China is at the Head of a “Quiet” Green Finance Revolution
Last week a global conference on responsible investment was held in Singapore, China. One could see the leadership staring at us via a video-link to that conference. Chief Economist at the People’s Bank of China, Dr. Ma Jun, stated that China is currently moving to the mandatory report of environmental information by the companies.
Dr. Ma Jun mentioned that all water, climate, and environmental issues are closely connected with asset allocation risks. This conference, which was held by Principles for Responsible Investment, was listened and watched by over 600 delegates. During the video conference, Dr. Ma Jun talked about how China was waiting for the release of green finance and used government stimulus in order to attract private capital.
Carbon Trading Scheme
People’s Bank of China (PBOC) is the financial regulator and the central bank in China. Dr. Ma has got the nickname “Mr. Green Finance” because he is usually driving this agenda. He used to be an economist at Deutsche Bank and joined PBOC only two years ago. Next year China is planning to launch a national carbon trading scheme, which will become the largest trading scheme in the world.
The economists state that China has passed ahead and left the West behind. China is now investing more in clean technology than the U.K., U.S., and France altogether. At the same time, the U.S. has even failed to launch a national carbon trading market. The day before this conference started, China Central Depository and Clearing Co announced itself a partner of Climate Bonds Initiative (CBI), which is an international, non-for-profit organization. Together they aimed at launching the first Climate-Aligned bond index.
Obey or Explain
The recent announcement of China to start the move towards mandatory disclosure of environmental risk has built a lot of momentum in this space. Some of the companies have suggested this is going to be a quiet revolution. It all started in 2014 when Mr. Robins became the head of Climate Change Center and mentioned a joint program on green finance between G20 and investors as his “dream headline” for the next year.
A lot of stock exchange CEOs joined at the Sustainable Stock Exchange Initiative and formally added to the numbers on board. It demanded stable development reporting on an “obey or explain” basis. During the last year, more than 20 stock exchanges decided to provide ESG reporting guidance.
The credit rating agencies together with senior executives from S&P Global Ratings and Malaysia’s RAM Ratings were also present, talking about social and environmental issues and credit ratings. There were also some investment companies in Singapore, - Arabesque was one of them.
Small business owners can borrow through loan matching service hile big corporations need to find other ways and attract big investors. George Kell, who is a vice chairman of this investment firm, spoke about the significance to listen to the needs and necessities of the millennials. He even used a special name for them – Generation S – for sustainability.
Does everybody support the movement for change?
The managing director of PRI told the delegates that all the work concerning responsible investment is closely connected with rebuilding trust in the whole financial system. This task is rather challenging, and it requires leadership across geographical boundaries. However, while this movement for change was being held in China, there was something missing.
Some economists and partners at the conference suggested it was the U.S. David Blood, managing partner in an investment company mentioned that most American people were missing because in the U.S. sustainability is a political agenda.