China's ex-securities regulator on green finance

Xiao Gang, former CSRC head, elaborates his vision for a financial system toward China's carbon goals

This is the fifth newsletter from Pekingnology of a series of speeches made by guest speakers at the 2021 Tsinghua PBCSF Economic Forum on Carbon Neutrality held on September 16.

The forum was widely covered in Chinese media but not so much in English so your Pekingologist wishes to present a more domestic detailed, technical discussion from the forum on reaching China’s carbon goals - China aims to reach the carbon peak before 2030 and carbon neutrality before 2060, sometimes known as “双碳” “dual carbon” goals that you will see below.

This newsletter features major parts of the speech by 肖钢 Xiao Gang, former chairman of the China Securities Regulatory Commission from March 2013 until 20 February 2016. He is currently a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), an advisory body.

Please note this is not Xiao’s full speech. This is a condensed version by Pekingnology. For your reference and cross-check, a fuller Chinese transcript was posted at the end of this newsletter. The full video documentation of the forum is available at Tsinghua PBCSF’s Twitter account with simultaneous translation in English.

For more on the forum that Pekingnology has already covered: the speech by a senior executive of CATL, the leading battery giant, the speech by the head of China National Nuclear Power, the speech by the President of Sinopec, and the speech by Prof. Jiandong JU, a Tsinghua professor, advocating progressive carbon tax in China.

In case you’ve missed it, Pekingnology has just published the transcript of the November 2 press conference by Xie Zhenhua, China’s climate envoy, in Glasgow during the just-concluded COP26. Xie answered ten questions and comprehensively laid out the Chinese position on the climate crisis.

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In China, great importance has been attached to green finance in recent years and a framework for green finance policies has been put in place. The framework covers five aspects.

First, the government plays a leading role. Carbon emission reduction cannot be accomplished by market forces alone, and it is hard-pressed to bring into play the role of the market mechanism. Therefore, the government shall play a leading role. Of course, all financial institutions must formulate sound plans, integrate top-down and bottom-up approaches, and more importantly, deepen the reform of the financial system and mechanism.

Second, make full use of the role of market entities. Although the Chinese government plays a leading role in fulfilling the “dual carbon” goal, it is also necessary to give full play to the role of a market mechanism, and in particular, make overall plans for managing environmental risks and climate risks, and creating opportunities for financial development.

Third, foster financial innovation, which requires the concerted efforts of all parties.

Fourth, step up efforts to build financial infrastructure. Further improvement shall be made to financial infrastructure involved in green finance, such as green financial products and standards, green databases, carbon emissions trading, green ratings, and green certifications.

Fifth, the system of laws and regulations on green finance is crucially important, including enhancing the responsibilities and obligations of market entities to achieve the “dual carbon” goals and practicing mandatory disclosure of environmental and climate information in the future.

The business scope of green finance involves many aspects. Below are a few examples. China has issued green loans of 12 trillion yuan, ranking top in the world. In terms of green bonds, the stock of green bonds exceeds 810 billion yuan, putting China second in the world. The green equity investment will be developed and development is underway in China.

According to global statistics, investment in ESG probably accounts for upwards of 30% of the world’s total investment. Green funds and green financial management are being developed. By the end of last year (2020), China had over 500 green-related private equity funds, with a size of 200 billion yuan, mostly equity investment. Moreover, it is necessary to develop green trusts, green leases, and so on.

We take the view that the following aspects are important for the development of green finance. First, operate a positive incentive mechanism. Second, environmental risk analysis needs to be conducted. The positive incentive mechanism includes many aspects, such as fiscally subsidizing interest payments, i.e. how to expand the fiscal subsidy for interest payment for loans associated with “carbon neutrality” goals; how the central bank creates special tools in support of low-carbon transformation; refinancing from the central bank, or using green bonds as qualified collateral for loans from the central bank. In addition, we need to establish compensation funds for green guarantees and projects.

In the future, we need to raise the awareness of individual investors about investment in ESG. As we know, there is a huge number of individual investors in China. How to popularize financial knowledge and green finance education so that individual investors invest in ESG products? This is a new problem we have. For investment in a financial product, we are mainly used to analyzing risks and returns. This was a two-dimensional model. There may be a shift to a three-dimensional model in the future. To invest in a financial product, it is necessary to take into account its risks and returns, and also its ESG performance. Many financial products, because they are dedicated to ESG purposes, returns have actually been increasing. They - ESG and returns - are not in conflict. Therefore, how to guide investors to invest in ESG products is also a new undertaking.

For financial institutions, the next step is to step up efforts to analyze environmental risks. Many financial institutions have started this work. It is technically demanding in this respect. How to harness a suite of tools and methods to assist financial institution decision-makers in choosing investments? Environmental risks are divided into physical risks and transition risks. These risks may increase risks in investment. Financial institutions must enhance the capability to identify, monitor, and analyze environmental risks and give early warnings.

Financial institutions also need to perform stress tests on environmental risks. The means of analytical tools and models should be included in the internal decision-making process of financial business through these stress tests.

To develop green finance, it is necessary to develop new products on environmental rights. I will not elaborate on this. For example, environmental rights such as pollution rights, water rights, emission rights, and energy use/consumption rights can be used as underlying assets for financial products development. Therefore, several innovative financial products can be developed towards the “dual carbon” goals.

Next, financial institutions shall ensure greater disclosure of environmental information. Both listed companies and financial institutions have begun to disclose information on a voluntary basis. There will be a gradual shift from voluntary information disclosure to mandatory disclosure. Of course, rules must be drawn up and implemented step by step.

It is necessary to establish a platform for the environment and climate data, and in particular, further promote the rating and certification of green finance. The disclosure of information will lead to the more transparent business of financial institutions. In this way, the carbon emissions of the investment projects and the products supported by financing will be tracked, as well as the carbon footprint.

Of course, financial institutions also face the issue of carbon emissions. It is necessary to disclose the carbon footprint of carbon dioxide emitted by enterprises and projects supported by financial institutions, and also disclose information on their own carbon emission reductions.

Finally, we should tighten the supervision of green finance. In particular, in order to develop green finance, it is necessary to enact sound laws and regulations, establish a sound evaluation system for green finance, harmonize the regulatory rules, realize the development of green finance, prevent deleveraging risks of the financial industry, and prevent excessive leverage ratio of green projects.

In particular, caution must be exercised to prevent the “greenwash” problem in the financial industry – undertaking projects that are not environmentally friendly but pretending to support the “dual carbon” goals. Therefore, it is necessary to strengthen the regulation and coordination of innovation in green finance, establish a mechanism of analysis, monitoring, and early warning for green finance, and tighten the supervision of the use of funds to prevent and defuse financial risks.

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For more on the forum that Pekingnology has already covered: the speech by a senior executive of CATL, the leading battery giant, the speech by the head of China National Nuclear Power, the speech by the President of Sinopec, and the speech by Prof. Jiandong JU, a Tsinghua professor, advocating progressive carbon tax in China.

In case you’ve missed it, Pekingnology has just published the transcript of the November 2 press conference by Xie Zhenhua, China’s climate envoy, in Glasgow during the just-concluded COP26. Xie answered ten questions and comprehensively laid out the Chinese position on the climate crisis.

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Xiao Gang’s speech in Chinese as provided by the forum’s organizer to Chinese journalists in a WeChat group at the time.

尊敬的各位领导和嘉宾,各位老师、各位同学:

    大家上午好!

    今天很荣幸能参加清华五道口举办的“碳中和经济”这样一个重要的论坛,下面我想结合这个论坛的主题分享一下在发展绿色金融方面的一些情况。

    习近平总书记明确指出,特别是在今年4月30日中央政治局集体学习的时候,他强调指出:“要把实现减污降碳协同增效作为促进经济社会发展全面绿色转型的总抓手,加快推动产业结构、能源结构、交通运输结构、用地结构的调整。”

    中央政治局这个会议非常明确的指出,从“十四五”规划开始,我国的生态文明建设要进入到一个以降碳为重点、降碳和防污协同推进的这样一个阶段,我觉得这是一个非常重要的论断。我们过去发展绿色金融主要是讲防治污染,从“十四五”规划开始,为了实现“双碳”目标,降碳成为绿色金融的重点之一,当然降碳和防污要协同增效、协同推进。

    绿色金融是指为支持环境改善、应对气候变化和资源节约高效利用的经济活动,即对环保、节能、清洁能源、绿色交通、绿色建筑等领域的项目投融资、项目运营、风险管理等所提供的金融服务。

    全球生态的安全由于气候的变化,现在已经非常严重,要实现“碳中和”目标,从全球来看也是全人类共同面临的一个挑战,这里讲几个数据。

    1.全球大概80%的人口还生活在人均能源消耗大大低于100吉焦的国家和地区,2019年全球人均一次能源消费大概是75.7吉焦,各个地区很不平衡,其中亚太地区是61.1吉焦,南美洲地区是55吉焦,非洲最低,才15.2吉焦,联合国设定的人类发展指数将人均能源消费100吉焦作为一个参考指标,也就是说全球80%以上的人口现在远远没有达到人均能源消费的水平,主要是发达国家排放的很多。

    2.全球80%以上的一次性能源消费还仍然是煤炭、石油和天然气,仍然是我们讲的传统能源,而不是非化石能源。

    3.全球80%以上的人口是低于人均GDP1.1万美元的,也就是说大部分还是发展中国家。

    从这几个数据看出,我们全人类要实现“碳中和”目标,面临的挑战十分艰巨,这不仅是一个经济问题,还是一个政治问题。

    在去年以来全球疫情蔓延的背景下,使得各个国家减碳的任务更加艰巨,这里我列了一个联合国环境规划署今年4月份发布的报告,这个报告对全球50个经济体财政刺激一共支出了14.6万亿美元。大家知道去年以来各个国家应对疫情出台了很多财政刺激的措施,联合国环境规划署统计了一下,到4月份一共是14.6万亿美元。其中只有3600多亿美元是符合绿色标准的,当然这是一个比较特殊的情况,为了应对疫情。

    2021年绿色和平组织也发出公开的批评,指责欧洲央行为了应对疫情,放松了对信用评级下降、碳排放比较多的企业抵押品的融资规则,央行要发放再贷款要融资需要抵押品,企业的抵押品很多是高碳排放的抵押品。因此绿色和平组织今年也发出呼吁,要求欧洲央行要尽快将货币政策转向到纠正气候应对失衡上面。举这两个例子说明,从全球来看要完成“碳中和”目标任务还十分的艰巨。

    绿色金融是中国“双碳”目标政策框架里面的一个重要的组成部分,协同产业政策、消费政策、税收政策、碳市场的交易,绿色金融在推动实现“双碳”目标实现当中具有重要作用。

    “碳中和”目标对金融体系也会带来很多方面的影响,首先会给金融业带来巨大的投资和发展机遇,时间关系不展开讨论了,前面几位领导都讲了这些数据。对金融业业务的模式也会带来重大的变革,对金融资产的定价、估值、信息披露、风险管理应该说具有长期性和系统性的影响。同时“双碳”目标的推进也可能会成为系统性金融风险的重要来源,当然现在不同的机构也有些不同的研究和测算,比如说贷款不良率可能会上升,债券的违约率可能会提高,上市公司的股票可能也会减值,因为在转型当中可能会遇到这样那样的风险。

    同时“双碳”目标的实现对货币政策和宏观审慎政策也会带来新的挑战,因为降碳和经济增长的关系怎么样处理好,降碳和能源安全的关系怎么处理好,降碳和可负担的关系怎么处理好,这些都会对通货膨胀、利率、汇率,以及货币政策其他的工具带来一些影响,这个都是需要货币政策和宏观审慎政策研究的新问题。

    绿色金融我们国家这几年一直高度重视的,构建了绿色金融政策的框架,整个框架应该说是五个方面。

    一是政府主导,在减碳这个问题上不能完全依靠市场,发挥市场机制的作用是很难的,所以政府要发挥主导的作用。当然各个金融机构也要制定好规划,要把自上而下和自下而上结合起来,更重要的是要推进金融体制机制的改革。

    二是充分发挥市场主体的作用,虽然中国政府实现“双碳”目标要发挥主导作用,但是同时也要充分发挥市场机制的作用,特别是在管理环境风险、气候风险和拓展金融机遇发展方面,要把它统筹起来。

    三是加强金融创新,这个需要各个方面共同努力。

    四是加强金融基础设施的建设,绿色金融涉及绿色金融产品和标准、绿色数据库、碳排放交易、绿色评级、绿色认证等一系列的金融基础设施要进一步的健全。

    五是绿色金融法律法规的制度非常重要,包括要强化市场主体对实现“双碳”目标的责任义务,包括未来要实施环境和气候信息强制披露。

    从绿色金融的业务范围来讲,也是很多方面,这里列举了几个。绿色贷款,目前我们国家是达到了12万亿元,在全球我们国家的绿色贷款位居第一。绿色债券,存量债券超过了8100亿元,在全球来讲位居第二。未来还要发展绿色股权的投资,我们国家现在正在开始发展,这里有一个全球的数据,大概ESG投资占全球总投资资产超过了30%。现在也在发展绿色基金、绿色理财,到去年年底,我们国家和绿色相关的私募基金大概已经超过了500只,规模达到2000亿元,其中主要是股权投资。另外要发展绿色信托,还有绿色租赁等。

    进一步发展绿色金融,我们认为有这几个方面特别重要。一是要实行正向的激励机制;二是要开展环境风险分析。正向的激励机制包括很多方面,比如说财政贴息,怎么样扩大对金融对“碳中和”目标贷款的贴息;比如说中央银行怎么样来设立支持低碳转型专门的工具;比如说再贷款,或者把绿色债券作为央行放款的合格抵押品;另外要建立绿色担保和项目风险的补偿基金等。

    未来还要培育个人投资者投资ESG的意识,大家都知道中国个人投资者数量庞大,怎么样普及金融知识,普及绿色金融教育,让广大个人投资者投资ESG的产品?这个也是我们面临的一个新问题。过去我们讲投资一个金融产品,主要是分析风险和收益,这是一个二维的模式。未来可能要转向一个三维的模式,投资一个金融产品,不仅要看它的风险、收益,同时也要看它的ESG绩效,全面衡量。现在看很多金融产品,正因为它是用于ESG,实际上它的收益是在增加的,两者并不是矛盾的,而是统一的。所以下一步怎么样培育广大的投资者来投资ESG的产品,也是一个新的课题。

    对于金融机构来讲,下一步应该进一步加强环境风险分析,现在我们很多金融机构已经开展这项工作,这个方面技术性也很强,未来怎么样运用一系列工具和方法,帮助金融机构决策者选择项目?环境风险分为物理风险和转型风险,这些风险都可能会增加投资风险,作为金融机构必须要增强识别监测环境风险的分析和预警的能力。

    各个金融机构还要开展环境风险的压力测试,有了分析的工具和模型,通过这些压力测试传导到金融业务的内部决策流程上来。

    下一步从发展绿色金融来讲,还要对环境的权益开发新的产品,这里我也不展开了,比如说排污权、水权、排放权、用能权等,这些环境的权益都可以作为金融资产的底层资产来进行开发。所以在这里可以开发出若干个创新型的金融产品来推动“双碳”目标的实现。

    下一步对金融机构还要加强环境信息的披露,现在是无论上市公司还是金融机构,都在开始自愿性披露,未来要从自愿性信息披露逐步转向强制性披露,当然要制定规则分步实施。同时要建立公共环境和气候数据平台,特别是对绿色金融的评级和认证进一步加强,通过信息的披露,使得金融机构业务的透明度增加,这样的话投资的项目、支持的产品将来的碳排放量到底是多少,要追踪碳足迹。当然金融机构本身也还有一个碳排放的问题,不仅要披露金融机构支持企业、支持项目所排放的二氧化碳的碳足迹,还要披露自身的碳减排的信息。

    最后一个是要加强绿色金融的监管,特别是当前为了进一步发展绿色金融,还要进一步完善相关法律法规体系,健全绿色金融的评价体系,特别是还要进一步统一监管的规则,实现绿色金融的发展和金融业去杠杆的风险防范,要相互协调,也要防止绿色项目杠杆率过高的问题,特别是也要注意防止金融业“洗绿”的问题——以支持“双碳”目标为名,实际上不是干绿色的事情。所以还要进一步加强对绿色金融创新的监管协调,建立绿色金融分析监测预警的机制,强化资金运用的监管,有效防范化解金融风险。

    我就讲到这里,谢谢。