Climate Bonds Connect 2024 Shanghai: China’s Road to Net Zero

Climate Bonds joined our sponsors in Shanghai to share insights on the growth of the Chinese sustainable finance market and to discuss how the world’s largest country can transition its economy into a net zero future. In only ten years, the Chinese green bond market has grown from virtually nonexistent to being the largest green bond market in the world. Climate Bonds CONNECT 2024 brought together issuers, investors, and regulators to discuss what’s been done and what work we still have to do.

“The Chinese sustainable finance market has grown tremendously over the past ten years,” said Climate Bonds CEO Sean Kidney as he kicked off the event. “We’re here to understand what we need to do next, how we’re going to grow this market, and how we’re going to make it contribute even more to addressing the challenges our planet is facing.”

China Sustainable Debt State of the Market 2023

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“The Chinese sustainable finance market has grown from literally nothing at the end of 2014 to being the largest issuer of green bonds globally. The next ten years are going to be incredible.” ? ? Sean Kidney, Climate Bonds CEO?

At the conference, Climate Bonds’ launched the 2023 China Sustainable Debt State of the Market Report , delving into China’s second consecutive year as a world leader in green bond issuance.??

A total of USD131bn (RMB940tn) labelled green bonds for both onshore and offshore deals originated from Chinese issuers in 2023. Although Chinese green bond volumes shrank by 3.5%, the quality and credibility have increased, with 63.6% deals included in the Climate Bonds Green Bond Database (GBDB), an increase from 57.3% in 2022. China is the biggest green bond market for second year, recording volumes aligned with Climate Bonds’ GBDB methodology of USD83.5bn from onshore and offshore issuance.?

The report is available now on the Climate Bonds website .??

Shanghai CONNECT — The Road to Net Zero?

“I am delighted to join today’s conference, where policy makers, regulators, financial institutions and third-party organisations?share their views on climate change and transition finance.? At Standard Chartered, our unique presence in the developing markets of Asia Pacific, the Middle East and Africa compels us to engage in the transition while supporting economic development in these regions.? This is no small challenge. And we look forward to collaborating with industry leaders, including Climate Bonds, to enhance the role of bonds and other financial instruments in China's green transition.” ? ? Jean Lu, Head of CCIB & Deputy CEO, Standard Chartered Bank China?

Climate Bonds CONNECT 2024 Shanghai focused on the topic of transition — how industries and economies can align themselves with net zero pathways and realize a green future. While the Chinese green bond market has surged over the past decade, understanding of transition finance is still developing in China and around the world.??

One opportunity for the Chinese economy to hasten its transition to net zero can be found in the country’s steel sector. China is the largest producer of steel worldwide, and 34% of steel in China is purchased by the government. That provides a remarkable opportunity for green public procurement and large scale investment in greener methods of steel production.??

Hear more about how the Chinese market is developing its transition programmes and aligning with a net zero future in the latest Climate Bonds Café , featuring Standard Chartered Bank’s Tracy Wong-Harris and Climate Bonds’ CEO Sean Kidney.??

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Landscape of Sustainable Finance Regulation in Asia?

In the day’s first session, Landscape of the Sustainable Finance Regulation in Asia: Regulation for Financial Stability and the Taxonomy Development in the Face of Climate Change. Sean Kidney, CEO guided the panel as they discussed insights into Asia's sustainable finance landscape.

Dr. Ma Jun, Director of Green Finance Committee of the China Society for Finance & Banking, Chairman and President of the Hong Kong Green Finance Association (HKGFA), and Co-Chairman of the IPSF Common Ground Taxonomy Working Group, emphasised the importance of green definition and preventing "greenwashing." More than 75 countries and regions around the world, including China, have participated in developing taxonomy, and Climate Bonds has also contributed to this process. In the next step, the focus will be on how to improve the interoperability of taxonomies among countries and regions. The development and application of the EU-China Common Taxonomy is an excellent example.?

Satoshi Ikeda, Chief Sustainable Finance Officer and Counsellor for International Affairs at the Financial Services Agency of Japan, shared Japan's experience in transition finance and setting a net-zero pathway for high-carbon emission sectors, and also mentioned the world's first sovereign climate transition bond issued in February.

Cho Hoi Hui, Head of Banking Policy at Hong Kong Monetary Authority (HKMA), provided valuable insights for the latest work on the Hong Kong Sustainable Finance Taxonomy.? Li Jin, Deputy General Manager of the Shanghai Environment and Energy Exchange, shared the latest progress on climate investment and financing and transition finance in Shanghai and Pudong New District of Shanghai.?

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The State of the Climate Finance Market in Asia?

The day’s second panel focused on the state of the existing climate finance market in Asia and the role of institutional investors in the green transition. Raymond Zhang, CEO of SynTao Green Finance, led an engaging discussion on the state of the climate finance market in Asia, emphasising the crucial role of institutional investors in China's green transition.

Yuki Yasui, Regional Director at Glasgow Financial Alliance for Net Zero (GFANZ), highlighted key trends in Asia's climate finance sector, while Sylvia Chen, Head of ESG at Amundi, shared insights on sustainable investments in South Asia.

Phoebe Zhao, Co-Secretary-General, China Climate Engagement Initiative, shared her perspectives, adding depth to the discourse on climate engagement in China. Additionally, Jason Tu, Founder and CEO of MioTech, delivered expert insights on market players role, "In addition to regulatory and investor factors, market factors are fast becoming important drivers of the climate transition, and over the past two years, companies that have been deeply involved in the climate transition are reaping the positive benefits of these initiatives, especially better earnings and stock price performance”?

Transition Finance and the Role of Transition Plans?

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The third session of the day focused on the crucial topic of transition. Wenhong Xie, Head of China Programme at Climate Bonds Initiative, guided us through a deep dive into transition finance and the critical role of transition plans in combating climate change.?

He joined Ting Li, Managing Director of RMI and Chief Representative of RMI Beijing Office, to discuss both the growing understanding of transition and the opportunity it presents.

“Globally, less than a quarter of the largest listed livestock companies by market capitalization have yet to make credible commitments related to transition plans, and the agriculture, forestry and other land use (AFOLU) sector has a funding gap for climate finance (less than 3%)," said Erika Susanto, Director of ESG Research & Data at FAIRR Initiative. To address this, there is an urgent need for strong transformation taxonomies and sector-specific guidance to channel financial flows towards systemic change solutions.

Xi Liang, Professor at University College London, provided insights on transition finance and decarbonisation, and Jonathan Luan Dong, Head of APAC Sustainability Research at BloombergNEF, discussed the role of transition plans in advancing sustainable finance.

Yingjie Zhang, Vice President of CCX Green Finance International Limited, provided perspectives on sustainable financing, “The transformation of finance is achieved through capital markets and financial instruments, a process that requires the consensus of society and the mobilization of resources. In recent years, the innovation of financial instruments and the introduction of supporting policies have experienced a stage of rapid development", he said, "The current market in terms of infrastructure, incentives and international exchanges, the long-term development of the market is still stable, optimistic and full of prospects.”?

Urgency and Opportunity: Building Resilience?

The fourth session of the conference discussed the crucial topic of resilience. With the effects of climate change becoming more evident each year, the world must ensure that our economies, infrastructure, and societies are equipped to deal with the changes to come.??

Julija Polycarp, Climate Change Specialist at Asian Infrastructure Investment Bank (AIIB), led the discussion on the urgency and opportunity of building climate resilience.?

Bruce Chong, Fellow and Director of Arup, leading City Advisory, Climate and Urban Sustainability services in East Asia, Arup, shared insights on sustainability and climate resilience, and Huixin Liu, Executive Director of Climate Finance Center at International Institute of Green Finance (IIGF), offered insights on fostering climate resilience for an environmentally sustainable future..

Annemarie Büttner, Lead Climate Risk Solutions at Swiss Re, spoke on the urgency and opportunity of building climate resilience, and Helen He, Country Anchor for IFC - International Finance Corporation Advisory, discussed driving social and economic transformation through climate resilience. ???

The Outlook of Sustainable Finance?

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The day’s final session looked to the road ahead. Sean Kidney, explored the outlook of sustainable finance, shedding light on China's remarkable progress and examining the work still to be done, together with Jennifer Zhou, Head of Sustainable Finance China at Standard Chartered Bank, Leslie Maasdorp, Vice President and CFO of New Development Bank (NDB),? and Stefen Hyun Sang Shin, Investment Operations (Region 2) Banking Department at Asian Infrastructure Investment Bank (AIIB).

In the past few years, China's green finance policies have promoted the rapid development of the green bond market and the sustainable finance market, and China has become the world's leading market for green bond issuance. Globally, the development and implementation of standards and definitions, with the active participation of regulators, multilateral banks, commercial banks, investors, etc., have effectively promoted the rapid development of sustainable financial markets. Looking ahead, we need to more vigorously promote the global climate agenda and climate investment and financing, help major economies and industries, including high-carbon emission industries and energy transition, and consider factors such as a just transition, so as to support countries to better cope with the challenge of climate change and seize the huge investment potential.?

Climate Bonds CONNECT 2024 Continues in S?o Paulo!??

Climate Bonds Connect 2024 continues next month in S?o Paulo, where on 5 June Climate Bonds will join our sponsors to discuss Latin America’s transition to net zero. Learn more about Climate Bonds Connect 2024 at?climatebonds.net/conference ?