Policy Brief: How will financial regulations in China’s green bond market affect green finance policies?

Resource details
  • Resource Group: Policy Brief
  • Policy Impact Area: Legislation

SUMMARY

In 2018, China’s green bond market witnessed continued and stable growth. The Green Bond Standard Committee was established in December 2018 under the guidance of the People’s Bank of China. As China’s first self regulatory and coordination mechanism for green bonds, it is expected to play an important role in 2019.

Motivating issuers and investors to scale the market for green bonds remains a key challenge for China’s green bond market in 2019.

BACKGROUND & DETAILS

China has emerged as one of the leading players in the global green bond market, with a higher proportion of overall labelled Chinese green bond issuance aligned to international definitions. Chinese issuance in 2018 topped USD30bn, and Industrial Bank became the second largest issuer globally with USD9.6bn. Regulators continued to improve market integrity through a series of measures to stimulate market growth through policy tools and regulatory reforms. As China’s first self-regulatory mechanism for green bonds, the Committee is expected to play an important role in the harmonisation of green bond standards and market access of green bond verifiers. In addition, the first green bond from a Local Government Financing Vehicle (LGFV) was issued in early 2017. sparking a growing number of LGFV green bonds entering the market. Local governments have since been gearing up to support green finance development locally across China.

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