WANG Yao 王遥 Director General, International Institute of Green Finance, Central University of Finance and Economics
VIDEO INTERVIEW (uploaded on our YouTube channel, VPN needed)
“Today everybody talks about green finance, but sustainable development shouldn’t just be a popular concept, it is in fact the direction we all should follow” – with these words, professor Wang Yao opened ThinkINchina event#76, focused on green finance. As Director General of the International Institute of Green Finance in the Central University of Finance and Economics (CUFE) based in Beijing, professor Wang joined us to explain what green finance is about and how China is shaping the global discourse overs sustainable development inside and outside its own borders.
Wang opened the evening presenting the work of the Institute, founded in 2016 with the mission of driving both public and private capital into green industries and preventing investments from those sectors highly damaging for the environment. In these three years, the Institute has grown in importance, spreading information about various aspects of sustainability, environmental policies and the importance of investing in green industries.
Today, one of the major challenges for this emerging sector is the lack of a common definition and approaches for green finance around the world, making it hard for different countries to coordinate their efforts in terms of sustainability. As Wang highlighted, China is the first country to provide a solid definition of green finance and to promote the concept of technological and financial instruments as means to fight climate change. In fact, by promoting a top-down approach for environmental policies and promulgating the concept of an “ecological civilisation”, China is actively setting an international benchmark for green finance.
As Wang noticed, those efforts led to some changes. In 2016, China chose green finance as one of the main discussion topics for the G20 of that year, held in Hangzhou, influencing the decision of other countries to choose the same topic for the G20 meetings of the following two years. Recently the European Union has launched a taxonomy for green bonds, and many other countries have been promoting measures to conform green standards and pushing the investments towards clean industries.
One of the highlights of our evening was the detailed and informative discussion about financial and political instruments used by China to promote the use of clean energies and sustainable development both domestically and abroad. The commitment that China has made towards sustainable development is symbolised by the inclusion of green finance in the Five-Year Plans, thus making it part of the national strategy. This has pushed the public and private sector to further the creation of green finance products. In this regard, green credit has been seen growing faster than credit in general, taking up 10% of the market. Green securities have been experiencing a year-on-year 8% growth, making them the fastest growing market in the world. Green insurance, another instrument of green finance, has also been gaining popularity, with the Ministry of Ecology and Environment making it compulsory for all companies in certain potentially environmentally damaging industries.
Domestically, China has been piloting programs in 5 provincial-level zones: Zhejiang, Jiangxi, Guangdong, Guizhou and Xinjiang. In Huzhou, Zhejiang, the local governments have been very successful at creating a system that has allowed small and micro enterprises to use green debts and green credit. The Institute has established a comprehensive database on green bonds in China and on the Environmental, Social and Governance (ESG) variables for all companies listed in China.
Wang Yao concluded the presentation highlighting once again the importance of international cooperation, before Mathias Lund Larsen, Director of International Cooperation for the Institute, joined her on stage for the Q&A session.
The final remarks brought up by both the public and the speakers concerned the future challenges of the discipline. As Lund Larsen concluded, the role of China in this field will be tied to the development of the Belt and Road Initiative. In fact, even if the role of green finance is increasing all over the world, finding a common ground to work together towards a sustainable development will be one of the challenges of our generation.
Report written by Raffaella Rossi and Eleonora Sartori