21st Century Business Herald reporter Li Deshangyu Beijing Report On November 4, the International Platform for Sustainable Finance (IPSF), co-sponsored by China and Europe and other economies, held the IPSF Annual Meeting during the United Nations Climate Change Conference (COP26). Ma Jun, co-chair of the IPSF Working Group on Sustainable Finance Classification and Director of the Green Finance Committee of the Chinese Society of Finance and Finance, released the Common Ground Taxonomy: Climate Change Mitigation (hereinafter referred to as the Common Ground Taxonomy: Climate Change Mitigation) on behalf of the IPSF at the annual meeting.
"Market entities may, on a voluntary basis, adopt the Common Classification Catalogue to issue and trade green financial products in international markets. For example, Chinese issuers can issue green bonds to Europe based on this catalogue, and European issuers can also issue green panda bonds in China based on this catalogue. Ma Jun said at the press conference.
In July 2020, at the proposal of Chinese Min min bank, IPSF initiated the establishment of a working group on the classification of sustainable finance, with CEIBS as co-chair. Through a comprehensive and meticulous comparison of China's Catalogue of Green Bond-Backed Projects and the EU's Sustainable Finance Classification Scheme – Climate Authorization Act, the Working Group analysed in detail the methodology and results of the cestralature and EU classification catalogues of green and sustainable finance, including legal basis, objectives, principles, frameworks, logic, classification criteria, indicator establishment and presentation, and based on this, the Common Classification Catalogue was prepared. The Working Group adopted the United Nations International Standard Industrial Classification (ISIC) as the basis for the preparation of a common classification catalogue, providing a universal discourse system for future countries (regions) to compile similar catalogues. The Working Group will seek feedback from financial markets and other stakeholders on the Common Classification Catalogue over the next two months to further refine the usage notes and catalogue list.
The Common Classification Catalogue includes a list of economic activities that have made significant contributions to climate change mitigation, as recognized by the EU-China Catalogue of Green and Sustainable Finance, and the current edition covers 61 major economic activities in six major sectors, including energy, manufacturing, construction, transport, solid waste and forestry, with the other 19 projects under study that may be included in the official revision after the end of the consultation process. The Common Classification Catalogue integrates the characteristics and advantages of the China-EU Catalogue and is of great significance for promoting China-EU green investment and financing cooperation, guiding cross-border climate investment and financing activities, and reducing the cost of green certification for cross-border transactions. As an important reference for the preparation of the SFC in other regions, the CCA will help to improve the comparability, compatibility and consistency of the global SFC standards.
Ma Jun said at the press conference that after Europe has officially issued the Sustainable Finance Classification Scheme bill covering other areas (such as circular economy, pollution prevention, biodiversity, etc.), the IPSF working group will further expand the coverage of the Common Classification Catalogue. The IPSF Working Group will also actively cooperate with the G20 Working Group on Sustainable Finance to continue to carry out the comparison and research of sustainable financial standards, analyze the experiences and practices of more national classifications, and further improve the Common Classification Catalogue to cover more sustainable economic activities, including those that support low-carbon transitions.
Sean Kidney, CEO of the Climate Bonds Initiative, said that "the results of the Common Classification Catalogue led by China and the EU have important implications for sustainable finance standards in seeking a global convergence path". The Chief Executive of the Hong Kong Monetary Authority, Mr Eo Wai Man, said at the annual meeting that "the Common Classification Catalogue is the embodiment of the principle of seeking common ground while reserving differences in China-EU cooperation, which will help international financial centres such as Hong Kong to enhance the interactivity of financial services", and said that Hong Kong will consider adopting the Common Classification Catalogue and arranging specific ways to land it in the local market.
At another seminar co-hosted by the European Commission's Financial Services and Capital Markets Council (DG FISMA), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), Cheng Daming, managing director of CICC's investment banking division, said: "A scientific classification catalogue is essential to broaden access to carbon-neutral project financing. The establishment of a Common Classification Catalogue, which is interconnected with Europe, will play a fundamental role in promoting the high-level opening up of China's capital market to the outside world and promoting the two-way green capital flow between China and europe."
Wang Bolu, a core member of the expert group involved in the compilation of the Common Classification Catalogue and the National Institute of Financial Research of Tsinghua University, said that "the release of the Common Classification Catalogue will provide an important reference for markets interested in adopting the Continuous Financial Classification Catalogue, and some countries and regions may even consider adopting the Common Classification Catalogue directly.". Lu Wenqin, a member of the expert group and director of CECEP Consulting Co., Ltd., said that it will cultivate cross-border green bond certification and consulting capabilities according to the Common Classification Catalogue to help the green development of the "Belt and Road".
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