To implement the decisions and arrangements of the Communist Party of China (CPC) Central Committee and the State Council on advancing the Beautiful China Initiative in all respects and support this initiative through high-quality development of green finance, the People’s Bank of China (PBOC), the Ministry of Ecology and Environment (MEE), the National Financial Regulatory Administration (NFRA), and the China Securities Regulatory Commission (CSRC) recently issued the Opinions on Leveraging Green Finance to Support the Beautiful China Initiative (hereinafter referred to as the Opinions). The Opinions outline 19 key measures across four areas, namely increasing support for key areas, enhancing the capacities to provide professional green financial services, enriching green financial products and services, and strengthening support for policy implementation.
The Opinions clearly state that, in response to the practical needs of the Beautiful China Initiative, a number of landmark projects will be planned to intensify financing support. In line with the requirements of cutting carbon emissions, reducing pollution, expanding green development, and promoting economic growth in a coordinated manner, the Opinions call for the creation of a project library dedicated to the Beautiful China Initiative, with a focus on key areas such as the construction of pilot zones for the initiative, green and low-carbon development in key industries, pollution prevention and control, and ecological conservation and restoration, thereby effectively enhancing the precision of financial support.
The Opinions emphasize the importance of enhancing the capacities of financial institutions to provide green financial services and diversifying green financial products and services. Financial institutions, including banks, insurance companies, securities firms, and fund management companies are urged to fulfill their roles and improve internal management systems by refining work mechanisms, optimizing process management, advancing the application of financial technologies, and building stronger teams, so as to enhance the quality of green financial offerings. They are encouraged to beef up green financing support by increasing green credit supply and developing green financial products such as green bonds and green asset securitization. They are also encouraged to step up innovation in green financial products for key links and areas such as regional ecological and environmental protection projects, carbon market, resources and environmental factors, eco-environment-oriented development (EOD) projects, diversified climate investment and financing, and green consumption.
The Opinions also stress the need to strengthen support for implementation and reinforce policy coordination among government agencies. A coordination mechanism will be established across agencies, and the government-bank-enterprise connection platform and the policy support system will be improved. Supporting foundational systems will be improved by developing a unified green finance standard system and enhancing carbon accounting standards and methods. Incentive and constraint mechanisms will be optimized, with evaluations conducted on the implementation of green finance policies. Moreover, a risk prevention and control mechanism will be improved to monitor and analyze project financing in key areas.
Moving forward, the PBOC and relevant authorities will continue to improve the foundational systems supporting green finance development to serve the Beautiful China Initiative and guide financial institutions to promptly implement the requirements set forth in the Opinions, advance green finance development, and contribute to the building of a Beautiful China.
Opinions of the People’s Bank of China, Ministry of Ecology and Environment, National Financial Regulatory Administration and China Securities Regulatory Commission on Leveraging Green Finance to Support the Beautiful China Initiative
Developing green finance is a key measure to support the Beautiful China Initiative. To implement the decisions and arrangements made by the Communist Party of China (CPC) Central Committee and the State Council on advancing the Beautiful China Initiative in all respects and accelerate the modernization featuring harmony between humanity and nature, the following opinions are hereby proposed on leveraging green finance to support the Beautiful China Initiative.
I. General Requirements
Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we fully implement the guidelines of the 20th CPC National Congress, the second and third plenary sessions of the 20th CPC Central Committee, and Central Financial Work Conference as well as the arrangements made at the National Conference on Ecological and Environmental Protection, aiming to integrate the provision of green financial services in support of the Beautiful China Initiative into the building of a modern financial system with Chinese characteristics and drive high-quality financial development. Focusing on deepening reform, strengthening policy guidance, promoting market-driven approaches, and ensuring coordinated advancement, we will improve green financial products and services, optimize resource allocation and supply in financial markets, explore new business forms and models in green finance, strengthen financial regulation and risk prevention, refine the policy framework of financial support for the Beautiful China Initiative, and leverage the role of green finance in resource allocation, risk management, and market pricing, thereby ensuring that the financing needs of the Beautiful China Initiative are better met and that the high-quality development of green finance provides robust support for the Beautiful China Initiative.
II. Increasing Support for Key Areas
(1) Supporting the establishment of pilot zones for the Beautiful China Initiative. We will guide financial institutions to serve major development strategies for areas such as the Beijing-Tianjin-Hebei region, the Yangtze River Economic Belt, the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta region, and the Yellow River basin. We will increase financial support for building beautiful provinces while encouraging local governments to explore investment and financing models for building beautiful cities, and systematically plan and implement beautiful city projects. We will coordinate efforts to support rural ecological revitalization and improve the rural living environment, contributing to the building of beautiful villages. We will support the creation of demonstration projects for beautiful rivers and lakes and beautiful bays, and promote the integrated development of these areas with green and low-carbon industries such as eco-tourism . In accordance with the requirements of cutting carbon emissions, reducing pollution, expanding green development, and promoting economic growth in a coordinated manner, we will strategically plan financial support projects for the Beautiful China Initiative, develop a guiding catalog, establish a project library, and ensure alignment with existing green finance standards and the reserve of financial support projects for ecological and environmental protection.
(2) Supporting green and low-carbon development. We will step up support for clean energy, focusing on initiatives such as clean heating in northern China during winter, long-distance heating demonstration projects, the construction of charging and battery-swapping infrastructure, and the development of zero-emission truck fleets. We will support pilot programs for coordinated pollution and carbon reduction innovation in cities and industrial parks, and implement projects for pollution and carbon reduction transformations, environmental protection equipment renewal, and process optimization in key industries such as electricity, steel, non-ferrous metals, and building materials. We will support the comprehensive utilization of emerging solid waste (such as scrapped batteries from new energy vehicles and decommissioned photovoltaic modules and wind turbine blades), expand market-based scenarios for secondary use, and support the construction of regional recycling bases. We will strongly support the development, demonstration and promotion of greenhouse gas control technologies, new energy technologies, carbon capture, utilization and storage (CCUS) technologies, technologies for the coordinated reduction of greenhouse gases and pollutants, green and low-carbon alternatives to substances that deplete the ozone layer and hydrofluorocarbons (HFCs), as well as alternative technologies. We will also promote the development of third-party governance models and channel financial support into integrated ecological and environmental services including comprehensive solutions for regional and watershed environmental governance and environmental stewardship.
(3) Supporting the further advancement of pollution control. We will ramp up support for the comprehensive treatment of volatile organic compounds (VOCs), ultra-low emission transformation in key industries, and initiatives to upgrade the environmental performance ratings of industrial enterprises. We will also support the management of odor pollution in key industries and noise pollution in transportation. We will further scale up support for the construction and upgrading of sewage collection and treatment facilities in industrial parks, new urban areas, towns, and rural areas, promote the construction of pipeline networks along key rivers and lakes, and encourage large and medium-sized cities to appropriately prioritize the construction of centralized sludge treatment and disposal facilities. Leveraging the Zero-Waste City initiative, we will drive the hazzard-free treatment and comprehensive utilization of regional solid waste. We will support the construction of facilities for household waste sorting, treatment, and disposal, and promote the development of regional hazardous waste environmental risk control technology centers and centralized disposal centers for special hazardous waste. We will support key soil pollution regulators in implementing projects focused on soil pollution source control. In addition, we will increase support for the environmental management of chemicals and the treatment of new pollutants.
(4) Supporting ecological conservation and restoration. We will actively support holistic conservation and restoration projects for mountains, rivers, forests, farmlands, lakes, grasslands and deserts as well as major projects to protect and restore important ecosystems, conduct evaluations of ecological conditions, and monitor ecological quality. We will support the protection of wildlife and their habitats and implement major projects for biodiversity conservation. We will support the conservation and restoration of marine ecosystems, as well as the sustainable development of industries such as marine renewable energy and ecotourism. We will support pollution control and ecological restoration in abandoned mines along the Yangtze River and Yellow River basins, encourage market-based approaches to make good use of natural resources in mining areas, and pilot coordinated efforts for pollution control and ecological restoration in these areas. Furthermore, we will encourage local governments to advance the transformation of the value of ecological products into economic benefits, promote financial services to facilitate this value realization, and establish cross-regional ecological compensation mechanisms.
III. Enhancing Capacities to Provide Professional Green Financial Services
(1) Promoting financial institutions to optimize green financial services based on their functions. Policy and development financial institutions are urged to focus on their core functions as well as major businesses while proactively advancing efforts to support the financing of major projects under the Beautiful China Initiative. Large state-owned banks are required to play a leading role in enhancing green finance mechanisms and improving the efficiency of financing for the Beautiful China Initiative. Joint-stock commercial banks are encouraged to leverage their unique strengths to establish themselves as strong brands for green financial services. Small and medium-sized banks should focus on specialized operations based on local conditions, targeting specific fields and key industries to improve the quality of their green financial services. Insurance institutions will develop a comprehensive green insurance service system, establish green insurance service networks, advance product innovation, increase services, and provide a package of risk mitigation and loss protection solutions. Securities and fund institutions should adopt the principle of green investment, focus on long-term value investing, and establish norms for green investment practices.
(2) Encouraging financial institutions to improve internal management systems. We will urge financial institutions to refine their work mechanisms by optimizing credit management in green and low-carbon transition sectors and exploring a credit incentive mechanism for environmentally responsible behavior, which incorporates companies’ carbon reduction, pollution mitigation, and green area expansion as important reference in loan approval, credit line determination, and interest rate pricing. We will also encourage financial institutions to optimize process management by integrating climate and biodiversity-related financial risks into all stages of business approval, improving green finance business approval procedures, and enhancing the efficiency of green project approval. We will advance the application of financial technologies in financial institutions by guiding them to explore the development of green finance platforms and promote data sharing. We will encourage the use of big data, artificial intelligence, and other technologies to support carbon accounting, sustainable information disclosure, green project identification, project evaluation, and risk management, thereby improving the capacity and efficiency of green financial services. We also advocate that financial institutions enhance their organizational structure and team building by establishing dedicated green finance departments or specialized branches, implementing targeted incentive programs, allocating dedicated resources, forming specialized teams, and designating specialized posts to cultivate a strong talent pool for green finance.
(3) Strengthening green financing support. We will scale up credit support by encouraging financial institutions to actively meet the financing needs of key projects under the Beautiful China Initiative, tap into the value of environmental equity, and reasonably determine asset valuation and collateral ratio. We will vigorously develop green bonds by supporting eligible enterprises in issuing green and transition bonds, encouraging pilot projects for issuing bonds on beautiful rivers and lakes and beautiful bays, and increasing investment in projects under the Beautiful China Initiative through fund-raising. Financial institutions are encouraged to enhance green bond issuance and investment. Credit rating agencies will be supported in making full use of environmental information legally disclosed by enterprises to provide ratings for green bond issuance. We will also promote the issuance of green asset-based securities products to revitalize existing assets and increase liquidity. We will give play to the leveraging role of government investment funds in guiding private capital to invest in the Beautiful China Initiative. In addition, we will support environmental infrastructure projects that comply with clean energy standards and other relevant criteria in issuing real estate investment trust (REIT) products in compliance with regulations.
(4) Promoting the coordinated development of green finance with technology finance and digital finance. We will encourage financial institutions to explore business models that combine equity and debt financing on the premise of compliance with laws and regulations and controllable risks and provide financial services for major ecological and environmental technology innovation initiatives, major scientific facilities, key laboratories, and engineering technology centers. We will also guide them to support fundamental research and breakthroughs in core technologies and in key fields such as pollution and carbon emissions reduction, response to climate change, biodiversity conservation, control of new pollutants, and ecological environment security, boosting self-reliance and strength in green and low-carbon science and technology. We will support the construction of smart platforms for ecological and environmental monitoring, the development and upgrading of monitoring networks as well as the R&D and application of automated and digital monitoring equipment, and strengthen the comprehensive development and use of data resources, thereby contributing to the Beautiful China Initiative. Local governments are encouraged to use a combination of interest subsidies, subsidies, and rewards to guide financial institutions to support the integration of digital and intelligent transformation with green development in industries, thus facilitating the development of new quality productive forces.
IV. Enriching Green Financial Products and Services
(1) Exploring financial support models for regional ecological and environmental protection projects. We will define the scopes and standards of regional ecological and environmental protection projects, have an accurate understanding of the funding needs of such projects, align them with the objectives and tasks of major regional strategies and coordinated development strategies, and support major projects in the ecological and environmental sector. Financial institutions are encouraged to actively support the development of these projects by leveraging their expertise to provide comprehensive and full-life cycle financial services, including financial advisory, credit facilities, investment banking, and payment settlement.
(2) Giving play to the role of the carbon market. As we steadily expand the national carbon emissions trading market to cover more industries and gradually diversify product types, trading entities, and trading methods, we will fully utilize the existing financial market infrastructure, integrate and improve systems for carbon trading, clearing and settlement, refine technical standards related to market access, transactions, and services, and encourage financial institutions to actively participate in the development of the national carbon market. Additionally, we will work towards establishing a market-driven pricing mechanism that reflects the value, scarcity, supply-demand dynamics, and cost-benefit of carbon emission rights to drive carbon emissions reduction in key emitters and industries.
(3) Steadily developing financing products and services related to resource and environmental factors. We will guide financial institutions to develop green credit, green insurance, green bonds, green asset-backed securities, and other products and services related to resource and environmental factors while ensuring legal compliance, risk control, and commercial sustainability. We will also encourage them to explore the use of resource and environmental factors as qualified collateral and to develop loans secured by these assets. We will improve carbon emission rights and the collateral system for China Certified Emission Reduction (CCER), and strengthen the business cooperation between registration authorities and the unified registration and public notification system for movable properties financing of the Credit Reference Center under the People’s Bank of China (PBOC) to enable real-time information sharing, aiming to facilitate the registration, public notification, identification, and freezing of carbon emission rights and CCER collateral. We will also explore services such as repos, factoring, and custody for resource and environmental factors to promote the comprehensive utilization of environmental assets. Moreover, we will explore ways of promoting financial support for forest and marine carbon sink projects, alongside improving related supporting services. Financial institutions are also encouraged to expand their products and services based on carbon footprint data.
(4) Strengthening financial support for eco-environment-oriented development (EOD) projects. We will increase credit support for EOD projects, improve loan granting conditions, and enhance financing efficiency. Financial institutions are encouraged to grant integrated credit facilities to EOD projects that combine ecological restoration with related industries based on market principles and the rule of law. We will expand investment and financing channels for EOD projects by exploring the use of project-related assets and rights as collateral for loans and encouraging green equity investment funds to invest in green projects. We will also establish comprehensive risk prevention and supervision mechanisms for EOD projects and strengthen the assessment and review of conformity to the EOD project model, implementation of projects, and project benefits.
(5) Developing diversified climate investment and financing services. We will support pilot projects for climate investment and financing, foster key projects with significant climate benefits, explore diversified climate investment and financing tools and service systems, and encourage financial institutions to strengthen financial support and services. We will support the issuance of climate-themed green bonds and expand direct financing channels. Furthermore, we will leverage the role of venture capital funds, private equity investment funds, and trust funds to attract more private capital to invest in key areas such as response to climate change.
(6) Developing green consumer finance. We will support the practice of green and low-carbon life style by exploring the establishment of personal carbon accounts and promoting the innovation of “carbon inclusion” systems. We will actively develop green consumer credit business and encourage financial institutions to broaden the application of green consumer loans in everyday activities such as clothing, food, housing, and transportation and to develop personal carbon finance products and services, incorporating individual green and low-carbon behaviors and carbon reduction data to generate exchangeable carbon credits, which will enable preferential treatment in areas such as credit limits, interest rates, and value-added services.
V. Strengthening Support for Policy Implementation
(1) Establishing a coordination mechanism. The PBOC, Ministry of Ecology and Environment (MEE), National Financial Regulatory Administration (NFRA), and China Securities Regulatory Commission (CSRC) will establish a mechanism for information sharing and coordination. Focusing on the development of pilot zones for the Beautiful China Initiative, the MEE and the PBOC will jointly plan and identify a series of landmark projects on sewage treatment facilities and pipeline network construction, solid waste pollution control, ecological conservation and restoration of abandoned mines, third-party environmental pollution control, green and low-carbon development in key industries, and the comprehensive utilization of emerging solid waste such as scrapped batteries from new energy vehicles and decommissioned photovoltaic modules and wind turbine blades, and form a project list to be shared with financial institutions. Ecology and environment authorities at all levels and branches of the PBOC will improve mechanisms for connecting government, banks, and enterprises as well as policy support systems by creating platforms to coordinate banks and enterprises, summarizing best practices, reporting exemplary cases, and providing feedback on challenges encountered.
(2) Leveraging the synergy of policy coordination. We will deepen reforms of the law-based environmental information disclosure system and ensure effective alignment between the disclosure requirements for corporate environmental information and those for financial institutions so as to improve both the efficiency and quality of disclosures. We will accelerate the establishment of an environmental credit regulatory system and an environmental credit evaluation information platform. Corporate environmental credit information will be incorporated into the basic database of financial credit information and credit information platforms for micro, small and medium-sized enterprises (MSMEs), enabling financial institutions to link credit evaluations for financing projects with environmental credit ratings. Additionally, we will enhance structural monetary policy tools such as carbon emission reduction facility (CERF) and encourage pilot zones for green finance reform and innovation to develop green finance support policies tailored to local conditions.
(3) Improving the supporting foundational systems. We will work to establish a unified standard system for green finance and transition finance, refine standards for green credit, green bonds, and green insurance, and strengthen statistical monitoring. We will also develop a comprehensive set of standards and methods for calculating carbon emissions from emitters in key industries, project-level carbon emissions reduction, and product carbon footprints. The PBOC and the MEE will strengthen collaboration to advance work related to green finance standards, ensuring these standards are systematic, consistent, authoritative, and enforceable. In addition, we will accelerate the development of green finance infrastructure, establish a comprehensive system for the determination, registration, and trading of resource and environmental factors such as pollutant discharge rights and water rights, and encourage financial institutions to use the unified registration and public notification system for movable properties financing to register environmental rights as collateral.
(4) Optimizing incentive and constraint mechanisms. We will improve the evaluation system for green finance in financial institutions to assess the implementation of green finance policies, expand the use of evaluation results, and guide financial institutions to intensify their support for green sectors. We will encourage financial institutions and business entities to explore environmental, social, and governance (ESG) evaluations. We will also encourage enterprises to develop transition plans and explore offering rewards and recognition to those that make clear commitments to green and low-carbon transition and achieve significant progress.
(5) Strengthening risk prevention and control mechanisms. Ecology and environment authorities are encouraged to provide financial regulators with updates on enterprises’ environmental protection performance and the environmental benefits of key projects based on day-to-day supervision, help ensure the sustainability of financial support, and cooperate with financial regulators to enhance financial risk prevention and control. Financial regulators are encouraged to guide financial institutions to provide financial services based on market principles and the rule of law, reinforce the monitoring and analysis of project financing in key areas, improve credit management, strictly oversee the allocation of funds to ensure that credit funds are used to support key projects in compliance with laws and regulations, thereby firmly defending the bottom line whereby no systemic risks will occur.
People’s Bank of China
Ministry of Ecology and Environment
National Financial Regulatory Administration
China Securities Regulatory Commission
October 12, 2024
