On April 10, 2024, the People’s Bank of China and National Development and Reform Commission, jointly with 5 other ministries, issued Guidelines on Strengthening Financial Support to Green and Low-carbon Development (hereinafter referred to as “the Guidelines”).

It is issued to specify the main goals and measures for financial sectors to support China’s green and low-carbon development, which will finally result in the achievement of the country’s carbon peak and carbon neutrality goals. The guidelines specify objectives into two phases:

- In the next five years, establish a globally leading financial support system for green and low-carbon development; closer international cooperation will take place while all elements and resources will cluster in the green and low-carbon fields.

- By 2035, economic and financial policies will be implemented with high efficiency and coordination; the standard and policy support system in financial sectors will be more mature and favourable for green and low-carbon development; and the functions of resource allocation, risk management and market pricing will be better utilized.

Further measures are elaborated in this document in seven perspectives:

Optimize standard system for green finance: push financial systems to carry out and further dig into calculating methods on carbon calculation; further optimize standard system for green finance, especially those for bonds, green credit, GHG calculation and disclosure etc., together with green insurance standards.

Strengthen restriction mechanism based on information disclosure: encourage financial institutions and participants to disclose environmental information, especially the listed companies bond-issuing bodies; improve the information disclosure quality, and integrate ESG factors into the credit rating methods and models.

Facilitate product and market development of green finance: accelerate the construction of carbon trading markets; strengthen support through green credit; encourage the development of green insurance and services; expand participants in the green financial markets with a wider coverage.

Improve policy coordination and system support: optimize relevant laws and regulations, assessment and evaluation system; enrich currency tools, and support the green and low-carbon transition of high emission sectors and projects; deepen green finance reform, and provide further support in national and regional major strategies settings.

Strengthen prudent management and risk control for climate-related fields: optimize the prudent management system and integrate risks of climate change into the policy framework; improve the risk control capabilities of financial institutions.

Enhance international cooperation: more actively participate in international multilateral green financial cooperations within organizations including but not limited in Financial Stability Board (FSB), Green Finance Network of Central Banks and Regulators (NGFS), International Platform for Sustainable Finance (IPSF), Bank for International Settlements (BIS), Basel Committee on Banking Supervision (BCBS), Sustainable Banking and Finance Network (SBFN), International Organization of Securities Commissions (IOSCO) etc.; promote the green investment in the “Belt and Road Initiative”.

Intensify organizational support: enhance supervision and surveillance on the actions and functions of financial sectors; central and regional government should clarify roles and responsibilities for a better supportive framework of green finance; intensify academic exchanges and cooperation, and carry out basic and proactive research; create good atmosphere for green finance development.

For MNCs and foreign stakeholders, the Guidelines will benefit those with intentions or have already invested in green and low-carbon projects in China. Product/service providers on environmental protection, climate friendly or similar fields will also benefit from the policy. On the other hand, the emphasize on international cooperation may lead to result in a mutual way: more friendly business environment in the country, and stronger competitors and presence from China in the international market of this field.

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