China plans mandatory climate disclosures in green transformation drive
Yi Gang, Governor of the People’s Bank of China (PBOC), has promised ambitious new climate disclosure requirements and international collaboration as part of efforts to drive a ‘green transformation’ of Chinese banking.
Speaking on 4 June at the 2021 Green Swan Conference held by the Bank for International Settlements (BIS), he said: “PBOC plans to implement mandatory disclosures of climate-related information, spur China’s main domestic commercial banks in the disclosure of carbon information, and subsequently spur related disclosure activities by domestic listed companies.” He added that the PBOC has already conducted stress testing to understand climate vulnerabilities in the Chinese financial system, and that it plans to set a timeframe for the green transformation of commercial banks, with work already well underway by both PBOC and banks themselves.
Stressing the importance of international collaboration in this drive, Yi explained that PBOC is collaborating with the EU on green loans and bonds, and implementing the Task Force on Climate-related Financial Disclosures (TCFD) disclosure framework. “China’s domestic green bond standards are 80% consistent with those of the EU, and we will endeavour to explore international, commonly-accepted standards,” he said.
It is clear that rapid change is happening, with Yi’s remarks coming a few days before the announcement by PBOC of a new set of assessment measures for green financing. With work set to begin in July 2021, the ‘Banking Sector Financial Institution Green Finance Assessment Plan’ includes both qualitative and quantitative indices; the latter, with an 80% overall weighting, focus on the share of green activities within bank operations.