Caixin
Mar 01, 2021 08:08 PM
BUSINESS & TECH

China and U.S. to Lead G-20’s Sustainable Finance Study Group

Climate change is now seen as a rare opportunity for cooperation between China and the United States, especially on green finance issues related to climate change. Photo: VCG
Climate change is now seen as a rare opportunity for cooperation between China and the United States, especially on green finance issues related to climate change. Photo: VCG

China and the U.S. will co-chair the G-20 Sustainable Finance Study Group (SFSG), potentially heralding greater cooperation between the economic heavyweights in the development of green finance and climate change more broadly.

The People’s Bank of China (PBOC) and the U.S. Department of the Treasury will chair the group, which is being relaunched after a two-year suspension, sources with knowledge of the issue told Caixin.

The SFSG will study plans to cope with financial risks stemming from climate change, strengthen the disclosure of climate-related information, and support green transformation, according a Saturday statement (link in Chinese) from the PBOC.

The PBOC is delighted to continue co-chairing the SFSG and is ready to promote green transformation together with other parties, PBOC Governor Yi Gang said Friday at a video conference attended by G-20 finance ministers and central bankers.

Prior to the SFSG’s suspension, the PBOC co-chaired the group with the Bank of England.

The sources said that China’s representative on the SFSG is likely to still be Ma Jun, head of a central bank-backed think tank’s green finance committee. Ma is also a member of the PBOC’s monetary policy committee.

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The SFSG’s predecessor, the Green Finance Study Group, was launched in 2016, and renamed in 2018. The name change came as the group looked to shift its focus to “the broader concept of sustainable finance,” according to a 2018 G-20 report. Sustainable finance can be “understood as financing as well as related institutional and market arrangements that contribute to the achievement of strong, sustainable, balanced and inclusive growth,” the report said.

The decision to relaunch the group was made by attendees of the Friday G-20 conference.

Climate change has been viewed by many analysts as fertile ground for cooperation between China and the U.S., as U.S. President Joe Biden will likely be a lot more proactive in responding to global climate problems than his predecessor, Donald Trump.

On Thursday, Treasury Secretary Janet Yellen confirmed the U.S. will co-chair the SFSG and called for “frank, open, and sometimes difficult discussions about how to share the burdens and opportunities of transitioning our economies.” Earlier this year, the U.S. rejoined the Paris Agreement and named John Kerry, a former secretary of state, as the country’s first special presidential envoy for climate.

China’s foreign ministry said Friday that the country’s special envoy for climate change Xie Zhenhua has held discussions with Kerry.

China has vowed to develop green finance and make it easier for environmentally friendly projects to get financing, as it looks to find ways to meet its recent pledges to hit peak carbon emissions by 2030 and achieve carbon neutrality by 2060.

The development of a low-carbon economy presents financial institutions with both challenges and opportunities. While they could benefit from rising financing demand for hundreds of trillions of yuan in green investments, they’ll also face rising costs stemming from tighter environmental regulations, according to industry regulators and experts. High-carbon assets may risk becoming stranded or losing their value, they added.

Last month, the State Council, China’s cabinet, issued guidelines for building up a broad range of green industries in different parts of the economy, vowing to give green finance greater weight in how financial institutions are evaluated.

Wang Liwei contributed to this report.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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