Monthly Report on Green Finance Policies in China (June 2021)

2021-07-15
Interpretation of key policies
 
1. “Green Finance Evaluation Program for Banking Financial Institutions”  May 2021- The People's Bank of China
 
The Program is a special green finance policy aimed at encouraging banking financial institutions to actively expand their green finance business and increase their financial support for green and low-carbon development. The Program defines green financial businesses, including, but not limited to, green loans, green securities, green equity investments, green leasing, green trust and green wealth management, etc. The Program identifies the People's Bank of China (PBoC) as responsible for conducting the green financial evaluation, which covers but is not limited to 24 major banks such as the Industrial and Commercial Bank of China and the Bank of China. The Program states that the green financial evaluation will be implemented from July this year and will be conducted on a quarterly basis.

The green finance evaluation indicators described in the Program include both quantitative (80% weighting) and qualitative (20% weighting) categories. Among them, four quantitative indicators are specified: the proportion of total green financial business, the proportion of total share of green financial business, the year-on-year growth rate of total green financial business, and the proportion of total green financial business risk. The Program also sets out the sources of data used in formulating some of the indicators and the scoring details are disclosed in the Annex.

The Program also states that the results of this green finance evaluation will be incorporated into the PBoC's policy and prudential management tools such as the central bank's rating on financial institutions. It advocates that regulators and market participants should actively explore legal application scenarios, and encourages banking financial institutions to proactively disclose the results of their green finance evaluations.

 
2.  “Guiding Opinions on Enhancing Ecological Environmental Protection in Pilot Free Trade Zones to Promote Quality Development”  May 2021- Ministry of Ecology and Environment, Ministry of Commerce, National Development and Reform Commission, Ministry of Housing and Urban-Rural Development, People's Bank of China, General Administration of Customs, National Energy Administration, State Forestry and Grassland Administration
 
The Guiding Opinions propose to support and improve the mechanism for realizing the value of ecological products through green finance. The Guiding Opinions encourage and develop the trading market for pollution rights (similar to emissions trading scheme), encourage the development of comprehensive environmental management and custodiam services. They also support exploration of green bonds and green equity investment and financing business, ecological and environmental management and energy conservation and emission reduction and pilot ecological product value accounting, and specifically mention support for the establishment of ecological product value realization mechanisms in the Anhui Pilot Free Trade Zone, and promote the improvement of off-site development for ecological protection compensation mechanisms in Hunan and other pilot free trade zones .
 
3. “Implementation Opinions on Promoting the High-Quality Development of the Property Insurance Industry in Shanghai” June 2021- Shanghai Banking and Insurance Regulatory Bureau
 
The Opinions is a policy document aimed at continuously promoting the transition of Shanghai's property insurance industry towards high-quality development. The Opinions point out that it is necessary to respond positively to the national carbon peaking and carbon neutrality targets, to align the planning of the Lin Gang New Area and Chongming World Ecological Island with these targets. It explains the need to vigorously develop green insurance, focusing on energy saving and emission reduction, clean production, clean energy, urban green development, environmental pollution control and other areas. It promotes o increasing support for companies engaged with green technology innovation, significantly reducing the market share of high energy consuming and high polluting enterprises. The Opinions promote the pilot application of weather index insurance, popularize electronic policies, and guide the transition of the insurance industry towards green, low-carbon, high-efficient and circular pattern.
 
4. “Guidance on Strengthening the Construction of Green Finance Franchise System in Shenzhen Banking Sector (Trial)” June 2021- Shenzhen Local Financial Supervision Authority
 
The Guidance is a special green finance policy on the construction of a green finance franchise system, aimed at implementing the Shenzhen Special Economic Zone Green Finance Ordinance and establishing a sound green finance system in Shenzhen. The Guidance defines the concepts of green finance and green finance franchise system, and specifies the Municipal Bureau of Local Finance Supervision, the Shenzhen Central Branch of the PBoC and the Shenzhen Banking and Insurance Regulatory Bureau as the three leading departments for the construction of the green finance franchise system.

The Guidance points out that, first, the head office/branch of banks participating in the construction should establish a top-down and effective risk management mechanism and set up dedicated green finance positions. Risk management should take into account separate green credit scale,  green credit granting protocol,  performance assessment, price of funds and risk weighting, etc. Second, green financial institutions should meet the requirements of green finance operation planning, human resources, operation scale and product innovation. Third, when carrying out business, green financial institutions should meet eight requirements which include green operation, system construction, green investment assessment and risk assessment. The Guidance also proposes seven supporting measures for recognized green financial institutions. For example, the PBoC Shenzhen branch will use monetary policy tools to support green financial institutions on a priority basis. In addition, the Guidance also sets out some management measures in the registration and recognition, assessment, verification and duration of green financial institutions.

 
Summary of recent policies
 
This summary of policies covers: 1) Policies issued by four-level government agencies: state, provinces and ministries, prefectures and cities, and counties in Mainland China. 2) Policies involving green bonds, green credit, green equity, green insurance, environmental finance and monetary policy. 3) Policies released publicly by governments and mainstream media through the internet.
 
Jurisdiction
Title
Actor
Purpose
Publication Date
Link
Nationwide
“Green Finance Evaluation Program for Banking Financial Institutions”
The People's Bank of China
Encourage banking financial institutions to actively expand their green finance business including investing in green bonds
27 May 2021
http://www.gov.cn/zhengce/zhengceku/
2021-06/11/content_5616962.htm
 
Nationwide
“Guiding Opinions on Enhancing Ecological Environmental Protection in Pilot Free Trade Zones to Promote Quality Development”
Ministry of Ecology and Environment,
Ministry of Commerce,
National Development and Reform Commission,
Ministry of Housing and Urban-Rural Development,
People's Bank of China,
General Administration of Customs,
National Energy Administration,
State Forestry and Grassland Administration
Achieve a significant reduction in energy consumption and carbon emission in FTZs
28 May 2021
202105/t20210531_835481.html
Inner Mongolia Autonomous Region
“Implementation Plan on Building a Modern Environmental Governance System”
General Office of the Party Committee of Inner Mongolia Autonomous Region,
General Office of the People's Government of Inner Mongolia Autonomous Region
Guide Inner Mongolia's Social Sectors to Participate in a Modern Environmental Governance System

26 June 2021
http://sthjt.nmg.gov.cn/dtxx/ztzl/dczg/mzdt/
202106/t20210626_1631104.html
Jiangxi Province
“Measures for the Management of Forestry Carbon Sink Development and Trading in Jiangxi Province (Trial)”
Jiangxi Provincial Department of Ecology and Environment
Explore the market-oriented realization path of ecological product values
4 June 2021
http://sthjt.jiangxi.gov.cn/art/2021/6/4/
art_57149_3388659.html
Sichuan Province
“Guidance for Provincial SOEs to Achieve Carbon Peaking and Carbon Neutrality”
Sichuan Provincial Government State-owned Assets Supervision and Administration Commission
Give full play to provincial SOEs in leading the low-carbon transition
3 June 2021
http://gzw.sc.gov.cn/scsgzw/xzgfwj/2021/6/22/
76e305ffeb1d48ec9d54ad9ec4267d1d.shtml 
Chongqing City
“Chongqing Green Finance Avenue Development Plan”
Chongqing Yuzhong District People's Government
Intended for Yuzhong's green and high-quality development and low carbon transition
24 June 2021
http://www.cqyz.gov.cn/zwxx_229/yzyw/202106/
t20210624_9421911.htm
Shanghai City
“Implementation Opinions on Promoting the High-Quality Development of the Property Insurance Industry in Shanghai”
Shanghai Banking and Insurance Regulatory Bureau
Promote the high-quality transition of the property insurance industry in Shanghai
9 June 2021
http://www.cbirc.gov.cn/branch/shanghai/view/pages/common/
ItemDetail.html?docId=989391&itemId=998
Sanming City, Fujian Province
“Sanming Banking and Insurance Supervision Branch's Promotion of the Action Plan 'Three Focuses and One New Mechanism'1 for Corporate Governance of Rural Small and Medium-sized Banking Institutions” 
Sanming Banking and Insurance Supervision Branch
Incorporate green financial information disclosure into corporate governance requirements
11 June 2021
http://www.cbirc.gov.cn/branch/fujian/view/pages/common/
ItemDetail.html?docId=989826&itemId=1107
Shenzhen City, Guangdong Province
“Guidance on Strengthening the Construction of Green Finance Franchise System in Shenzhen Banking Sector (Trial)”
Shenzhen Local Financial Supervision Authority
Establish a sound green finance system in Shenzhen
30 June 2021
http://www.sz.gov.cn/cn/xxgk/zfxxgj/zcfg/
szsfg/content/post_8912443.html