This is the second in a series of posts Cognito is preparing ahead of Sibos in Beijing. The world’s premier banking conference is coming to Mainland China for the first time, so we’re using this as a chance to explore what China can teach the rest of the world about relevant technology.
On 21 October, on the first day of Sibo’s Annual Conference, experts from EY will curate a panel on “The Future of ESG and how green investment can increase profitability.” The discussion will be just one of many – both on the stage and off the stage – at Sibos to touch on the space of sustainable investment and green finance.
The scope and scale of China’s green investments have shocked the world. China has created the world’s largest fleet of electric vehicles, with more than eight million electric vehicles bought just last year.
As the Chinese government promotes home-grown manufacturers under the “Made in China 2025” industrial plan, brands including Li Auto, Nio, and Xpeng are securing larger market shares. On the streets of Guangzhou, Shenzhen or many other big cities in China, almost all taxis and buses are now EVs. According to the International Energy Agency’s 2024 Global EV Outlook report, in 2024, the market share of electric cars could reach up to 45% in China, higher than that in Europe (25%) and the United States (over 11%).
Beijing is an ideal location to speak on these issues as it is a physical representation of China’s evolving approach to the climate. The Beijing autumn air Sibos visitors will inhale should be crisp and clear. Two decades ago, the capital was frequently covered in tight haze and fog. A concerted effort to close dirty factories and bring in stricter air pollution monitoring has made a large difference.
In recent years, China has focused on promoting development and repeating these successes abroad. This is a key driver behind the Belt & Road Initiative, the world’s most extensive infrastructure programme. Despite changes, the plan still sits at the core of how China handles international climate infrastructure investment.
The government is committed to strengthening cooperation in green energy, green transportation, green infrastructure and other industries, and assisting capacity building in developing countries through the special fund for South-South cooperation on climate change.
Over the past decade, China has provided vast sums of money for which one recent article described as being focused on “large-scale energy projects in particular on non-concessional terms.” This has included some of the world’s largest hydroelectric projects, from the Zungeru Hydroelectric Power Plant in Nigeria to the Chepete-El Bala Complex in Bolivia.
But China’s been a step removed from many international groupings on overall climate finance, as the country has generally liked to operate on individually negotiated bilateral agreements.
A major example was the ‘loss and damage fund’ that was established at COP28. China refused to make a contribution, instead providing alternative climate funding through its South-South Climate Cooperation Fund and the Belt and Road Initiative.
Another example is the launch of CNI ESG Ratings Methodology with a set of ESG indices based on the methodology by the Shenzhen Stock Exchange in 2022, which include a set of ESG rating tools for the Chinese market. The methodology includes several criteria around national goals such as “common prosperity” or “carbon neutrality”.
Green bonds are another pressing issue. A recent meeting in Shanghai on the topic showed that while green bond issuance actually slightly fell last year, it is making progress in other indicators. According to a China Bonds Initiative report, In 2023, Chinese issuers raised $131 billion in green bonds for onshore and offshore transactions. Despite a 3.5% decline in Chinese green bond sales, the quality and credibility of these bonds have improved significantly. 63.6% of the deals are listed in the Climate Bonds Green Bond Database (GBDB), up from 57.3% in 2022. For the second year in a row, China maintains the largest green bond market, with green bond volumes totaling USD 83.5 billion, aligned with the Climate Bonds’ GBDB methodology, across onshore and offshore issuances.
Zhou Xiaochuan, the former governor of the People’s Bank of China (PBoC), emphasized that “China’s policy-making will ensure private capital’s participation by setting up stronger regulatory frameworks and updating the Green Bond Endorsed Project Catalogue.”
Sibos is happening right before a potentially critical year for climate finance, as countries get set to revised targets for 2030 and 2040. China may, for the first time, be included in these targets, as when they were first created, China was considered a ‘developing economy’ and is now exempt. Many of these discussions will happen at and around COP29, which will be held later in the autumn in Baku, Azerbaijan.
Janet Lin is based in Cognito’s Hong Kong office. Jon Schubin is in London.
