerging world player in almost every area, from electric vehicles to space travel, attendees were in a consensus over the country’s potential in the market.

However, China has a chequered history with environmental issues, dating back to Chairman Mao’s insistence that “man must conquer nature”, and continuing into the present-day, which prioritises huge infrastructure projects to drive economic growth.

Professor Yao Wang, who leads the International Institute of Green Finance in Beijing, outlined China’s new strategy on green finance, detailing new ‘pilot zones’ in five regions across the country to address different environmental problems. In addition, she explained how the Chinese Government and financial institutions are now scaling-up their support of clean industries. She stated the country is developing a new financial system which looks to green funds, insurance and credit trading.

The country notably launched its first carbon market late last year, which will cover a huge 4 billion metric tonnes of emissions and 1,700 polluting companies.

Professor Wang also commented that “the lack of legislation is still an obstacle for getting eco-projects rolled out at both a national and local level. There is also a question about how much financial information should be disclosed to potential investors who want to benefit from China’s green finance market”.

New analysis from rating agency S&P on the green bond market, reported by Climate Action last month, showed that Europe remains the dominant force in this area, with the US catching up. Emerging markets, such as China, India and Mexico were cited as increasing their share of the market though.

Dr Charles Donovan, who heads up Imperial College’s Centre for Climate Finance, concluded: “China’s growing position as a leader in the international green finance market highlights the importance of tackling climate change and the role that governments and businesses need to play in boosting the global green economy”.

 

Climate Action is launching the Sustainable Investment Forum Europe this year, taking place in Paris on 13th March. If you are interested in green finance, learn more here.

Photo: Hanny Naibaho