Chinese green bond issuers must improve disclosures to ensure growth of sustainable finance market, report says

Only 65 per cent of green bond issuers in China revealed how green proceeds were used, compared with 77 per cent globally, a study showed

China had issued US$199 billion worth of sustainable bonds by the end of last year, the most after US$304 billion in the US

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China’s goal to hit peak emissions by 2030 and reach carbon neutrality by 2060 is boosting the country’s green finance market. Photo: Reuters

Published: 3:00pm, 22 May 2022Updated: 4:50pm, 22 May 2022

Chinese green bond issuers lag behind global peers in revealing how the proceeds are used, highlighting the need for improved disclosures in the world’s second largest climate bonds market, according to an industry report.

Improvement in terms of both availability and quality of disclosures in the green bond market was needed to ensure the continued growth of sustainable finance in China, according to the Post-Issuance Reporting in China’s Green Bond Market 2022 report by non-profit Climate Bonds Initiative (CBI) and consultancy SynTao Green Finance.

“Post-issuance reporting has been identified as among the most crucial elements to increase the appeal of the Chinese green bond market,” said CBI’s chief executive Sean Kidney on Thursday, referring to all publicly available information relevant to a green bond after the offering has closed.

“It adds transparency and credibility to an instrument and its issuer, confirming that the underlying projects were financed in line with commitments, ensuring accountability, reducing the risk of greenwashing, and enhancing investor confidence, all of which are conducive to healthy market development,” said Kidney.

Sean Kidney, CEO of Climate Bonds Initiative, said Chinese green bond issuers have to improve post-issuance reporting to increase the appeal of the country’s climate bond market. Photo: Felix Wong

Green bonds are fixed-income financial products designed to fund environmentally friendly projects.

Spurred by China’s commitment to hit peak emissions by 2030 and reach carbon neutrality by 2060, the country’s climate bonds market reached a cumulative US$199 billion by the end of 2021, growing 50 per cent from the previous year, according to CBI.