PBC, the National Development and Reform Commission (NDRC), and the China Securities Regulatory Commission (CSRC) jointly released the "Green Bond Endorsed Projects Catalogue (2021 Edition)." The release of the Catalogue will orient domestic green bonds toward the strategy of green and low-carbon development, better empower domestic green finance development, and boost international cooperation on green finance. The Catalogue will come into effect on July 01, 2021. PBC has also published questions and answers (Q&As) related to the Catalogue 2021.
The Catalogue 2021 has achieved three breakthroughs.
- It adopts more scientific and precise definitions on green projects. Carbon-intensive projects such as cleaner use of coal and other fossil fuels are no longer supported and the universally adopted principle of “Do No Significant Harm (DNSH)” is respected so that the constraint of carbon emission reduction is tightened further.
- It improves the mode of bond issuance and management. The Catalogue unified the criteria for defining green projects among regulatory authorities of green bonds for the first time; effectively reduced the costs of green bond issuance, trading, and management; and elevated the pricing efficiency of the green bond market.
- The Catalogue provides a stable framework and room for flexibility for domestic green bond development.
Regarding the rationale of taxonomy in this Catalogue, the Level-II and Level-III Categories are aligned with those of the world’s mainstream taxonomy of green assets, which will help domestic and overseas entities better identify, inquire, and invest in green assets. The Level-IV Categories remain consistent with the Level-III Category of the 2019 Directive Catalogue for Green Industries, so that national key projects on the transition to green and low-carbon development are supported to access list-based financial services. With economic and social development and advancement of national strategy and international cooperation, the sub-levels for green agriculture, sustainable architecture, water conservation, and unconventional water resources may be included in the Level-II and Level-III Categories, to expand the coverage of green bonds. Looking forward, PBC, NDRC, and CSRC will guide and support eligible financial institutions and enterprises to issue green bonds in a bid to underpin eligible green projects. Meanwhile, regulatory authorities of green bonds will continuously step up communication and collaboration, improve relevant financial standards in fighting climate changes, continuously promote uniform fundamental institutions of the green bond market and the convergence of domestic and foreign green bond standards, and better contribute to the achievement of carbon-emission and carbon-neutrality goals.
Effective Date: July 01, 2021
Keywords: Asia Pacific, China, Banking, Securities, Green Bonds, Climate Change Risk, ESG, Sustainable Finance, CSRC, PBC
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous ArticleEBA Publishes Single Rulebook Q&A Updates for April 2021
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.