This update of the China ESG Newsletter from Q4 of 2021 covers a series of measures that aim to accelerate the development of a green economy have been taken in mainland China, Hongkong, Macao, and Taiwan. These measures range from policy implementation to financial initiatives.
Policy Implementation
Last November, Hong Kong Exchanges and Clearing Limited (HKEX) announced that it joined the Glasgow Financial Alliance for Net Zero and the Net Zero Financial Service Providers Alliance as a part of its commitment to long-term sustainable development. After joining the global coalition as a regulator, HKEX published Net-Zero Guide on December 1, 2021. The Guide helps companies and investors understand a management strategy for greenhouse gas emissions, facilitating the net-zero transition.
In mainland China, a new rule on mandatory environmental disclosure (weblink in Chinese) was issued recently. The new rule aims to improve the legal disclosure system for corporate environmental information. Meanwhile, Taiwan issued Climate Risk Disclosure Guidelines for financial institutions, which is expected to be implemented in 2023, covering governance, strategy, risk management, and metrics
Financial Initiatives
Last December, China Construction Bank’s Macau branch issued the first model green bond based on the China-EU Common Taxonomy. The bonds will be listed in Hong Kong and Macau, and the special funds raised will also provide financial support for the green development of the Greater Bay Area. In the same month, ICBC brought the multi-currency carbon neutrality-themed green bond to the Luxembourg Stock Exchange. This bond is also displayed on the Luxembourg Green Exchange, the world’s leading platform for sustainable finance.
The latest report from ASEAN +3 Macroeconomic Research Office, “Policy Challenges for China’s Carbon Neutrality” suggests that it is critical for China to take further steps to achieve its national Dual Goals. One of the tools to be considered under current circumstances is the Carbon Tax for companies in Transport, Agriculture and Construction sectors. The analysts said that the Chinese economy would likely face a number of financial and economic challenges creating the need for careful analysis and a detailed roadmap.
News Overview
Carbon-Related
China Industrial Carbon Emission Information System Officially Launched
The China Industrial Carbon Emissions Information System was officially launched on December 23. This system collects carbon emission information from all levels of the supply chain to form a carbon emission data system for the entire life cycle of the enterprise, supporting the development of product carbon footprint accounting.
https://news.cnstock.com/industry,rdjj-202112-4802064.htm
China Sets Carbon Reduction Goals for Central SOEs
China outlined detailed carbon reduction goals for the 97 state-owned enterprises (SOEs) under the central government’s direct oversight. According to the guidelines issued Thursday, comprehensive energy consumption for every 10,000 yuan ($1,500) produced by a central SOE should fall by 15% by 2025 and carbon emissions by should fall by 18%. The share of renewable energy should rise to at least 50% by then.
China to Let Local Governments Find Own Ways to Meet National Carbon Goals
China will start selecting local governments to pilot programs to facilitate investment and financing for climate-related areas, encouraging them to find their own ways to fight climate change and bankroll the nation’s decarbonization drive.
https://www.caixinglobal.com/2021-12-27/china-to-let-local-governments-find-own-ways-to-meet-national-carbon-goals-101822800.html
China to Include More Industries in Emissions Trading Scheme
China plans to include financial institutions, non-ferrous metals, and building materials in its national emissions trading scheme (ETS), as reported by Reuters on December 29. Specifically, the non-ferrous metal and building materials sectors are expected to join the ETS market as early as this year.
The Implementation Plan for Carbon Peak in the Iron and Steel Industry Takes Shape
The implementation plan for carbon peak in China’s steel industry and the roadmap for carbon neutrality technologies have basically taken shape. Overall, the plan highlights source reduction, strict process control, and the strengthening of end-of-line governance. It directly points to the synergy of pollution reduction and carbon reduction, promoting a comprehensive green transformation of the economy and society.
http://www.news.cn/fortune/2021-12/02/c_1128122809.htm
The First Implementation Period of the National Carbon Trading Market Has Ended, with a Cumulative Turnover of 7.661 Billion Yuan
The 2021 annual transaction of the national carbon emission trading market officially ended on December 31. In 2021, the national carbon emissions trading market ran for 114 trading days, with a cumulative trading volume of carbon emission allowances (CEA) of 179 million tons and a cumulative trading volume of 7.661 billion yuan.
http://finance.china.com.cn/esg/20220101/5720291.shtml
China’s First Carbon Dioxide Power Cycle Generator Goes Online
China’s first self-developed supercritical carbon dioxide power cycle generation unit is now up and running. The five-megawatt unit, built by the state-owned power company China Huaneng Group Co. Ltd., uses extremely hot, highly pressurized carbon dioxide instead of conventional water vapor to spin the turbines that generate electricity. Generators using this technology are said to produce electricity more efficiently and with 10% less carbon emissions than conventional power plants.
Policy-Related
HKEX Publishes Net-Zero Guide & Announces New ESG Data Display
HKEX’s Net-Zero Guide introduces the essential steps for businesses to develop a pathway to net zero, aiming to help companies to understand their greenhouse gas (GHG) emissions in terms of where they are now, where they want to be, and how they can get there. HKEX will be introducing a new equities section on STAGE, following the introduction of Bonds and Exchange Traded Products. This will display the ESG metrics of Hong Kong-listed companies published by leading ESG data providers.
https://www.hkex.com.hk/News/News-Release/2021/211202news?sc_lang=en
Taiwan Issues Climate Risk Disclosure Guidelines for Banks, Insurers
The first disclosures are expected to be published by the end of June 2023, covering governance, strategy, risk management, and metrics and targets.
China Issues New Rule on Mandatory Environmental Disclosure
China’s Ministry of Ecology and Environment (MEE) has issued new rules on the disclosure of environmental information by domestic enterprises. These regulations seek to improve the legal disclosure system of corporate environmental information, as well as to promote the modernization of the ecological and environmental governance systems and capabilities of local enterprises.
https://www.esginvestor.net/china-issues-new-rule-on-mandatory-environmental-disclosure/
China Issues Five-year Plan to Boost Green Development of Industrial Sectors
By 2025, significant progress will have been made in the green and low-carbon transformation of China’s industrial structure and production, with technologies and equipment for green development widely applied. This is according to the plan issued by the Ministry of Industry and Information Technology (MIIT). The plan says that efficiency in energy and resource utilization will be greatly enhanced and green development in the manufacturing sector will improve further by 2025, laying a solid foundation for the peaking of carbon emissions in industrial sectors by 2030.
http://english.www.gov.cn/statecouncil/ministries/202112/03/content_WS61aa186fc6d0df57f98e5ff5.html
State-owned Assets Supervision and Administration Commission Clarifies the Main Goals of Central Enterprises’ “Dual Carbon” Practice
On , the state-owned Assets Supervision and Administration Commission of the State Council issued “Guiding Opinions on Promoting the High-Quality Development of Central Enterprises in Carbon Peak and Carbon Neutrality,” which clarified the overall requirements and main goals of central enterprises to achieve carbon peak and carbon neutrality.
http://www.cfej.net/news/jjzwrtq/202112/t20211231_965773.shtml
The 14th Five-Year Plan for the Development of Shanghai’s Energy Conservation and Environmental Protection Industry
The energy conservation and environmental protection industry is an important part of strategic emerging industries, a significant means to promote high-quality green development in advanced manufacturing, and an essential starting point for achieving carbon peak and carbon neutrality.
14th Five-Year Soil, Groundwater, and Rural Ecological Environmental Protection Plan
Soil, groundwater, and agricultural and rural ecological environmental protection are related to the safety of rice, vegetables, water, and the construction of a beautiful China. This plan is intended to effectively prevent pollution and control and strengthen the environmental protection of soil, groundwater, and agricultural and rural ecology.
http://www.gov.cn/zhengce/zhengceku/2022-01/04/5666421/files/3bf48f0ca40e4bca9e9bf14853edefe3.pdf
Green Finance-Related
ICBC Brings Multi-Currency Carbon Neutrality Themed Green Bond to LGX
In a hybrid Ring the Bell ceremony attended by Pierre Gramegna, Luxembourg’s Minister of Finance, the Luxembourg Stock Exchange (LuxSE) and the Industrial and Commercial Bank of China (ICBC) celebrated the listing of the bank’s recent multi-currency carbon neutrality themed green bond on LuxSE. The bond is also displayed on the world’s leading platform for sustainable finance, the Luxembourg Green Exchange (LGX).
https://www.bourse.lu/pr-ICBC-multi-currency-carbon-neutrality-themed-green-bond-on-LuxSE
Australia and China Lead Region’s ESG ETFs Boom
Beijing’s ambitious pledge to transform China into a carbon-neutral nation by 2060 was a catalyst for many ESG ETF launches. Australia retained its lead in passive investments for sustainable funds in the Asia-Pacific region, but China is catching up quickly with remarkable assets growth over the past few years, according to a recent report by consulting firm Cerulli Associates.
Green Panda Bond Could Spur Chinese Investment Towards Africa’s Energy Transition
The 8th Forum on China-Africa Cooperation called for a panda bond, but it’s unclear if gas projects would be eligible for the green version. China’s commitment to supporting Africa’s green and low-carbon energy transition was a highlight of the 8th Forum on China-Africa Cooperation (FOCAC), which concluded on November 30 with a joint declaration on the climate.
China ESG Assets Tripled in Q3, Lifting APAC Total to $93bn
Chinese environmental, social, and governance (ESG) fund assets more than tripled to $49bn year-on-year in the third quarter, taking the Asia-Pacific region’s total ESG AUM to $93bn. China accounted for more than two-thirds of the region’s flows in the third quarter, according to the latest data from Morgan Stanley.
China Construction Bank Issues the World’s First Model Green Bond Based on China-EU Common Taxonomy
On December 13, China Construction Bank successfully issued its second overseas green bond this year, raising funds of $500 million with a three-year term. This issuance is China Construction Bank’s first USD floating rate bond priced at a new benchmark interest rate and the world’s first green bond issuance based on the China-EU Common Taxonomy. The funds raised are used to support high-quality projects in the areas of clean transportation and clean energy in the Greater Bay Area and provide high-quality financial support for the construction of a green Greater Bay Area.
http://greenfinance.org.cn/displaynews.php?id=3581
China Development Bank Receives First Funds Through Carbon Reduction Tool
China Development Bank has received 10.267 billion yuan ($1.62 billion) of funds from the People’s Bank of China, the country’s central bank, through a supporting tool for carbon reduction. The tool was rolled out in November by the central bank to provide low-cost loans for financial institutions and guide them to give loans to firms in key carbon-reduction fields.
http://www.chinadaily.com.cn/a/202201/14/WS61e0d6aca310cdd39bc8100c.html
Other
The Science and Technology Innovation Board Has Supported the Listing of 221 Green Companies
The Science and Technology Innovation Board plays a significant role in supporting the listing and financing of green companies. As of December 26, 2021, 221 green companies have been listed by the Science and Technology Innovation Board, and many sub-sectors such as advanced environmental protection and electronic core have been listed as key support. 14 listed companies from the green financial reform and innovation pilot zones in Guangzhou and Huzhou have raised a total of 16.101 billion yuan in initial offerings.
http://finance.china.com.cn/kc/20211227/5716425.shtml
Beijing Winter Olympics will Fully Achieve Carbon Neutrality
Li Sen, director of the general planning department of the Beijing Winter Olympics Organizing Committee, said that the Beijing Winter Olympics would fully achieve carbon neutrality. One way they are going to achieve this is making full use of the Olympic and Paralympic venues to reduce carbon emissions at the source.
https://news.gmw.cn/2022-01/14/content_35446957.htm
Beijing 2022 Releases Pre-Games Sustainability Report
A Pre-Games Sustainability Report was released by the Beijing Organizing Committee for the 2022 Olympic and Paralympic Winter Games (BOCOG). The report elaborates on the green and sustainable development principles followed preparation for the Games.
http://www.china.org.cn/sports/2022-01/14/content_77988707.htm
“Waste-Free City” Construction will be Launched in 100 Cities Across the Country
Recently, 18 departments, including the Ministry of Ecology and Environment and the National Development and Reform Commission, jointly issued the Work Plan for the Construction of Waste-Free Cities” during the 14th Five-Year Plan Period. The plan aims to raise awareness of environmental protection and conservation, advocate for a simple, moderate, green, and low-carbon lifestyle, vigorously develop energy-saving and low-carbon buildings, comprehensively promote green and low-carbon building materials, and encourage the recycling of building materials.
https://www.eco.gov.cn/news_info/51808.html
Seven Departments Issued Implementation Plans to Promote the Green Transformation of Consumption
The “Implementation Plan” pointed out that promoting green consumption is a profound change in the field of consumption. It is necessary to deeply integrate the green concept into the entire cycle, value chain, and system of consumption. The plan points out the need to comprehensively promote the transformation and upgrading of green and low-carbon consumption. It is of great significance to build a new development pattern, promote high-quality development, and achieve the goal of carbon peak and carbon neutrality.
