The central bank and other seven departments: further strengthen financial support for green and low-carbon development and promote the construction of a carbon emission trading market

The People's Bank of China (PBOC) and other departments issued guidance on further strengthening financial support for green and low-carbon development. It is mentioned that in the next five years, the world's leading financial support system for green and low-carbon development will be basically constructed, the financial infrastructure, environmental information disclosure, risk management, financial products and markets, policy support system and green finance standard system will be continuously improved, the regional reform of green finance will be promoted in an orderly manner, international cooperation will be closer, and various factor resources will be gathered in the green and low-carbon field in an orderly manner. By 2035, various economic and financial green and low-carbon policies will be promoted in a coordinated and efficient manner, the standard system and policy support system for financial support for green and low-carbon development will be more mature, and the functions of resource allocation, risk management and market pricing will be better played.

The full text is below

People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Finance, Ministry of Ecology and Environment, State Administration of Financial Regulation, China Securities Regulatory Commission Guiding Opinions on Further Strengthening Financial Support for Green and Low-Carbon Development

The Shanghai Headquarters of the People's Bank of China, branches of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, development and Reform Commissions of all provinces, autonomous regions, municipalities directly under the Central Government and cities with separate planning status, the Development and Reform Commission of the Xinjiang Production and Construction Corps, the competent departments of industry and information technology, the Department of Finance (Bureau), the Department of Ecology and Environment (Bureau), the regulatory bureaus of the State Financial Supervision Administration, and the securities regulatory bureaus of the China Securities Regulatory Commission:

The following opinions are hereby put forward with the consent of the State Council, so as to implement the major decisions and deployments of the Party Central Committee and the State Council on carbon peak and carbon neutrality, to do a good job in green finance, and to actively support green and low-carbon development.

1. General requirements

(1) Guiding ideology.

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th National Congress of the Communist Party of China, deeply practice Xi Jinping Thought on Ecological Civilization, adhere to the general tone of seeking progress while maintaining stability, base ourselves on the new stage of development, completely, accurately and comprehensively implement the new development concept, accelerate the construction of a new development pattern, strive to promote high-quality development, further strengthen financial support for green and low-carbon development, and unswervingly follow the high-quality development path of ecological priority, conservation and intensification, green and low-carbon. Helping carbon peak and carbon neutrality form a strong support.

(2) Working principles.

-- Coordinating development and security. Coordinate high-quality development and high-level security, increase financial support for green and low-carbon development, coordinate carbon reduction, pollution reduction, green expansion and growth, strengthen risk identification and control, prevent and resolve risks in the process of promoting the construction of a new energy system and the transformation of energy enterprises, ensure the safety of food, energy resources, important industrial and supply chains and the normal life of the people, and provide strong support for high-quality economic development.

-- Taking into account both the long-term and the present. Adhere to the system concept, strengthen forward-looking thinking and overall planning, promote carbon peak and carbon neutrality in a scientific and orderly manner, based on the mainland's energy and resource endowment, take advantage of the momentum, establish first and then break down, reasonably plan and implement the short, medium and long-term tasks of financial support for carbon emission reduction, promote the early start of various tasks, continue to make efforts, promote green finance reform and innovation in a steady and orderly manner, and better serve green and low-carbon development.

-- Equal emphasis on incentives and constraints. Give full play to the decisive role of the market in resource allocation, give better play to the role of the government, guide financial resources to support the green and low-carbon transformation of high-emission industries and the construction of renewable energy projects, promote the green transformation and upgrading of industries, and support the development of green and low-carbon transportation and green buildings. Strictly control the investment of financial resources in high-energy-consuming, high-emission and low-level projects.

-- Adhere to high standards of promotion and high-level cooperation. In accordance with the national green and low-carbon development strategy, we will scientifically formulate and standardize the implementation of clear and enforceable standards for green finance and transition finance, and promote the compatibility of Chinese standards with international standards. Actively participate in global governance to address climate change, take the initiative to lead global green finance issues, contribute China's wisdom to the global response to climate change, and strengthen the domestic application of mature international experience and the international promotion of domestic beneficial experience.

(3) Main objectives.

In the next five years, the world's leading financial support system for green and low-carbon development will be basically established, the financial infrastructure, environmental information disclosure, risk management, financial products and markets, policy support system and green finance standard system will be continuously improved, the regional reform of green finance will be promoted in an orderly manner, international cooperation will be closer, and various factor resources will be gathered in the green and low-carbon field in an orderly manner.

By 2035, various economic and financial green and low-carbon policies will be promoted in a coordinated and efficient manner, the standard system and policy support system for financial support for green and low-carbon development will be more mature, and the functions of resource allocation, risk management and market pricing will be better played.

2. Optimize the green finance standard system

(4) Promote the gradual implementation of carbon accounting in the financial system. Establish and improve carbon accounting methods and databases for financial institutions, strive to promote the application of mature carbon accounting methods and results in the financial system, formulate and introduce unified carbon accounting standards for financial institutions and financial businesses, and promote financial institutions to strengthen the management and statistics of carbon emission data for themselves and their investment and financing-related businesses. Improve the standardization, authority and transparency of carbon accounting of financial institutions. Encourage financial institutions and enterprises to use big data, financial technology and other technical means to provide technical support for carbon accounting.

(5) Continue to improve the green finance standard system. Formulate a unified green finance standard system. We will continue to optimize the standards for green bonds in mainland China, unify the use of funds raised by green bonds, information disclosure and regulatory requirements, and improve the evaluation and certification standards for green bonds. Further optimize the "green channel" system for green corporate bond application acceptance, review and registration, and enhance the convenience of enterprises to issue green bonds. Research and formulate the recommended guidelines for low-carbon projects, carbon accounting methods and disclosure standards for green bonds in the "Catalogue of Green Bond-Backed Projects", and require bond issuers to calculate and disclose the carbon emission reductions and carbon emissions of the projects supported by the raised funds. Improve the statistics of green bonds, gradually build a green finance statistical system that can measure the effect of carbon emission reduction, and comprehensively reflect the effectiveness of financial support for the construction of ecological civilization. Further improve the green credit standard system. Establish and improve green insurance standards. Research and formulate green stock standards and unify green stock business rules. Promote the itemized accounting, disclosure and statistics of greenhouse gases in a timely manner. Accelerate the research and formulation of industrial green development guidance catalogues and project libraries, and vigorously support green technology innovation. Support the establishment of a standard system for the library of climate investment and financing projects. Accelerate the research and formulation of transition finance standards, include eligible industrial green development projects in the scope of support, and clarify core elements such as the catalogue of transition activities, disclosure requirements, product systems and incentive mechanisms.

3. Strengthen the restraint mechanism based on information disclosure

(6) Promote financial institutions and financing entities to carry out environmental information disclosure. Explore the establishment of an environmental information disclosure system covering different types of financial institutions in a step-by-step category, and promote the disclosure of environmental information by relevant listed companies and bond-issuing entities in accordance with the law. Formulate and improve guidelines for the disclosure of sustainable development information by listed companies, and guide listed companies to disclose sustainable development information. Improve the carbon emission information disclosure framework, encourage financial institutions to disclose their exposure to high-carbon assets, and establish an emergency disclosure mechanism for climate change-related risks and emergencies. Regular disclosure of green finance statistics.

(7) Continuously improve the quality of environmental information disclosure and assessment. Research and improve the guidelines for environmental information disclosure by financial institutions. Credit rating agencies are encouraged to establish and improve rating systems for green financial products, and credit rating agencies are supported to incorporate environmental, social and governance (ESG) factors into credit rating methods and models. Promote the sharing of environmental information and carbon emission information disclosed by key pollutant discharge units, enterprises implementing mandatory cleaner production audits, relevant listed companies and bond-issuing enterprises in accordance with the law. Give full play to the role of the national industry and finance cooperation platform, establish an information sharing mechanism for industrial green development, and promote cross-departmental, multi-dimensional, and high-value green data docking.

4. Promote the development of green financial products and markets

(8) Promote the construction of a carbon emission trading market。 In accordance with the relevant policies, regulations and technical specifications of the carbon market, carry out carbon emission rights registration, trading and settlement activities, and strengthen carbon emission accounting, reporting and verification。 Study and enrich the financial products and trading methods linked to carbon emission rights, and gradually expand the scope of trading entities suitable for the development of the mainland carbon market. Reasonably control the total amount of carbon emission allowances issued, and scientifically allocate initial carbon emission allowances. Enhance the liquidity of the carbon market and optimize the pricing mechanism of the carbon market.

(9) Increase green credit support. Under the premise of compliance with laws and regulations, controllable risks, and sustainable business, financial institutions are encouraged to use green finance standards or transition finance standards to increase credit support for green development and low-carbon transformation in fields such as energy, industry, transportation, and construction, and optimize green credit processes, products and services. Explore the adoption of market-oriented methods to provide credit enhancement services for domestic entities in overseas financing, and reduce the risk of overseas financial activities. Strengthen the construction of supporting infrastructure for supply chain finance, and promote the innovation and application of green supply chains.

(10) Further increase the capital market's support for green and low-carbon development. Support eligible enterprises to list or refinance at home and abroad, and raise funds for the construction and operation of green and low-carbon projects. Vigorously support eligible enterprises and financial institutions to issue green bonds and green asset-backed securities. Actively develop carbon neutrality bonds and sustainability-linked bonds. Support the issuance of real estate investment trusts (REITs) products for eligible infrastructure projects such as clean energy. Support local governments to include qualified construction projects in areas such as ecology and environmental protection into the scope of local government bond support. Strengthen financial support for eco-environment-oriented development (EOD) and improve relevant investment and financing models. Under the premise of compliance with laws and regulations and controllable risks, research and promote the development of green asset management products. Standardize the development of green bonds and green equity investment and financing business. Encourage overseas institutions to issue green panda bonds and invest in domestic green bonds. Support securities funds and related investment industries to develop green investment products, and better fulfill environmental, social and governance responsibilities. We will increase financial support for the research, promotion and application of major green and low-carbon scientific and technological research, strengthen basic research and cutting-edge technology layout, and accelerate the research and development and promotion of advanced and applicable technologies.

(11) Vigorously develop green insurance and services. Improve the insurance protection system for major risks related to climate change. Provide disaster prevention and loss prevention early warning services for high-risk customers, timely investigate hidden risks, and reduce the risk of claims. Give full play to the characteristics of long-term investment of insurance funds, encourage insurance funds to support green industries and green projects in accordance with the principle of commercialization, and optimize the evaluation mechanism for long-term investment capabilities. Insurance institutions are encouraged to study the establishment of a mechanism for linking the level of corporate carbon emissions with insurance pricing. Promote the development of new energy vehicle insurance.

(12) Strengthen the participants in the green finance market. Promote the concept of sustainable investment and attract long-term institutional investors such as pension insurance funds to invest in green financial products. Encourage banking financial institutions to build branches with green finance characteristics, and incorporate the development of green finance into the assessment and evaluation system of financial institutions. Encourage qualified and willing financial institutions to adopt or sign international principles or initiatives with the theme of green finance and sustainable finance. In the process of account establishment, trading, registration, clearing, settlement, fund exchange and cross-border remittance and remittance, we will provide convenient financial services for foreign investors to allocate domestic green financial assets. If the carbon asset business is involved, it shall be managed in accordance with the domestic compliance requirements of the Paris Agreement.

5. Strengthen policy coordination and institutional safeguards

(13) Promote the improvement of laws and regulations. Give full play to the role of the rule of law in consolidating the fundamentals, stabilizing expectations, and benefiting the long-term, promote legislation in the field of green finance, and promote financial support for green transformation and low-carbon development. Encourage qualified localities to take the lead in promulgating local green finance regulations in accordance with the law. Study and clarify the requirements for commercial banks to be exempted from liability for social responsibility and credit review in green finance.

(14) Improve the assessment and evaluation mechanism of financial institutions' green finance. Carry out policy follow-up and evaluation from time to time, continue to optimize the green finance evaluation mechanism, and improve and strengthen the information communication mechanism for financial support for green and low-carbon development. Intensify the assessment and evaluation of financial institutions' green finance business and capabilities, gradually include green funds and overseas green financial assets held by financial institutions in the evaluation of green finance, and enrich the application scenarios of evaluation results. Encourage financial institutions to guide the green allocation of financial resources by adjusting internal fund transfer pricing and economic capital occupation, and continuously optimize the asset structure of financial institutions. Include financial support for carbon peaking and carbon neutrality in the assessment of senior managers of financial institutions.

(15) Enrich relevant monetary policy tools. Make good use of carbon emission reduction support tools, provide low-cost funds to eligible financial institutions, and support financial institutions to provide preferential interest rate financing for key projects with significant carbon emission reduction benefits. Promote the greening of the central bank's asset allocation, gradually incorporate sustainability into the long-term management objectives of foreign exchange reserves, and continue to invest in green bonds.

(16) Support the green and low-carbon transformation of high-emission industries and high-emission projects. Give full play to the exemplary and leading role of the National Green Development Fund. Encourage qualified financial institutions and social capital to set up carbon peak and carbon neutrality transition funds. Guide financial institutions to support clean transportation, clean heating and ultra-low emission transformation in key industries, vigorously support the research and development, investment, promotion and application of clean energy, continue to promote the clean and efficient use of coal, and encourage financial resources to favor enterprises with high environmental performance levels. Support the issuance of transition bonds to meet the needs of low-carbon transformation such as the transformation and upgrading of energy production and consumption enterprises above designated size. Linking the carbon emission reduction information of high-emission industries and high-emission projects with project credit evaluation and credit system construction. Promote the green and low-carbon transformation and digital and intelligent upgrading of high-emission industries.

(17) Deepen regional reform of green finance. Steadily and orderly explore the development and reform path of green finance with regional characteristics, and do a good job in summarizing and evaluating the pilot zones and promoting their experience. Carry out the upgrading and expansion of green finance reform and innovation pilot zones in an orderly manner. Support localities with the capacity to carry out climate investment and financing pilot projects, and explore the establishment of climate-friendly investment and financing systems and mechanisms. Promote green finance standards to be piloted in green finance reform and innovation pilot zones, and support the establishment of a high-standard green project library and achieve interconnection.

(18) Further support green development in major national and regional strategies. Promote the positive interaction between the development of the onshore green finance market and the construction of Shanghai as an international financial center and the internationalization of the RMB, and enhance the international influence of the pricing of RMB green products. Establish and improve the Yangtze River Delta environmental information sharing mechanism, and promote the promotion of green financial information management system in the Yangtze River Delta region. Support the development of the green finance industry in the implementation of major national and regional strategies such as the Beijing-Tianjin-Hebei region and the Guangdong-Hong Kong-Macao Greater Bay Area, and build an internationally recognized green bond certification body.

6. Strengthen prudential management and risk prevention related to climate change

(19) Improve prudential management. Gradually incorporate climate change-related risks into the macro-prudential policy framework, guide financial institutions to support green and low-carbon development, and encourage financial institutions to regularly report information on the scale, proportion and risk exposure of high-carbon assets to financial regulatory authorities. Timely disclosure of stress test results on climate change-related risks in China's financial system. According to the risks related to climate change, research and improve risk supervision indicators and assessment methods.

(20) Enhance the ability of financial institutions to respond to risks. Promote financial institutions to incorporate climate change-related risks into their risk control systems and corporate governance frameworks. Financial institutions are encouraged to use climate risk stress testing, scenario analysis and other tools and methods to carry out climate risk assessment, and improve internal control systems, policy tools and management processes to effectively respond to transition risks. Promote insurance institutions to establish climate change-related risk assessment and prediction models, and use big data and other technical means to carry out climate disaster risk analysis.

7. Strengthen international cooperation

(21) Deepen cooperation in green finance. Actively participate in multilateral and bilateral green finance cooperation mechanisms such as the G20, the Financial Stability Board (FSB), the Green Finance Network for Central Banks and Regulators (NGFS), the International Platform for Sustainable Finance (IPSF), the Bank for International Settlements (BIS), the Basel Committee on Banking Supervision (BCBS), the Sustainable Banking and Finance Network (SBFN), and the International Organization of Securities Commissions (IOSCO). Actively participate in the formulation of international standards for green finance, and promote the compatibility of Chinese standards with international standards. Promote the interconnection of domestic and international green financial products and services, and facilitate cross-border green investment by Chinese and foreign investors.

(22) Promote green investment in the Belt and Road Initiative. Encourage banks, equity investment institutions, fund companies and other financial institutions to carry out green and low-carbon investment in the countries and regions of the Belt and Road Initiative.

8. Strengthen organizational safeguards

(23) Strengthen organizational leadership and form a joint force for development. Adhere to and strengthen the overall leadership of the Party, resolutely safeguard the authority of the Party Central Committee and centralized and unified leadership, strengthen the coordination and cooperation of financial departments supporting green and low-carbon development, and form a joint force of financial support for green and low-carbon development. Strengthen the behavioral and functional supervision of green finance, improve the ability to early identify, warn and deal with risks early, and report major matters to the Party Central Committee and the State Council in a timely manner. Strengthen information sharing among relevant departments, strengthen communication between financial institutions and enterprises, guide enterprises to effectively carry out green transformation and technological transformation, and promote the smooth implementation of financial support for green and low-carbon policies. Promote local governments to adapt measures to local conditions, clarify the division of responsibilities, establish rules and regulations, and ensure the effective implementation of various policies for financial support for green and low-carbon development. Strengthen the publicity of financial support for green and low-carbon development, and create a good atmosphere for the development of green finance.

(24) Strengthen green finance capacity building. Strengthen academic exchanges and cooperation, promote the construction of green finance-related disciplines, and carry out basic and forward-looking research on major topics related to financial support for green and low-carbon development. Vigorously carry out green finance training, and promote financial management departments, financial institutions and third-party institutions to improve their green finance capabilities. Support financial institutions to carry out technical exchanges with domestic and foreign counterparts on climate risk stress testing and scenario analysis, and further strengthen the capacity building of financial support for green and low-carbon development.