New | China’s environmentally-friendly green bond issuance set to accelerate

Issuance of green bonds in China is increasing quickly thanks to growing clarity in the sector’s regulatory infrastructure.

China now has 759 ‘climate aligned bonds’ according to the China Green Bond Index, which was launched by the China Central Depository & Clearing Co. just last month.

Green bonds are capital-raising devices designed to provide funding for new and existing projects with environmental benefits. They are particularly targeted at those looking to direct investment towards environmentally focussed projects.

Such projects are growing in significance on the mainland, as both enterprises and government bodies give greater weight to green initiatives. In a reflection of the importance policy makers now place on issues relating to environmental sustainability, green development was one of the five development concepts identified in the 13th five-year-plan passed by the two sessions in March.

Chinese economic development, in both the Mao Zedong era and since reform and opening in the 1980s, has been dominated by manufacturing and construction, causing significant damage to the country’s air, water and land quality. Recent years have seen a range of policies designed to mitigate environmental damage, and the 13th five year plan includes targets to reduce energy intensity and to raise the proportion of energy derived from non-fossil fuels.

This will require major financing, and so lies the rationale behind efforts to create a functioning green bond sector.