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Green finance
BusinessBanking & Finance

Green financing to help drive China’s 2060 push for carbon neutrality

  • Sustainable financing is becoming ‘more mainstream’ and ‘more common’ in investment portfolios
  • China was the second-largest issuer of green bonds globally in 2019, at US$55.8 billion

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Sustainable finance is expected to help drive China’s goal of reaching carbon neutrality by 2060. Photo: AFP
Chad Bray
Green bonds and other types of sustainable financing could play a major role in driving China’s pledge to be carbon-neutral within the next four decades, as sustainable investing gains more traction in investment portfolios, according to panellists at the South China Morning Post’s Asia Sustainability Conference.

“This is effectively a movement that has gathered steam. If you look at the diversity of investors, it has gotten higher. I think the demand and the supply of green bonds and sustainability financing has become fairly mainstream,” Kok Siong Ng, chief financial officer at Link Asset Management, said. “I think this is going to get more mainstream and more common. I think this is something you can’t ignore.”

Ng said about a quarter of the firm’s financing was in the sustainability-linked or green financing space, with the firm targeting increasing that to one-third in the future.

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Sustainability: Green bonds to help drive China's push towards carbon neutrality

Sustainability: Green bonds to help drive China's push towards carbon neutrality
In September, Chinese President Xi Jinping said in a video address to the United Nations General Assembly that the country would scale up its voluntary emissions targets under the Paris climate accords, hitting peak emissions before 2030 and achieving carbon neutrality before 2060.
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Green finance will be an important tool for policymakers on the mainland as they try to achieve a goal of carbon neutrality by 2060, according to Fitch Ratings.

The SCMP’s Chad Bray, left, discusses green bonds with Kok Siong Ng, chief financial officer of Link Asset Management, Ellen Lam, senior adviser for environmental finance at WWF-Hong Kong, and Issac Yeung, general manager of Hong Kong and China Gas Company, at the Asia Sustainability Conference on Wednesday. Photo: SCMP
The SCMP’s Chad Bray, left, discusses green bonds with Kok Siong Ng, chief financial officer of Link Asset Management, Ellen Lam, senior adviser for environmental finance at WWF-Hong Kong, and Issac Yeung, general manager of Hong Kong and China Gas Company, at the Asia Sustainability Conference on Wednesday. Photo: SCMP
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“New policies and incentives have continued to emerge despite the coronavirus pandemic, with financial regulators setting policy goals to address climate change through investment and financing in China’s next five-year plan,” Fitch analysts Jingwei Jia and Mervyn Tang said in a research note on Wednesday.

China was the second-largest issuer of green bonds that met international standards after the United States last year, issuing US$55.8 billion of “labelled green bonds”, according to the non-profit Climate Bonds Initiative (CBI). Including bonds that only meet Chinese standards, China would have surpassed the US in issuance.

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