On July 13, China’s Guangdong provincial government released a new green finance development plan to support the implementation of carbon peak actions. The program requires that by 2025, 40 green franchise locations be established in the province and that the growth rate of green loan balances be no less than the growth rate of various loan balances. By 2030, the proportion of green credit in all loan balances will reach around 10% and the carbon finance market should operate efficiently.
This framework supports Guangzhou Futures Exchange to accelerate the listing of futures contracts that serve green development, such as electricity, silicon and lithium, and develop carbon financial derivatives to serve the construction of the national futures market. term on carbon.
The authorities are also encouraging financial institutions to engage in carbon market transactions based on meeting regulatory requirements, providing services such as fund deposit, clearing, settlement, carbon asset management and the opening of agency accounts for carbon transactions. Financial institutions are also encouraged to explore the cross-border carbon trade facilitation mechanism, launch foreign exchange pilot projects for carbon emissions trading, actively use the cross-border RMB payment system, and introduce investors from Hong Kong. Kong, Macao and overseas.
In terms of varieties of carbon financial instruments, the program proposes to explore financial products such as carbon asset mortgage financing, carbon asset custody, carbon buyback, carbon fund, carbon leasing and structured deposits of carbon emission rights income. It could therefore increase the liquidity of the carbon market. In addition, the program helps financial institutions develop new mortgage financing models based on environmental rights such as carbon rights, emission rights, energy use rights and rights. of green projects.
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In terms of corporate carbon emissions, the program proposes to build a green financial innovation and development platform based on the Shenzhen Stock Exchange, order listed companies to actively disclose their carbon emissions information and launch product innovations such as the Green Securities Index and Social and Corporate Governance (ESG) Rating Systems”.
In terms of regulation and supervision, the program proposes to strengthen the monitoring of the use and management of funds for green financial products. It guides financial institutions to strengthen the tracking management of green financial product funds and oversees the use of product funds in accordance with agreed objectives. If illegal misappropriation of funds is detected, the necessary internal risk control measures must be taken quickly.