China State Council Issues Guideline to Support Green Initiatives

New guideline indicates that green finance initiatives will be given a greater weighting in financial institutions’ performance evaluations.

China’s State Council has issued a new guideline aimed at accelerating the development of green finance and a low-carbon economy.

The guideline, published on Monday, includes efforts by policymakers to ensure green finance initiatives at financial institutions are given a greater weight in how they are evaluated and assessed.

The move is part of efforts by Chinese policymakers to meet a nationwide target of reaching peak carbon emissions by 2030 and carbon neutrality by 2060.

The PBOC (People’s Bank of China) had indicated earlier this month that it would be using green finance performance evaluations to incentivise financial institutions to increase their allocations towards green assets.

At the time, PBOC Research Bureau Director Wang Xin said the measure will strengthen environmental risk management and help enhance the financial industry’s ability to support green and low-carbon development.

In January, the Ministry of Finance also issued revised performance evaluation rules for state-owned and state-controlled banks, which includes an indicator on how well they support green industries and companies.

The new State Council’s guideline also requires that standards for green bonds be unified and standards for rating such bonds be created.

According to the guideline, green insurance and green credit will also be further developed, financial institutions will be aided in efforts to obtain green financing on the international market, and qualified green companies will be further supported in efforts to raise money in the capital markets.

Policymakers will also promote the convergence of international green finance standards in China and promote the two-way opening of the country’s green finance market, the guideline says.

Other measures mentioned in the guideline include policy efforts to improve green pricing mechanisms, enhance fiscal and tax support for green infrastructure, speed up the construction of a green product certification system, and further develop carbon rights trading mechanisms.

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