Asia-Pacific

China Approves First Carbon Neutral ETFs 

Eight carbon neutral ETFs scheduled for Shanghai debut; five interbank transition bonds approved for launch.

The Shanghai Environment Energy Exchange (SEEE) has granted its approval to eight carbon neutral ETFs to launch on its market. 

The SEEE was founded in 2008 as the first environment and energy exchange in China. 

The approvals were granted to companies including E Funds, Guangfa Funds, Fullgoal Fund Management, China Southern Asset Management, China Merchants Fund Management, China Universal, ICBC Credit Suisse Fund and Dacheng Fund. 

The funds will start accepting subscriptions from investors this week. The eight funds will be listed on the Shanghai and Shenzhen stock exchanges in the “near future”, the SEEE said. 

The SEEE said the new carbon neutral ETFs will further raise the ability of the capital market to service the economy’s green transformation and enable institutions and retail investors to contribute to green investment. 

China is seeking to achieve peak carbon by 2030 and carbon neutrality by 2060. 

National Association of Financial Market Institutional Investors (NAFMII) also recently announced the launch of China’s first batch of interbank transition bonds. 

Five state-owned enterprises issued the bonds: Huaneng Power, Datang International, Chalco, Wanhua Chemical, and Shandong Iron & Steel Group. The proceeds from the bonds will be used to finance the decarbonisation of high-emissions projects such as power generation and aluminum production. 

Transition bonds are designed to help decarbonise emission-intensive sectors. Under NAFMII’s pilot scheme, companies in eight sectors can issue transition bonds. The sectors include the power, construction materials, non-ferrous metals, steel, petrochemicals, chemicals, paper and aviation industries. 

Last month, the Shanghai Stock Exchange also issued revised its guidelines for corporate bonds to include low-carbon transition bonds and pandemic prevention and control bonds as specific bond types that can be listed on its market. 

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