Seven state ministries jointly issue "Guidelines for Establishing the Green Financial System”

China issued “China's initiative for developing Green Finance under the G20 framework", which made "Green Finance" be included in the G20 agenda for the first time. On 31 August, 2016,approved by the State Council, the People's Bank of China, Ministry of Finance, National Development and Reform Commission, Ministry of Environmental Protection, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission jointly issued "Guidelines for Establishing the Green Financial System" (Yinfa [2016] no. 228, hereinafter referred to as the " Guidelines").

The Guidelines clear the definition of Green Finance. Green Finance refers to financial services provided for economic activities that are supportive of environment improvement, climate change mitigation and more efficient resource utilization. These economic activities include the financing, operation and risk management for projects in areas such as environmental protection, energy savings, clean energy, green transportation, and green buildings. The green financial system refers to the financial instruments such as green credit, green bonds, green stock indices and related products, green development funds, green insurance, and carbon finance.

The Guidelines include a series of policy incentives to support and incentivize green investment. These incentives include re-lending operations by the People’s Bank of China, specialized green guarantee programs, interest subsides for green loan-supported projects, the support for introduction of the PPP model in the green industry, and the launch of a national-level green development fund.

The Guidelines also emphasize the importance for building and improving the unified rules and regulations for green bonds, and taking measures to reduce the financing cost of green bonds. The Guidelines aim to explore ways to formulate standards for third party evaluation of green bonds and green credit rating, actively support the qualified green enterprises to obtain financing via initial public offerings and secondary offerings, support the development of green bond indices, green equity indices and related products, and gradually establish and improve the mandatory environmental information disclosure system for listed enterprises and bond issuers.

The Guidelines emphasize the development of Green Insurance, i.e. establish a compulsory environmental pollution liability insurance system in areas of high environmental risk, encourage and support insurance institutions to innovate green insurance products and services.  The Guidelines also emphasize the importance of developing different kinds of carbon finance products, promoting the establishment of markets for pollutant emission rights, energy use rights, water rights and other environmental rights, and developing financing instruments based on carbon emission rights, pollutant emission rights, energy use rights, water rights and other environmental rights.

The Guidelines require a further expansion in international cooperation on Green Finance, continued promotion of global consensus on Green Finance under the G20 framework, a progressive opening of the green securities market, and an enhancement of the level of “greenness” of China’s outward investment.

In the next step, the relevant government departments in China should adhere to the responsibilities assigned by the Guidelines, strengthen policy coordination on Green Finance development, improve regulations related to Green Finance, resolve the outstanding problems based on reality and enhance the publicity of Green Finance concept, with a view to achieving a healthy development of China’s Green Finance.

Deloitte was accredited as the Designated Operational Entity (DOE) by the Clean Development Mechanism (CDM) Executive Board of United Nation in May 2006, the accredited validation and verification areas include energy industry, chemical industry, waste treatment, agriculture and other industries. Deloitte is the observer of the International Capital Markets Association (ICMA) which is constitutor of the Green Bonds Principles (GBP). Deloitte is also the council member of Green Finance Committee, China Society for Finance & Banking (GFC). Now Deloitte is providing the services including Green Bonds Evaluation, Green Credit Consulting, Environmental and Social Risk Consulting for all kinds of enterprises and institutions, and has accumulated rich experience. Deloitte continues to provide green financial services for all kinds of enterprises and institutions, and help the development of Green Finance.