China to unveil new rules for climate funds to rein in ‘greenwashing’: sources

Name: “I can’t see my family die like this”: The Kyoto Protocol’s impact 25 years on
Uploaded: 2022-12-21T03:00:49.000Z
Duration: 6 min 45 s
Description: “I can’t see my family die like this”: The Kyoto Protocol’s impact 25 years on

The new rules drafted by the country’s funds regulator could come into force in the first half of next year

The regulations could impact some or most of the green funds that make up the bulk of the 160 sustainable funds now in China

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Smoke belches from a coal-fuelled power station near Datong, in China’s northern Shanxi province. The country aims to become carbon neutral by 2060. Photo: AFP

Reuters

Published: 11:00am, 21 Dec 2022Updated: 11:01am, 21 Dec 2022

China plans to tighten rules to regulate environmentally friendly, or so-called green funds, as part of its efforts to rein in ‘greenwashing’ in the world’s second-largest climate fund market, sources with direct knowledge of the matter said.

The new rules, which could be in place in the first half of 2023, will mark a major change in a rapidly growing corner of the funds industry in China, where asset managers currently have the leeway to determine the scope of green investments on their own.

The regulations could impact some or most of the green funds that make up the bulk of the 160 sustainable products now in China, forcing them to back up their green claims or drop the popular label, potentially curbing strong flows in a sector that has raised tens of billions of dollars in the last few years.

At present, China’s green funds only operate within broad investment guidelines that came into effect in 2018 and do not have a mandatory labelling regime. Such funds had US$34 billion in assets as of end-September, according to Morningstar data.

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“I can’t see my family die like this”: The Kyoto Protocol’s impact 25 years on

The country’s funds regulator, Asset Management Association of China (AMAC), has drafted regulations that will require mutual funds or exchange-traded funds to have at least 60 per cent of their assets in the defined green investments category to be eligible to be sold as green products, the sources said.

Under so-called ‘greenwashing’ funds make sustainability claims which are exaggerated or unverified.