China and EU to Harmonise Green Taxonomies

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    Stockholm (NordSIP) – At the Roundtable of the China Development Forum held on March 23rd, the People’s Bank of China (PBoC) Governor, Yi Gang (Pictured), revealed that China was cooperating with the European Union (EU) in the development of a harmonised taxonomy of green economic activities.

    The announcement is motivated by the growth of the green bond market and is part of a range of five actions that the PBoC identified to promote green finance during the next five years and is motivated by China’s goal of peaking carbon emission by 2030 and achieving carbon neutrality by 2060, known as the 30/60 goal.

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    The first of these activities will be to “improve the taxonomy of green finance,” Yi Gang said. “The PBC issued taxonomies of green bonds and green credit in 2015 and 2018 respectively. We are about to finish revising the Green Bond Endorsed Project Catalogue by removing fossil fuel projects. We are now working with our European counterparts to harmonize taxonomies and plan to announce a common taxonomy this year. This issue will also be discussed at the G20.”

    The other initiatives focused on strengthening information disclosure, incorporating climate change into the policy framework and encouraging financial institutions to proactively deal with the climate change risk. Last but not least, the PBoC will also seek to deepen international cooperation within the G20, the Network for Greening the Financial System (NGFS), the International Platform on Sustainable Finance (IPSF) and other multilateral frameworks.

    “By end-2020, outstanding green loans in China were about 12 trillion RMB, or 2 trillion USD, ranking the first in the world. Outstanding green bonds in China registered about 800 billion RMB, or about 120 billion USD, ranking the second largest in the world. Such rapid progress in green finance is giving strong support to China’s green transition,” the PBoC Governor explained.

    Image © World Economic Forum/ Photo by Remy Steinegger via Wikimedia Commons

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.
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