China's top economic planner to support overseas green bonds to meet decarbonization goals

The National Development and Reform Commission, China's top economic planner, plans to support the issuance of green bonds by domestic companies to help meet the country's long-term carbon peaking and carbon neutrality goals, NDRC spokesman Yuan Da said at a press conference on July 19.

The move highlights China's strategy to tap into global capital markets to facilitate its green technology and infrastructure development, as well as support its transition to a low-carbon economy.

"The companies that issue bonds overseas should have good financial condition, international operating capabilities and comprehensive risk management systems," Yuan said.

In the first half of this year, China recorded 29 issuances of green bonds overseas with total value of $10.2 billion, compared with a total value of $8.5 billion under 19 bond issuances for all of 2020, Yuan added.

He said the overseas green bond market has heated up quickly, which helps to provide high-quality financing for China's green transformation in its socio-economic development, and that there was a diverse range of green bonds being sold in the international market with longer terms to maturity.

Besides conventional green bonds and climate bonds, carbon-neutrality bonds and sustainable development bonds have been issued in recent years, with specialized objectives attached to the raised capitals, Yuan said.

He added that over 30% of companies issued green bonds with a maturity of over five years in order to better optimize their financing structure and support low-carbon green development in the medium and long term.

However, in order to realize NDRC's strategy and raise more capital from the international market, Chinese companies need to meet global standards and ensure sufficient information disclosure, and there have been efforts to meet this objective.

"People's Bank of China (PBOC) plans to require mandatory disclosure of carbon emissions and other climate-related information, starting from China's major commercial banks, followed by China's publicly listed companies," Yi Gang, the governor of PBOC, the central bank of China, said at the Green Swan conference hosted by the Bank for International Settlements in June.

He added PBOC was collaborating with EU about the categorization of green loans and green bonds, as well as disclosing climate-related information under the framework of Task Force on Climate-related Financial Disclosures.

"The standards of China's domestic and EU green bonds have 80% similarity. We will collaborate to explore an internationally accepted set of standards," Yi said at the conference.