The People’s Bank of China, the central bank of the People’s Republic of China, and the European Investment Bank, the European Union’s long-term lending institution, announced Wednesday a joint initiative intended to combine policy and market best-practice and strengthen the framework for green investment.
The initiative aims to provide a clear framework for analysis and decision-making in green finance. Development of a common language will enhance the confidence of Chinese and international investors to support green finance through more consistent definitions and methodologies.
“China and the European Union jointly recognise the importance of strengthening investment in green finance to support sustainable growth, better protect the environment and tackle a changing climate change,” said Jonathan Taylor, European Investment Bank Vice President. China’s ambitious policy initiatives to establish the Green Financial System, outlined by the People’s Bank of China and government bodies last August, demonstrate the same vision as the EIB’s commitment to mobilise new investment for green finance and contributing to development of best practice in climate finance. Both the People’s Bank of China and the European Investment Bank recognise the importance of ensuring investor confidence in green finance and look forward to sharing their experience to facilitate green investment.”
According to said Hans-Dietmar Schweisgut, Ambassador of the European Union to China,“As signatories of the Paris Agreement, the European Union and China are committed to strengthening the global response to the threat of climate change and enhanced transparency of green finance.”
Schweisgut said that, “Putting theory into practice through improving accountability and aligning the financial system with climate policies is crucial to successfully tackle climate change.”
Reflecting the crucial role of capital markets in financing green investment experts from the China’s Green Finance Committee and the European Investment Bank will examine current classification of green bonds to map and compare respective approaches to green projects eligibility. This will use references including the Green Bond Endorsed Project Catalogue of the China Green Finance Committee as well as the Common Principles for climate finance tracking used by the Multilateral Development Banks (MDBs) and the International Development Finance Club (IDFC).
In the coming month’s experts from the China Green Finance Committee and the European Investment Bank will work together to contribute to strengthening the capacity of Green Bonds to improve accountability in green finance and support implementation of the Paris Agreement.
The results of the collaborative study are expected to be published in a White Paper later in the year. This will compare different reporting of Green Bonds and identify ways to improve comparable reporting and include examination of definitions of sectors and projects eligible for financing through green bonds, project evaluation, management of the proceeds of green bond and use of external reviews.