Some of China’s green projects are “cleaner than others”, says former UN climate change chief

China’s rise in four short years from being a marginal issuer of green bonds to hosting the world’s largest market is a sign that it has the potential to become a leader in the wider arena of sustainable investment. But it has some catching up to do first.

That’s according to the United Nations’ former head of climate change, Christiana Figueres, who acknowledged there are still hurdles to be overcome, such as a lack of clarity over what actually constitutes a “green”, or environmentally friendly, investment.

Although it has lagged behind, the sheer size of Asia’s population and its vast economic growth potential means it can eventually catch up with the West in becoming one of the most important markets for responsible investment, said Figueres.

“I would argue that the time lag in Asia would be made up for by scale. Yes, Asia was late to the topic but it will definitely take the lead,” she said. “China alone can lead the world on this, but I don’t think China is going to be the only one.”

Thanks to jumbo offerings by financial institutions, China led the pack in the first nine months of this year, accounting for 44 per cent of the world’s US$63 billion issuances of bonds that fund energy efficiency improvement and environmental protection projects, according to Moody’s. The credit ratings agency projected the full-year global total to reach US$80 billion - nearly double last year’s.

Despite her optimism about China’s future in sustainable investment, Figueres, the former executive secretary of the UN Framework Convention on Climate Change, acknowledged controversy over the “greenness” of some of the projects underway in China.