PBoC will increase green bonds in foreign exchange reserves, limit investments in high-carbon assets, and include climate-related factors in the risk management framework, said PBoC Governor Yi Gang at the Boao Forum for Asia Annual Conference 2021 in Hainan province, as reported by Caixin on April 20. The central bank will continue to implement the principles of green investment. In the meantime, PBoC will ameliorate the national-level path of green finance in three areas: mobilizing funds to support the low-carbon transition, managing financial risks related to climate change, and increasing international coordination.
PBoC is promoting the construction of the country’s green financial standard system, reinforcing information reporting and disclosure, and building incentive mechanisms, in response to the national transition to a low-carbon economy. Yi said that in terms of information disclosure, the central bank will set up a mandatory information disclosure system in steps to cover all types of financial institutions and financing entities and unify disclosure standards.
As for managing climate-related financial risks, Yi indicated that China has less time than developed economies to achieve its carbon neutrality goal. From the central bank level, China will evaluate the impact of climate change on financial stability and monetary policy in a timely manner. At the level of financial institutions, PBoC will encourage financial institutions to cover climate challenges in their risk management framework. The central bank has instructed pilot financial institutions to measure carbon emissions and assessed the climate and environmental risks of projects, exploring the establishment of a national carbon accounting system.
Regarding international collaborations, PBoC will motivate financial institutions to enhance investments in the Belt and Road Initiative (BRI), especially to assess environmental and climate risks. At present, 39 member companies have joined the Green Investment Principle (GIP) for the BRI, collectively managing assets of up to USD4.8bn to nourish green and sustainable investments. In addition, PBoC will help developing countries enhance their green finance capacity and their own green transformation. In addition, the G20 has re-established the Sustainable Finance Study Group (SFSG) with China and the US as the co-chairmen earlier this year.