The People's Bank of China, the central bank of the People's Republic of China, and the European Investment Bank, the European Union’s long-term lending institution, today announced a joint initiative intended to combine policy and market best-practice and strengthen the framework for green investment.
The initiative intends to provide a clear framework for analysis and decision-making in green finance. Development of a common language will enhance the confidence of Chinese and international investors to support green finance through more consistent definitions and methodologies.
“China and the European Union jointly recognise the importance of strengthening investment in green finance to support sustainable growth, better protect the environment and tackle a changing climate change. China’s ambitious policy initiatives to establish the Green Financial System, outlined by the People's Bank of China and government bodies last August, demonstrate the same vision as the EIB’s commitment to mobilise new investment for green finance and contributing to development of best practice in climate finance. Both the People's Bank of China and the European Investment Bank recognise the importance of ensuring investor confidence in green finance and look forward to sharing their experience to facilitate green investment.” said Jonathan Taylor, European Investment Bank Vice President.
“As signatories of the Paris Agreement, the European Union and China are committed to strengthening the global response to the threat of climate change and enhanced transparency of green finance. Putting theory into practice through improving accountability and aligning the financial system with climate policies is crucial to successfully tackle climate change. This new cooperation between leading Chinese and European financial institutions demonstrates a clear commitment to enhance the role of capital markets to support green finance and represents a strategic contribution to this endeavour.” said Hans-Dietmar Schweisgut, Ambassador of the European Union to China.
Reflecting the crucial role of capital markets in financing green investment experts from the China’s Green Finance Committee and the European Investment Bank will examine current classification of green bonds to map and compare respective approaches to green projects eligibility. This will use references including the Green Bond Endorsed Project Catalogue of the China Green Finance Committee as well as the Common Principles for climate finance tracking used by the Multilateral Development Banks (MDBs) and the International Development Finance Club (IDFC).
In the coming month’s experts from the China Green Finance Committee and the European Investment Bank will work together to contribute to strengthening the capacity of Green Bonds to improve accountability in green finance and support implementation of the Paris Agreement.
The results of the collaborative study are expected to be published in a White Paper later in the year. This will compare different reporting of Green Bonds and identify ways to improve comparable reporting and include examination of definitions of sectors and projects eligible for financing through green bonds, project evaluation, management of the proceeds of green bond and use of external reviews.
The joint initiative was announced in Beijing at a high-level workshop attended by leading Chinese market participants, including investors, financial institutions, regulators, securities firms and multilateral financial institutions based in China jointly hosted by the People’s Bank of China and the European Investment Bank.
The new cooperation will support implementation of the COP 21 Paris Climate Agreement through strengthening the role of Green Bonds to improve accountability of green finance. Further development of green bond standards in different markets will enhance implementation of the global treaty.
The European Investment Bank is the world’s largest lender for climate related investment and pioneered the Green Bond market in 2007 by issuing the world’s first green bond. Since then the EIB has issued EUR 16.7 billion in Green Bonds, branded as Climate Awareness Bonds, across 11 currencies, making the EIB the world’s largest issuer of Green Bonds to date.
The European Investment Bank has financed projects in China since 1995 and last year the European Investment Bank Group provided EUR 84 billion to finance new investment around the world, including EUR 19.6 billion for climate related investment.
On the margins of the COP 23 climate talks in Bonn, the Green Finance Committee (GFC) of the China Society for Finance and Banking and the EIB today launched a White Paper that provides an international comparison of several green bond standards. The new paper paves the way for enhancing the consistency of green finance definitions and standards between China and the EU.
Speaking at the start of a five day climate focused visit to China, the Vice-President of the EIB announced that Europe’s long-term lending institution provided EUR 298 million (2.2 billion CNY) to support investment in new environmental, energy efficiency and forestry projects across China last year. New cooperation between the European Investment Bank and the People’s Bank of China to mobilise greater support for green finance from institutional investors was also confirmed.
The Green Finance Committee of China Society for Finance and Banking (GFC) and the European Investment Bank (EIB) jointly released a second edition of the White Paper "The Need for a Common Language in Green Finance" during the United Nations Climate Change Conference (COP24) in Katowice, Poland. This is a further step towards a better understanding, at a global level, of the nature of investments in green projects and transparency for the international community. This increased transparency and comparability of criteria is a welcome news for capital markets and green project promoters alike, as more and more public and private issuers and investors internationally access the green bond space.