Caixin
Nov 19, 2022 10:30 AM
WEEKEND LONG READ

Weekend Long Read: How China’s ESG Policy Is Progressing

The Chinese ESG market still enjoys considerable room for growth, and top-down policies remain the most important force driving development of the sector. Photo: VCG
The Chinese ESG market still enjoys considerable room for growth, and top-down policies remain the most important force driving development of the sector. Photo: VCG

China’s environmental, social and governance (ESG) market growth goes hand-in-hand with the development of the country’s green finance market. Hence, ESG policy cannot be discussed without considering the evolution of the country’s green finance policies.

After years of research, the People’s Bank of China (PBOC) developed the policy ideas of “three functions” and “five pillars” for green finance. The “three functions” refer to green finance’s function in resource allocation, risk management and market pricing. And the “five pillars” refer to the standards system, regulation and information disclosure, incentive constraint mechanisms, product and market system and international cooperation for the green finance business. By following the framework set forth by the “five pillars,” this article aims to review the progress of policy development of ESG investing and green finance throughout this year and provide a glimpse into the future. The policies discussed cover the Chinese mainland, while some may also include the Hong Kong market.

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