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Chinese trust companies have been launching carbon neutrality-themed trust products recently, as reported by Caixin on March 18. In February, AVIC Trust, China Energy Conservation Association, and Shanghai Treasure Carbon jointly set up the country’s first carbon neutrality-themed green trust plan, with an initial scale of RMB50m, mainly investing in carbon assets that are traded in the national carbon market. On March 9, State Grid International Leasing Company (State Grid Leasing) issued an RMB1.75bn green oriented asset-backed commercial paper (ABCP) for renewable energy projects, which is the country’s first carbon neutrality related asset-backed securities (ABS) project. Both the trustee and the structured investment vehicle (SIV) of the ABCP are Yingda International Trust, also a subsidiary of State Grid. In addition, China Industrial International Trust also released carbon emission reduction related trust plans.
Green development and carbon emission reduction will be a big hit in the economic and social field in the following years. On September 23, 2020, President Xi Jinping made commitments to reach the peak of carbon emissions by 2030, and carbon neutralization in 2060. Predictably, more financial resources will incline to green development. PBoC emphasized the importance of green finance for the achievement of the carbon neutrality target at its 2021 work conference, while CBIRC also proposed to actively develop green credits, green insurance, and green trusts at its 2021 work conference.
According to H2O-China, Ma Jun, member of the monetary policy committee of PBoC and director of the green finance professional committee of the China Society of Finance, said that in the next 30 years, the scale of green low-carbon investments needed to achieve carbon neutrality in China should be more than RMB10bn and may also reach billions of Yuan. Green trust can guide and encourage more social capital to inject into the green industry, innovate green financial products and services, help promote green development, and realize the win-win development of the trust industry and the green industry. However, since green finance for trust companies is still an emerging field, how to explore it is still a problem.
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