More than 759 ‘climate aligned bonds’, known as China’s Green Bonds, are rapidly becoming the investment flavour of the month as new regulations and guidance are due to be issued in the coming months to bring clarity to the sector’s regulatory infrastructure, according to the China Green Bond Index, which was launched by the China Central Depository & Clearing Co in April 2016.
Green bonds are financial instruments issued specifically to raise capital for projects with environmental benefits and are aimed at investors with direct interest in environmentally focussed projects.
Investments in China’s environmental sector are growing, as the effect of urban smog, river pollution and lax (or absent) waste management plays out in the public domain and in the media, causing increased public outrage.
As a result both enterprises and government bodies have been focusing on green initiatives - the acceleration of implementation of China’s Circular Economy Law through Green Development was one of the five development concepts identified in the 13th five-year-plan passed by the two sessions in March 2016.
Chinese economic development has been dominated by manufacturing and construction; as far back as 2006, then-Premier Wen JiaBao, in his speech announcing the five-year-plan said, ““We will promote development by relying on resource conservation and environmental protection and focus on the fundamental change of the economic growth model, transforming economic growth FROM being driven by large resource consumption TO being driven by the improvement of resource utilization and efficiency.”
For more insight into the emergence of the Green Bond market, subscribe to Packaging Business Insight Asia – “The Financial Times of the Asian Packaging Value Chain”