The 2020 HSBC annual report on sustainable financing and investing show China’s strong drive towards Green Financing
Author: Jessica Sam
Being the most populated country, China contributes the highest amount of carbon emissions in the world. However, the increasing importance of sustainability has influenced China as sustainable finance is now becoming a mainstream concept in its economy. In light of this, HSBC discloses the significance of green finance in China in their 2020 annual survey on sustainable financing and investing.
The HSBC annual report surveyed 180 capital market participants. A majority of them have shown a keen interest in sustainable and green finance. 72% of investors have stated that they are open to investing in a green and sustainable economy despite obstacles. Only 22% of investors say that they would not consider investments in green finance.
Production in China has played a significant part in supply chains across the world. As a result, the GHG emissions have increased to a substantial amount. In the survey, 90% of issuers have stated that they would prefer to work in sustainable supply chains and 82% of investors say they would like to invest in sustainable supply chains.
Mainland China constitutes the biggest carbon trading exchange and some of the biggest green bond markets in the world. The combined support from the Chinese government has helped China opt for more sustainable solutions over the years. In 2019, China met the international standards by issuing a 31.3USD in green bonds. China is also taking measures to reduce coal-fired power and to use more sustainable energy solutions. The new carbon capture technology used in China is helping reduce GHG emissions profoundly.
Furthermore, the effects of the pandemic have caused a massive change in the Chinese economy. It has heightened the importance of health and sustainability. Investors and issuers now consider health as an important issue along with environmental issues and energy efficiency.
However, issuers and investors have still reported certain obstacles in green financing. 70% of the total investors who felt obstacles in Sustainable financing stated that the returns are insufficient whereas 60% say that the disclosure of data on green finance is unclear and inadequate.
Although there is enormous support from the Chinese government on sustainable financing, investors and issuers feel that financial aid from the Chinese government would help sustainable finance better; especially now in the post-pandemic world.
Nevertheless, China is showing a large drive towards green financing and has a high potential for a sustainable future. However, addressing the obstacles reported by the investors and issuers will further strengthen their sustainability movement. Furthermore, the HSBC report states that the market participants in China show great willingness to follow their government’s path. Well placed policies and reforms on sustainable finance will help China achieve a green future.
Image Credits: Nick Fewings on Unsplash
Reference: gbm.hsbc.com
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