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1、 About CEIBS Lujiazui International Institute of Finance The CEIBS Lujiazui International Institute of Finance(CLIIF)was initiated by the China Europe International Business School(CEIBS)and the Shanghai Lujiazui(Group)Co.,Ltd.in October 2007.The purpose of CLIIF is to carry out social influence res

2、earch and facilitate the construction of Shanghai International Financial Center,for Chinas macro-economic control and financial stability.Based in Shanghai,CLIIF shall serve as an open and international platform for academic exchange while focusing on studying the opportunities and path to the fina

3、ncial opening-up and development of the service industry under the new development pattern.CLIIF is committed to providing first-class research,consulting and training services to financial institutions,financial regulation agencies,financial investors,and consumers,as it fulfils its role as an infl

4、uential think tank for the development of Shanghai as an international financial center and promotes a going-out strategy for Chinas financial institutions and enterprises.Each year,CLIIF undertakes more than 10 key financial research projects commissioned by the Shanghai Local Financial Regulatory

5、Bureau,submits more than 60 special reports for decision-making consulting research,and organizes more than 20 sessions of forums and salons.CLIIF also publishes academic research works and delivers more than 100 articles in various newspapers and media.Notably,CLIIF has innovatively developed the G

6、lobal Asset Management Center Evaluation Index,and has continuously released four index reports since 2021,which has attracted increasing attention and recognition across various sectors.CLIIF WeChat Public Account QR Code About FMBA The CEIBS Finance MBA(FMBA)programme is the first professional par

7、t-time MBA program in CEIBS,which combines financial depth and management breadth to educate future leaders with a broad international perspective,excellent strategic decision-making and leadership,and integration of finance and management.The CEIBS FMBA employs a Finance X Management curriculum sys

8、tem,organically integrating various elements of finance and management.This approach analyzes the interrelationships and interactions between these elements from a holistic perspective,fostering a comprehensive mindset that helps students develop systematic thinking and decision-making capabilities

9、in capital operations.Additionally,multiple overseas modules expand students global perspectives and stimulate innovative thinking,enabling them to adapt to the rapidly changing business environment.Beyond the classroom,the practice-driven F4 series of activities provide students with diverse perspe

10、ctives,deep insights into the forefront of business,and a comprehensive enhancement of practical skills and business acumen.Since its inception in 2011,the CEIBS FMBA has cultivated over a thousand senior management talents who are active in various industries,becoming the backbone of promoting the

11、synergy between industry and finance.FMBA WeChat Public Account QR Code i Since the Industrial Revolution of the 19th century,technological advancements have fueled unprecedented prosperity for human society.However,the reliance on fossil fuel consumption has led to significant industrial pollution,

12、environmental degradation,and an escalating climate crisis.In response,the concept of sustainable development began to take shape in the 1970s and has since become a globally recognized and pursued model for economic growth.The rising demand for financial services aligned with sustainable developmen

13、t objectives has catalyzed the growth of sustainable finance.In essence,Sustainable Finance integrates the objectives of environmental protection,social responsibility,and governance(ESG)into traditional financial activities and investment decisions.Among the various sustainable development objectiv

14、es,addressing climate change caused by greenhouse gas emissions is one of the most urgent challenges.In September 2020,Chinas President Xi Jinping announced at the United Nations General Assembly that China aims to peak its carbon emissions by 2030 and achieve carbon neutrality by 2060,establishing

15、the countrys overarching climate action goals.On August 11,2024,the Central Committee of the Communist Party of China and the State Council issued the Opinions on Accelerating the Comprehensive Green Transition of Economic and Social Development,marking the first national-level strategy for accelera

16、ting a comprehensive green transition.The goal is to establish a green,low-carbon,and circular economic system by 2035.Throughout this process,enterprises will undoubtedly play a pivotal role as both key practitioners and core drivers in the comprehensive,collaborative,innovative,and secure transfor

17、mation of Chinas economy and society.While businesses are motivated to align with sustainable development trends,significant financial support is required for their transformation efforts.Furthermore,the transition involves rising costs,policy uncertainties,and technological risks.As a result,althou

18、gh half of global publicly listed companies have committed to net-zero ii emissions,there remains a substantial gap between aspirational visions and actual actions.Sustainable finance should help bridge this gap by establishing financial market mechanisms that align with climate action goals,it mean

19、s to lower the cost of low-carbon investments,mitigating risks associated with these assets,and increasing the cost of holding carbon-intensive assets.This would direct more smart capital toward low-carbon transition projects.This report,jointly produced by the China Europe International Business Sc

20、hool(CEIBS)Lujiazui International Institute of Finance(CLIIF)and the CEIBS Finance MBA(FMBA)Programme,aims to track and analyze the progress of sustainable finance and corporate decarbonization,with a particular focus on the development of green initiatives in Chinese enterprises.The goal is to trac

21、k and provide first-hand,reliable,and relevant data reviews and analyses to international and domestic,public and private,corporate and investment institutes,to serve Chinas dual carbon goals and broader sustainable development strategies.The report was led by Professor Xinge ZHAO,Executive Deputy D

22、irector of CLIIF,and Professor Fang YU,Director of the CEIBS FMBA Program,with coordination from Liu Gongrun,Deputy Director of CLIIF,and Ma Ning,Administrative Director of the CEIBS FMBA Program.The 2024 report consists of three main chapters:the first two chapters were written by CLIIF researchers

23、 Xi CHEN and Ju QIU,while the third chapter,CEIBS Alumni Insights,features research projects by CEIBS FMBA 2022 alumni,Jingchang ZOU,Zhuojun KONG,Jin LI,Shoupeng XU,and Jiancheng ZHANG.MSCI,The MSCI Net-Zero Tracker,May 2023.iii Over the past eight years,the global sustainable bond and loan markets

24、have exhibited a three-phase development pattern.In the first phase(20162019),the sustainable bond and loan markets maintained relatively low annual issuance volumes and numbers,with the market size remaining stable.The second phase(20202021)witnessed significant expansion in these markets,especiall

25、y driven by the pandemic,with global issuance volumes reaching historic highs in 2021,particularly for green bonds and social bonds.In the third phase(2022 to the present),the global sustainable bond and loan markets experienced a notable decline due to factors such as global economic downturns and

26、worsening geopolitical conditions.However,by 2023,the markets began to recover and showed strong signs of a rebound by early 2024.The global sustainable bond market is becoming increasingly diverse,exhibiting distinct development trends.Firstly,green bonds have consistently been the primary driving

27、force in the market,with their issuance volume and quantity far surpassing the other three types of bonds,despite some fluctuations.Secondly,as global efforts to address social and economic challenges have intensified,the significance of social bonds and sustainability bonds has rapidly grown.Notabl

28、y,during the pandemic in 2020,social bond issuance saw a breakthrough,reaching ten times the volume of the previous year.Regionally,Europe has long been the dominant player in the global sustainable bond market,consistently accounting for around 50%of global issuance.From 2022 to 2023,the Asia-Pacif

29、ic region surpassed the Americas in sustainable bond issuance,becoming the second-largest issuing region globally.This rise is mainly attributed to the rapid growth of Chinas green finance market.iv In contrast to its dominant position in the sustainable bond market,Europes sustainable loan issuance

30、 has been more volatile over the past four years,with the Americas emerging as a strong competitor.In the first half of 2024,Europes sustainable loan market expanded to$160.2 billion,accounting for 42.4%of the global total,slightly ahead of the Americas 37.4%share.The construction of the EU sustaina

31、ble finance framework primarily revolves around three core pillars:the EU Taxonomy,the disclosure system for financial institutions and companies,and sustainable investment tools aimed at promoting sustainable development.So far,significant progress has been made in the legislation and implementatio

32、n of these three pillars,providing a relatively comprehensive regulatory environment for sustainable investment within the EU.Chinas sustainable finance market has formed a diversified development pattern led by green finance,with emerging sectors such as transition finance and social responsibility

33、 finance as complementary.Between 2018 and 2023,Chinas green loans achieved an average annual growth rate of 26.62%.In 2022 and 2023,the issuance of green bonds in both domestic and overseas markets reached record highs of 980 billion and 1.08 trillion,respectively,with year-on-year growth rates of

34、60.66%and 10.20%.In the field of emerging finance,China issued 53 Sustainability-Linked Bonds(SLBs)in 2023,with a total volume of 40.6 billion,maintaining its global leadership.However,compared to developed countries and regions in the sustainable finance market,China is still in a catch-up phase.Ar

35、eas such as the development of information disclosure systems,expansion of sustainable finance standards,and alignment with international practices remain underdeveloped.For instance,disclosure requirements are still primarily encouraged rather than mandatory,the scope of mandatory disclosure indica

36、tors for companies remains limited,and the proportion of listed companies disclosing sustainability information is still relatively low.To achieve the 1.5 C target set for the end of this century while minimizing the economic and social costs of a low-carbon transition,it is essential to scale up cl

37、imate v investment as soon as possible.Recent global investment flows suggest that potential funds to combat climate change could be sufficient,however,the key issue lies in the lack of incentives.Consider green premium or carbon premium as metrics for assessing the capital markets support for low-c

38、arbon economic activities,as well as its penalization of high-carbon projects,so far,there is no solid evidence that suggest the common existence of such premiums.A comparison of the returns on different types of financial assets reveals that green financial assets exhibit greater volatility compare

39、d to traditional financial assets.Although green assets may generate higher returns during market upswings,they also experience sharper declines during market downturns.This high-risk characteristic indirectly indicates that the capital market has not yet established a reward to green and low-carbon

40、 investments,implying a lack of incentives strong enough to drive large-scale capital flows into low-carbon sectors.In terms of financial institutions carbon reduction progress,among the worlds 54 largest lending banks,48 have set net-zero emissions targets,with 23 of them committing to halting fina

41、ncial support for coal-related assets.Compared to 2017,37 banks with continuous data disclosure reduced their total loan exposure to five carbon-intensive industriesoil and gas,coal,power,steel,and cementby 24%,with loan-associated carbon emissions dropping by more than 40%.Regional trends indicate

42、that European banks have seen the largest reductions in both loan volume to these carbon-intensive sectors and associated carbon emissions,followed by North American banks.In contrast,banks in the Asia-Pacific region have significantly increased both their lending to these industries and the associa

43、ted carbon emissions.Preliminary analysis suggests that the notable decline in banks loan-related carbon exposure may be attributed to several factors:the reduction in the industries carbon emissions,a cleaner carbon mix,and changes in bank lending strategies towards high-carbon sectors.On the corpo

44、rate side,data of 432 companies in carbon-intensive industries globally shows that 68%of these companies have set net-zero emissions targets.Regionally,over 80%of companies in both Europe and South Latin America have committed to net-zero goals,the highest among regions in comparison.The vast majori

45、ty(75%)of companies net-zero targets cover Scope 1 and vi 2 emissions,while only 17%aim for full net-zero across Scope 1,2,and 3 emissions.In terms of emission reduction pathways,60%of companies plan to achieve carbon neutrality through market-based mechanisms such as purchasing carbon credits or in

46、vesting in carbon offsets.The remaining 40%of companies aim to reach net-zero entirely through location-based decarbonization.Analyses on a larger group of listed companies from 62 countries and across 32 industries indicate that,in the decade since 2014,companies have halved their average carbon em

47、issions and reduced their emissions intensity by almost a third,with average energy consumption falling by 45%and energy intensity decreasing by 40%.Sub-industry analysis reveals that most sectors have shown varying degrees of decline across these four indicators,with only a few exceptions.However,r

48、egional differences are substantial.North American companies had the highest average carbon emissions across all regions,and between 2014 and 2019,they experienced the most significant reduction.However,since 2020,emissions reduction has plateaued.European companies had the second-highest average em

49、issions before 2019,but their emissions have steadily declined,with the median emissions of European companies becoming the lowest among all regions by 2021.Over the past ten years,European companies emissions have fallen by 68%.In addition,their carbon intensity and energy intensity have shown stea

50、dy annual declines,contrasting with the fluctuations observed in other regions.This reflects the effectiveness of climate legislation and the green transition efforts in European countries.Asia-Pacific companies have seen a steady decline in average carbon emissions since 2019,signaling a gradual sh

51、ift towards lower emissions in the region.In general,fluctuations have been observed for changes in both carbon emissions and energy consumption.Before the pandemic,an increasing proportion of companies were reducing their emissions and energy consumption.However,during the post-pandemic recovery ph

52、ase,this trend was reversed until 2022,in which relevant indicators approached those seen before the pandemic.For example,in 2015,about half of the companies experienced a year-on-year decline in carbon emissions.By 2020,this proportion increased to 70%.However,in 2021,the percentage of companies re

53、ducing their emissions fell to 44%,and by 2022,vii it had recovered to levels similar to 2019,with approximately 50%of companies showing a year-on-year decrease in carbon emissions.For Chinese companies,significant sectoral differences in carbon emissions and energy consumption are found.The Consume

54、r Goods and Services sector performs better in terms of emissions reductions,with the median corporate emissions and emission intensity decreasing by 16%and 29%,respectively,compared to 2016.However,in the other three sectors-Energy&Power,Manufacturing&Technology,and Metals&Chemicals-average carbon

55、emission have continued to increase year by year.Despite this,companies in these sectors have achieved substantial reductions in both emission intensity and energy intensity since 2015.Chinas ESG regulatory practices are becoming increasingly standardized,and company disclosure are becoming more rou

56、tine.As of May 2,2024,a total of 2,124 listed companies had independently prepared and released their 2023 ESG reports,accounting for approximately 39.8%of all A-share companies.Notably,95%of companies listed in the CSI 300 Index released ESG reports in 2024.The Shanghai Stock Exchange(SSE)has the h

57、ighest ESG report publication rate at 49.9%,followed by the Shenzhen Stock Exchange(SZSE)at 33.2%.The top three sectors in terms of ESG report release rate in 2024 were the financial industry(91.3%),utilities(64.4%),and energy(58.7%).By contrast,industries such as ICT,consumer goods,pharmaceuticals,

58、and industrials had the lowest disclosure rates,at 31%,35.1%,and 36.4%,respectively.As the worlds second-largest asset management market,China introduced ESG-related products in 2019.Currently,nearly all ESG-related asset management products in the domestic market are public funds and wealth managem

59、ent products offered by banks,with only a small number of primary equity private funds adopting the ESG label.ESG investment and secondary private equity funds are almost non-existent.From 2018 to 2024,the proportion of ESG products issuance relative to the total product issuance in the market has r

60、emained stable in the 35-40%range,peaking at 38.8%in mid-2022.In terms of total assets under viii management(AUM),the share of public ESG products as a percentage of total public fund products rose steadily from 14%in 2018 to 27%by mid-2022,before declining slightly.The issuance of bank wealth manag

61、ement ESG products followed a similar trajectory to that of public ESG products.ix Chapter I -The Development and Practices of Sustainable Finance.1 Section 1 Global Progress in Sustainable Finance.2 1.The Rise of Sustainable Finance.2 2.The Formation of the Concept of Sustainable Finance.3 3.Global

62、 Practices of Sustainable Finance.5 Section 2 The EU Sustainable Finance Framework as a Global Model.13 1.The Launch and Structure of the EU Sustainable Finance Framework.13 2.The EU Taxonomy and Its Characteristics.15 3.The EU Sustainable Disclosure Framework.15 Section 3 The Development and Opport

63、unities of Sustainable Finance in China.20 1.Chinas Sustainable Finance Policy Blueprint and Infrastructure Development.20 2.Chinas Sustainable Finance Market Practices.22 3.The Prospects and Opportunities for Sustainable Finance in China.28 Chapter II-Sustainable Finance and the Low-Carbon Developm

64、ent Progress.31 Section I Sustainable Finance and Carbon Premium.32 1.Sustainable Investment Growth Target under SDGs.32 2.Carbon Premium and Sustainable Investment Incentives.34 3.Performance of Sustainable or Green Assets.35 Section II Carbon Reduction Progress of Financial Institutions.40 1.Statu

65、s of Climate Action Targets.41 2.Sectoral Composition of BanksFinanced Emissions.42 3.Regional Differences in Financed Emissions.45 Section III Low-Carbon Development Progress of Enterprises.48 1.Corporate Climate Action Pledge.48 2.Corporate Carbon Reduction Progress.51 x 3.Progress of Carbon Reduc

66、tion on Chinese Firms.58 Chapter III -CEIBS Alumni Insight-Chinas ESG Products and the Optimization of Brokerage Firms ESG Investment Strategies.61 Section I ESG Regulatory Trends in China.62 1.CSRC Policies.62 2.Policies of Major Chinese Exchanges.62 3.SASAC Requirements.64 Section II Status of ESG

67、 Disclosure of A-share Listed Companies.65 1.ESG Report Release by Chinese Listed Companies.65 2.ESG Report Release by Sector.67 3.ESG Disclosure for CSI300 Constituent Companies.67 Section III Current Status of ESG Asset Management Products in China.69 1.Issuance and Scale of Public ESG Products.69

68、 2.Issuance and Scale of Bank Asset Management ESG Products.71 Section IV Optimization of Brokerage Firms ESG Product Screening Mechanism.73 1.Screening Public ESG Funds.73 2.Finding Effective ESG Factors.75 xi Figure 1-1 Conceptual Framework of Sustainable Finance by the UN.4 Figure 1-2 Conceptual

69、Framework of Sustainable Finance by the EU.5 Figure 1-3 20182024 H1 Global quarterly issuance volume and quantity of sustainable bonds.7 Figure 1-4 20182024 H1 Global quarterly issuance volume of sustainable bonds by type.7 Figure 1-5 20182024 H1 Global quarterly issuance volume and quantity of sust

70、ainable loans.8 Figure 1-6 20202024 H1 Share of Sustainable Bond Issuance in Major Global Regions.9 Figure 1-7 20202024 H1 Share of Sustainable Loan Issuance in Major Global Regions.10 Figure 1-8 20202024 H1 Top Five Countries for Global Sustainable Company M&A Activities(by Number of Transactions).

71、12 Figure 1-9 The Ten Key Actions of the EU Action Plan on Financing Sustainable Growth.14 Figure 1-10 20222023 Market Share of the Three Types of Funds under the SFDR.17 Figure 1-11 20182023 Balance and YOY Growth of Chinas Domestic and Foreign Currency Green Loans.23 Figure 1-12 20182023 Issuance

72、Scale and YOY Growth of Green Bonds in Chinas Domestic Market.24 Figure 1-13 20172023 Sectors Targeted by Chinas Domestic Green Bond Issuance.24 Figure 1-14 20212023 Scale and Issuance of Chinas Social and Sustainability Bonds.25 Figure 1-15 20212023 Sectors Targeted by Chinas Social and Sustainabil

73、ity Bond Issuance.26 Figure 1-16 20182023 Industry Breakdown of Chinas Sustainability-Linked Bond Issuance.27Figure 2-1 Climate Investment Growth Targets and Trajectories.33 Figure 2-2 Comparison of Sustainable and Traditional Funds.35 Figure 2-3 Return of Funds by Investment Destination.36 Figure 2

74、-4 Annual Returns of Fixed Income Indices by Region.37 Figure 2-5 Annual Returns of Fixed Income Indices by Category.37 Figure 2-6 Cumulative Returns of MSCI World Equity Indices(Nov.2013-Mar.2024).39 Figure 2-7 Industry strategies in Banks Climate Targets.42 Figure 2-8 20172022 Sector Composition o

75、f Banks Financed Emissions.44 Figure 2-9 Sector Composition of Bank Loans.44 Figure 2-10 Sectoral Composition of Financed Emissions by Region.47 Figure 2-11 Corporate Climate Action Pledge by Region.49 Figure 2-12 Corporate Climate Action Pledge by Industry.49 Figure 2-13 Scope of Corporate Carbon N

76、eutral Target.50 xii Figure 2-14 Pathways to Achieve Carbon Neutral Targets.50 Figure 2-15 20142023 Corporate Carbon Emissions by Region.53 Figure 2-16 20142023 Carbon Emission Intensity by Region.54 Figure 2-17 20142023 Corporate Energy Consumption by Region.55 Figure 2-18 20142023 Corporate Energy

77、 Consumption Intensity by Region.55 Figure 2-19 CDF of the Rate of Change in Carbon Emissions and Emission Intensity.57 Figure 2-20 CDF of the Rate of Change of Energy Consumption and Energy Intensity.58 Figure 3-1 20092024 The number of ESG reports issued by A-share listed companies.66 Figure 3-2 2

78、0232024 Labels of ESG-related Reports Released by A-share companies.66 Figure 3-3 20232024 ESG Report Publication Rate by Industry for A-share Listed Companies.67 Figure 3-4 2024 Number of ESG Reports Published by CSI 300 Index Constituents.68 Figure 3-5 20182024 H1 Number of Public ESG Funds.70 Fig

79、ure 3-6 20182024 H1 Percentage of Public ESG Funds in Total Public Funds.70 Figure 3-7 20182024 H1 Active Scale of Public ESG Funds.71 Figure 3-8 20182024 H1 Percentage of Active Public ESG Funds in Total Active Public Funds.71 Figure 3-9 20192023(first nine months)Number of Bank Wealth Management E

80、SG Products Issued and Actual Size Raised.72 Figure 3-10 Multi-factor analysis of holding styles,July 2021.76 Figure 3-11 Multi-factor analysis of holding styles,June 2023.77 Figure 3-12 Multi-factor analysis of holding styles,July 2024.78 Figure 3-13 Portfolio Performance After Reweighting with E/S

81、/G Scores.79 Table 2-1 Banks Climate Action Targets by Region.41 Table 2-2 Bank Financed Emissions(2022).43 Table 2-3 Carbon Emission and Energy Consumption by Industry(2023).52 Table 2-4 Carbon Emissions and Energy Consumption of Chinese Firms by Sector(2023).60 Table 3-1 ESG Public Fund Screening

82、Process.74 Table 3-2 Examples of ESG Fund Basket Screening.75 ith technological advancements and productivity improvements,human society and the economy have rapidly developed,but this progress has also led to issues such as resource depletion,ecological degradation,climate change,and social inequal

83、ity.These problems not only harm the environment but also threaten the stability of the economy and society,becoming obstacles to sustainable development.Over the past half-century,various stakeholders have gradually recognized that traditional business models,which ignore ecological and social resp

84、onsibilities,may result in unsustainable outcomes,ultimately jeopardizing future economic prosperity.In this context,the concept of sustainable development emerged.Sustainable development emphasizes that economic growth must be combined with environmental protection and social equity to ensure the s

85、ustainable use of resources and the well-being of future generations.However,achieving this goal requires transforming traditional development models and directing capital to support environmentally friendly and socially responsible economic activities.Sustainable finance is a key practical tool for

86、 implementing this concept.Its main approach is to integrate environmental(E),social(S),and governance(G)factors into financial decision-making and investment processes,aiming to achieve a harmonious balance of economic,social,and environmental benefits.This chapter will explore the development and

87、practice of sustainable finance,aiming to provide an overview of global progress,analyze the experience of the European Union as a model for sustainable finance systems,and delve into the opportunities and future development of China in this field.By incorporating environmental,social,and governance

88、(ESG)factors into financial decision-making processes,sustainable finance can achieve financial returns while promoting environmental protection and social progress,driving long-term sustainable economic growth.Currently,the international influence of sustainable finance is steadily expanding,becomi

89、ng a cutting-edge trend in the financial sector.Governments,international organizations,and major financial institutions worldwide are committed to introducing and formulating policies and regulations that promote the development of sustainable finance.These efforts aim to encourage and guide financ

90、ial markets to focus more on sustainability,contributing to global sustainable development.Against this backdrop,this section will provide a global perspective on the rise of sustainable finance,the formation of its concepts,and an overview of its practices.With the rise of the concept of sustainabl

91、e development,sustainable finance has emerged accordingly.International organizations and supranational institutions such as the United Nations,the World Bank,the G20,and the European Union have been the driving forces behind the development of sustainable finance policy frameworks.The United Nation

92、s Conference on the Human Environment,held in Stockholm in June 1972,marked a significant turning point in global environmental policy and became a key milestone in promoting sustainable finance.In May 1992,just before the Rio Earth Summit,13 banks,including Deutsche Bank and HSBC,jointly issued the

93、 Banking Sector Statement on Environment and Sustainable Development,which signaled the official launch of the United Nations Environment Programme Finance Initiative(UNEP FI).Since then,this initiative has developed several frameworks aimed at integrating sustainable development into financial mark

94、et practices,such as the Principles for Responsible Investment(PRI)in 2006,the Principles for Sustainable Insurance(PSI)in 2012,and the Principles for Responsible Banking(PRB)in 2019.With the gradual For more information,please refer to the official website of the United Nations Environment Programm

95、e(UNEP):https:/www.unepfi.org/about/about-us/history/.In April 2006,the UNEP launched the Principles for Responsible Investment(PRI).Currently,more than 4,000 financial institutions from over 50 countries have signed the agreement.For more information,please refer to the official website of the Unit

96、ed Nations Environment Programme(UNEP):https:/www.unepfi.org/about/about-us/history/.In 2012,the UNEP together with a group of insurance institutions,launched the Principles for Sustainable Insurance(PSI),the first global framework in the insurance industry to address environmental,social,and govern

97、ance(ESG)risks and opportunities.Over 200 organizations worldwide have adopted its four guiding principles,including insurance companies representing more than 25%of global premium volume and managing assets totaling$14 trillion.For more information,please refer to the official website of the United

98、 Nations Environment Programme(UNEP):https:/www.unepfi.org/about/about-us/history/.In 2019,under the leadership of the United Nations Environment Programme Finance Initiative(UNEP FI),a coalition of 132 banks launched the first global sustainability framework for the banking industrythe Principles f

99、or Responsible Banking.These six guiding principles help signatory banks ensure that their strategies and practices introduction of these principles,the United Nations sustainability blueprint has now covered the core sectors of the financial industry.In addition to the United Nations,various intern

100、ational institutions and organizations have also played a collaborative role in promoting the development of global sustainable finance through funding,setting standards,conducting research,and providing technical support.These efforts have facilitated the global transition toward a sustainable econ

101、omy.For example,the International Finance Corporation(IFC)introduced the widely recognized Equator Principles(EPs)in 2003,and since 2016,the G20 has released several Comprehensive Reports on Sustainable Finance and the G20 Sustainable Finance Roadmap.Additionally,in 2016,the European Union establish

102、ed the High-Level Expert Group on Sustainable Finance(HLEG)to conduct in-depth research on sustainable finance strategies.Overall,while discussions on sustainable finance have been ongoing for some time,its true global momentum was achieved after the adoption of the United Nations 2030 Agenda for Su

103、stainable Development in 2015 and the entry into force of the Paris Agreement in 2016.Notably,the Paris Agreement set forth the requirement to make financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development,emphasizing the dual focus on funding t

104、argets,emission reduction,and climate adaptation.This marked a significant advancement in global climate finance.Sustainability is a complex and evolving issue,and neither academia nor industry has yet reached a unified definition of sustainable finance.However,as the role of finance in addressing e

105、nvironmental challenges and promoting sustainable development becomes increasingly significant,the international communitys understanding of sustainable finance has been expanding and deepening.The United Nations considers sustainable finance to encompass four key areas:environmental,social,economic

106、,and governance aspects.These areas,in order of scope from broadest to narrowest,include social environmental finance,green finance,climate finance,and low-carbon finance.Climate finance is closely tied to the United Nations Framework Convention on Climate Change(UNFCCC)and focuses on emission reduc

107、tion and climate change adaptation.Green finance,with a broader definition,not only addresses align with societys vision for the future as outlined in the Sustainable Development Goals(SDGs)and the Paris Agreement.The framework brings purpose,vision,and ambition to sustainable finance,with signatori

108、es committing to embedding these principles into all areas of their business,from strategy to portfolios and transactions.For more information,please refer to the official website of the United Nations Environment Programme(UNEP):https:/www.unepfi.org/about/about-us/history/.The Equator Principles p

109、rovide financial institutions with a framework and standards for managing environmental and social risks in project financing across industries such as mining,oil,gas,and forestry.These principles are designed to identify,assess,and manage environmental and social risks in project finance,offering m

110、inimum due diligence standards for making responsible risk decisions.As of June 2023,the Equator Principles have been adopted by 139 financial institutions across 39 countries,establishing themselves as the global industry standard for managing environmental and social risks in project financing.For

111、 more information,please refer to the following website:https:/www.ifc.org/content/dam/ifc/doc/2023/ifc-annual-report-2023-building-a-better-future-cn.pdf.Based on the recommendations of the High-Level Expert Group on Sustainable Finance,the European Commission launched the Action Plan on Financing

112、Sustainable Growth in March 2018,aimed at reforming the EUs financial system.Since then,the EUs sustainable finance sector has entered a fast-track phase of development.At present,the EU has largely established a sustainable finance framework composed of three main pillars,setting a leading example

113、for global sustainable finance development.The three main goals are outlined in Article 2 of the Paris Agreement.For more information,please refer to the official United Nations website:https:/www.un.org/zh/documents/treaty/FCCC-CP-2015-L.9-Rev.1.environmental issues but also covers a wider range of

114、 environmental goals and risks.(See Figure 1-1)Source:United Nations Environment Programme(UNEP)Figure 1-1 Conceptual Framework of Sustainable Finance by the UN The European Commission views sustainable finance as the process by which the financial sector incorporates Environmental,Social,and Govern

115、ance(ESG)factors into investment decisions to support long-term investments in sustainable economic activities and projects(see Figure 1-2).In the environmental domain,the EU mandates that financial decisions address not only climate change but also biodiversity and the circular economy.In the socia

116、l sphere,the focus is on inequality,inclusiveness,labor relations,and human rights.Governance emphasizes institutional management structures,employee relations,and executive compensation,ensuring that social and environmental concerns are fully integrated into investment decisions.While the EUs sust

117、ainable finance framework is similar to the United Nations,it has distinctive elements.In addition to supporting environmentally friendly economic activities(green finance),the EU also promotes the transition of high-carbon industries,such as coal power,steel,and cement,toward environmental sustaina

118、bility(transition finance).Transition finance,therefore,plays a key role in the EUs sustainable finance framework,extending and UNEP,DEFINITION AND CONCEPTS,INQUIRY WORKING PAPER 16/13,September 2016.For more information,please refer to the following website:https:/finance.ec.europa.eu/sustainable-f

119、inance/overview-sustainable-finance_en#what.SustainableDevelopmentEnvironmentalCliamteMitigationClimateAdaptationOtherenvironmentproblemsSocialEconomicGovernanceLow-carbon Finance Climate Finance Green Finance Sustainable Finance Social and Environmental Finance complementing green finance by enabli

120、ng the shift of the overall economy towards low-carbon and environmentally-friendly development.Source:Compiled by the author based on information from the official website of the European Commission Figure 1-2 Conceptual Framework of Sustainable Finance by the EU Overall,the scope of sustainable fi

121、nance has expanded from its initial focus on environmental issues to encompass broader areas,including social,economic,and governance factors.It now covers fields such as low-carbon finance,climate finance,green finance,social responsibility finance,and transition finance.Domestically,green finance

122、is a more familiar concept,often divided into broad and narrow definitions.Broad green finance refers to sustainable financial activities related to supporting green development,while the narrow definition is more specific,based on clear guidelines in policy documents.In this report,we will primaril

123、y adopt the sustainable finance framework defined by the United Nations and the European Commission.As mentioned earlier,sustainable finance is a complex and evolving concept that covers a wide range of financial instruments,making it challenging to systematically measure the overall market size.Thi

124、s complexity leads to varying statistical approaches and focuses across major financial institutions.In this section,we refer to financial data from Refinitiv,part of the This policy document mainly refers to the Green Industry Guideline Catalogue(2023 Edition).Refinitiv,a subsidiary of the London S

125、tock Exchange Group(LSEG),is one of the worlds largest providers of Sustainable DevelopmentEnvironmental（E）CliamteMitigationClimateAdaptationOtherenvironmentproblems：pollution,waste,ecosystem,biodiversity,etc.Social（S）Governace（G）Low-carbon Finance Climate Finance Green Finance/Transition Finance Su

126、stainable Finance Social and Environmental Finance London Stock Exchange Group,to provide an overview of the recent global development and practices related to sustainable bonds and loans.Following the adoption of the United Nations 2030 Agenda for Sustainable Development and the Paris Agreement,the

127、 sustainable bond market experienced its first global growth surge.The sustainable bond market can be divided into three development stages based on issuance volume:the initial stage(20162019),the rapid expansion stage(20202021),and the adjustment stage(2022present)(see Figure 1-3).Before 2020,the s

128、ustainable bond market maintained relatively low annual issuance volumes and numbers,with the total annual issuance generally remaining below$300 billion.Among these,the issuance of social bonds,sustainability bonds,and bonds issued by sustainable companies was significantly smaller than green bonds

129、(see Figure 1-4).The second stage witnessed substantial growth in the sustainable bond market,especially with the pandemic driving demand.In 2021,global issuance reached a historic high,with green bonds and social bonds seeing particularly significant issuance.The global issuance of sustainable bond

130、s surpassed$1 trillion for the first time in 2021,marking a 45%year-on-year increase and setting a new record.Green bond issuance totaled$488 billion,more than double that of 2020,while social and sustainability bonds also reached record highs in 2021.In the third stage,the global sustainable bond m

131、arket experienced a notable decline in 2022 due to factors such as economic downturns,worsening geopolitical conditions,and stricter global ESG regulations.The market began to recover in 2023 and showed signs of revival in early 2024.After a year of adjustment,the sustainable bond market had its str

132、ongest start in the first quarter of 2024 since 2021.In Q1 2024,global sustainable bond issuance totaled$259 billion,a 9%year-on-year increase,with over 500 bonds issued,representing a 14%increase.However,issuance in Q2 declined by 24%compared to Q1,resulting in a total of$455.8 billion in the first

133、 half of 2024,a 2%year-on-year decrease.This indicates that while the global sustainable bond market is recovering,it remains in an adjustment phase(see Figure 1-3).financial market data and infrastructure.The organization regularly publishes updates on global sustainable financial products and the

134、trading and activities of sustainable companies.For more information,please refer to the following website:https:/ Deals Intelligence,Sustainable Finance Review Full Year 2021,January 2022.In 2022,the total global issuance of sustainable bonds amounted to$744.3 billion,a 26%decrease year-on-year,mar

135、king the first annual decline since records began.By 2023,the total global issuance of sustainable bonds had reached$740.8 billion,remaining largely stable compared to 2022.For more information,please refer to the following website:Refinitiv Deals Intelligence,Sustainable Finance Review Full Year 20

136、22,January 2023.Refinitiv Deals Intelligence,Sustainable Finance Review First Quarter 2024,April 2024.Refinitiv Deals Intelligence,Sustainable Finance Review First Half 2024,July 2024.Source:Refinitiv Figure 1-3 20182024 H1 Global quarterly issuance volume and quantity of sustainable bonds Source:Re

137、finitiv Figure 1-4 20182024 H1 Global quarterly issuance volume of sustainable bonds by type From the perspective of sustainable loans,the global sustainable loan market followed a similar trend to the sustainable bond market during the first stage(20162019),with low annual issuance volumes and fewe

138、r loans.In the second stage,the two markets developed somewhat 010020030040050060005001000150020002500300035002018201920202021202220232024100 Million USDSustainable bondNumber of issues020040060080010001200140016002018201920202021202220232024100 Million USDGreen bondSocial bondSustainability bondSus

139、tainable companydifferently.Sustainable bonds saw an explosive growth at the beginning of 2020,while sustainable loans only experienced a significant upward trend toward the end of 2020.In 2021,global sustainable loan issuance surged to$716.6 billion,more than three times the amount in 2020,setting

140、a record high.However,due to factors such as the Russia-Ukraine conflict and increased global economic pressure,the sustainable loan market showed a marked decline in 2022.Unlike the sustainable bond market,sustainable loans continued their downward trend in 2023,with the total loan issuance amounti

141、ng to only$576.1 billion,a 24%year-on-year decrease,marking the slowest growth since 2020.Nevertheless,in the first half of 2024,the sustainable loan market showed signs of a strong recovery.From January to June 2024,global sustainable loan issuance totaled$377.7 billion,with a year-on-year growth r

142、ate of 11%.(see Figure 1-5).Source:Refinitiv Figure 1-5 20182024 H1 Global quarterly issuance volume and quantity of sustainable loans By reviewing the global sustainable bond and loan markets,in addition to the three distinct stages mentioned earlier,we have observed the following two development c

143、haracteristics.First,the global sustainable bond market has diversified,showing distinct growth trends.Green bonds have consistently been the primary driving force,with both issuance volume and number far surpassing the other three types of bonds,despite some fluctuations.Moreover,as global efforts

144、to address social and economic challenges have intensified,the significance of social bonds and sustainability bonds has rapidly increased.Notably,during the pandemic in Refinitiv Deals Intelligence,Sustainable Finance Review First Half 2024,July 2024.050100150200250300350400050010001500200025002018

145、201920202021202220232024100 Million USDSustainable loansNumber of issues2020,the issuance of social bonds saw a breakthrough,growing tenfold compared to the previous year.This contributed to the total global sustainable bond market exceeding$1 trillion for the first time in 2021,reflecting the marke

146、ts diverse demands.Second,both the sustainable bond and loan markets have exhibited high volatility but also strong resilience.The sustainable finance market experienced rapid growth between 2020 and 2021.Although the sustainable bond and loan markets saw their first annual decline in 2022 due to gl

147、obal macroeconomic and geopolitical factors,signs of recovery emerged in early 2024 following more than a year of market adjustment.3.2.1 Sustainable Bond Europe has consistently been the leading region for sustainable bond issuance,maintaining approximately 50%of the global market share,securing it

148、s top position.During 2020 and 2021,the Americas ranked second in issuance volume,followed by the Asia-Pacific region in third.However,in 2022 and 2023,the total sustainable bond issuance from the Asia-Pacific region surpassed that of the Americas for two consecutive years,making it the second-large

149、st region for sustainable bond issuance globally(see Figure 1-6).The rise of the Asia-Pacific sustainable bond market is primarily attributed to the rapid development of Chinas green finance market.In 2023,seven of the top ten global issuers of sustainable bonds were Chinese companies,accounting for

150、 86.8%of the total issuance by the top ten.Among them,Shanghai Pudong Development Bank ranked first,issuing green bonds worth$4.36 billion.Source:Refinitiv Figure 1-6 20202024 H1 Share of Sustainable Bond Issuance in Major Global Regions 25.721.918.418.519.452.554.052.449.354.416.218.327.929.222.55.

151、65.81.23.03.70.010.020.030.040.050.060.070.080.090.0100.020202021202220232024H1%AmericasEuropeAsia PacificOhters3.2.2 Sustainable Loan In contrast to Europes dominant position in the sustainable bond market,the issuance of sustainable loans in Europe has shown significant fluctuations over the past

152、four years,creating a competitive landscape with the Americas.In 2020,64.4%of sustainable loan borrowers were from Europe.By 2023,Europes share of the global sustainable loan market had dropped to 37.8%,while companies from the Americas became increasingly active,raising the regions share to 34.3%.I

153、n the first half of 2024,Europes sustainable loan volume expanded again,reaching$160.2 billion,a year-on-year increase of 56.1%,accounting for 42.4%of the global total,slightly surpassing the Americas 37.4%share(see Figure 1-7).Source:Refinitiv Figure 1-7 20202024 H1 Share of Sustainable Loan Issuan

154、ce in Major Global Regions In recent years,the equity capital market(ECM)activities of sustainable companies have shifted from being primarily dominated by the Americas to a dual dominance by both China and the U.S.In 2020 and 2021,the Americas accounted for 62%and 56%of global ECM activities,respec

155、tively,maintaining a leading position.However,driven by the equity capital market transactions in South Korea and China,the Asia-Pacific region surpassed the Americas in sustainable financing in 2022,accounting for 65%of the global total.By 2023,sustainable ECM activities were largely concentrated i

156、n the U.S.and China,with the two countries contributing to over 57%of global sustainable ECM activities.Among the top 10 global transactions,three U.S.companies raised a total of$4.42 billion,while four Chinese companies raised$2.46 billion,representing 43.1%and 24%of the top 10 transactions,respect

157、ively.Refinitiv Deals Intelligence,Sustainable Finance Review Full Year 2023,January 2024.15.942.739.134.337.464.443.337.737.842.417.710.720.824.017.42.03.42.43.92.80.010.020.030.040.050.060.070.080.090.0100.020202021202220232024H1%AmericasEuropeAsia PacificOhtersIn the first half of 2024,the U.S.an

158、d China continued to dominate sustainable ECM activities,with a combined share of 68%of global ECM activities.Together,companies from these two countries raised$4.37 billion in the top 10 transactions,accounting for 72.9%of the total.Due to the ongoing macroeconomic downturn and deteriorating geopol

159、itical environment,the global M&A market for sustainable companies has also underperformed in recent years.However,in terms of activity,China stands out as a leader in the global M&A market.From 2020 to 2023,China ranked first in the number of sustainable M&A transactions for four consecutive years,

160、and it continued to hold this position in the first half of 2024,with the number of Chinese M&A deals far exceeding those of other countries except for the U.S.(See Figure 1-8).Refinitiv Deals Intelligence,Sustainable Finance Review First Half 2024,July 2024.9844363428020406080100ChinaUnited StatesI

161、talyIndiaUnited Kingdom2020326164836863050100150200250300350ChinaUnited StatesIndiaUnited KingdomSpain2021242238898579050100150200250ChinaUnited StatesSpainIndiaUnited Kingdom2022 Source:Refinitiv Figure 1-8 20202024 H1 Top Five Countries for Global Sustainable Company M&A Activities(by Number of Tr

162、ansactions)Overall,the regional development of the sustainable finance market in recent years has shown a diverse trend.Although Europe has maintained its dominant position in the global sustainable finance market,the importance of the U.S.and China in certain segments has been gradually increasing.

163、For example,since 2020,the U.S.sustainable loan market has been highly active,with its market share growing year by year,reaching a scale comparable to that of Europe.Additionally,China has made significant strides in the sustainable bond market,equity capital market,and M&A transactions.Driven by C

164、hinas green finance market,the Asia-Pacific region has surpassed the Americas in sustainable bond market share for two consecutive years in 2022 and 2023,becoming a key driver of the global sustainable bond market.Chinas equity capital market activities have remained consistently vibrant,with sustai

165、nable companies financing capabilities approaching those of the U.S.Moreover,Chinese companies have led the global sustainable M&A market in terms of the number of transactions for several consecutive years,underscoring Chinas growing importance and influence in the global sustainable finance landsc

166、ape.For more analysis on the Chinese sustainable finance market,please refer to Section 3 of this report.3892221079592050100150200250300350400ChinaUnited StatesIndiaSpainUnited Kingdom2023020406080100120ChinaUnited StatesIndiaUnited KingdomItaly2024 H1 Since the 1970s,the EU has gradually developed

167、a green transition model that is guided by a sustainable development policy framework,driven by green research and innovation and the carbon emissions trading system,and supported by EU public finance and a sustainable financial framework.However,achieving the EUs sustainable development goals requi

168、res more than just public funds;a stable and efficient sustainable finance framework is essential to mobilize additional capital to bridge the gap between the goals and the necessary funding.Therefore,integrating sustainable risks,opportunities,and objectives into the EUs financial regulatory framew

169、ork and reforming the existing financial system to steer investments toward sustainable directions is key to achieving the EUs sustainable development goals.Currently,the EU has essentially established a sustainable financial framework based on three main pillars and leads globally in areas such as

170、top-level policy design,the EU Taxonomy for classification standards,disclosure frameworks,and sustainable investment tools.To tackle the challenges of green transition and enhance the sustainable growth efficiency of financial services,the European Commission established the High-Level Expert Group

171、 on Sustainable Finance(HLEG)in 2016.This group initiated an in-depth study on the development strategy for sustainable finance within the EU.In March 2018,the EU introduced the Action Plan on Financing Sustainable Growth,which aimed to reform the financial system.This plan divided the EUs future su

172、stainable finance actions into three categories with ten key action points,marking a significant step toward the EUs transition to a sustainable economy(see Figure 1-9).Since then,the EU has entered a fast-paced development phase in the field of sustainable finance.The EU Action Plan covers a series

173、 of key legislative initiatives.By the end of 2023,over half of the legislative tasks related to the ten action points had progressed.These include the EU Environmental Taxonomy,the EU Green Bond Standard,EU Sustainable Finance Disclosure,and Corporate Sustainability Reporting.Legislative processes

174、in areas like ESG ratings,retail and insurance investment products,and corporate sustainability due diligence are For more information,please refer to the following website:https:/finance.ec.europa.eu/publications/renewed-sustainable-finance-strategy-and-implementation-action-plan-financing-sustaina

175、ble-growth_en#action-plan.ongoing,while the development of the EU Social Taxonomy and EU Ecolabel has been temporarily put on hold.Source:European Commission Figure 1-9 The Ten Key Actions of the EU Action Plan on Financing Sustainable Growth As mentioned above,the construction of the EUs sustainabl

176、e finance framework has primarily progressed around three core pillars:the EU Taxonomy,the disclosure framework for financial institutions and corporations,and sustainable investment tools aimed at promoting sustainable development.At present,significant progress has been made in the legislation and

177、 implementation of these three pillars,providing a comprehensive regulatory environment for sustainable investment within the EU.The First Pillar-the EU Taxonomy has undergone several important legislative stages.It began with the EU Taxonomy Regulation coming into effect in July 2020,followed by th

178、e implementation of the Climate Delegated Act in 2022 and the Supplementary Climate Delegated Act in 2023,culminating in the full enforcement of the Environmental Delegated Act in July 2024.The Second Pillar-the Disclosure Framework started with the implementation of ESG disclosure requirements in A

179、pril 2020,the entry into force of the Sustainable Finance Disclosure Regulation(SFDR)in March 2021,and the subsequent adoption of the Disclosure Vincent Vandeloise,A guide to the next sustainable finance agenda,Finance Watch 2024,January 2024.European Commission,Enhancing the usability of the EU Tax

180、onomy and the overall EU sustainable finance framework,Commission Staff Working Document,COM(2023)317,Strasbourg,June 2023.For more information,please refer to the following website:https:/eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023SC0209.Action plan on financingsustainable growthReori

181、enting capital flows towards a more sustainable economyAction 1：Establishing a clear and detailed EU taxonomy,a classification system for sustainable activities.Action 2：Creating an EU Green Bond Standard and labels for green financial productsAction 3：Fostering investment in sustainable projectsAct

182、ion 4：Incorporating sustainability in financial adviceAction 5：Developing sustainability benchmarksMainstreaming sustainability into risk managementAction 6：Better integrating sustainability in ratings and market researchAction 7：Clarifying asset managers and institutional investors duties regarding

183、 sustainabilityAction 8：Introducing a green supporting factor in the EU prudential rules for banks and insurance companiesFostering transparency and long-termismAction 9：Strengthening sustainability disclosure and accounting rule-makingAction 10：Fostering sustainable corporate governance and attenua

184、ting short-termism in capital marketsDelegated Act and Corporate Sustainability Reporting Directive(CSRD)in 2022 and 2023,respectively.The Third Pillar-sustainable Investment Tools includes the Benchmark Regulation(BMR),which was implemented in December 2020,and the EU Green Bond Standard Regulation

185、(EUGBS),which came into effect in December 2023.Next,we will focus on a detailed review and analysis of the EU Taxonomy and the disclosure framework,which are currently the most discussed topics in financial markets based on the outlined framework.In March 2018,the European Commission introduced the

186、 EU Taxonomy in its Sustainable Finance Action Plan.After about a year of preparation,the Technical Expert Group(TEG)of the European Commission published the technical report of the EU Taxonomy Regulation in June 2019,establishing technical screening criteria for 67 economic activities and providing

187、 initial usage guidelines for the taxonomy.In March 2020,the TEG submitted its final report and policy recommendations on the EU Taxonomy to the European Commission.The regulation was approved by the European Parliament and the European Council and officially came into effect in July 2020.The EU Tax

188、onomy has several key characteristics.First,the EU Taxonomy Regulation provides a comprehensive classification list for sustainable activities within the EU,making it highly operational.The regulation defines technical screening criteria for hundreds of economic activities,aligning not only with the

189、 EUs industrial classification system but also with international statistical frameworks,covering a wide range of economic sectors and activities.Second,although the EU Taxonomy Regulation has established a general framework for sustainable economic activities,including specific activity lists and t

190、echnical screening criteria,these lists and standards are not fixed.They are continuously updated and adjusted in line with advancements in scientific knowledge and market practices to address emerging environmental challenges and economic activities.Between 2020 and 2023,the EU passed four climate

191、and environment-related delegated acts to update/revise the list of sustainable economic activities and technical screening criteria under the EU Taxonomy Regulation.Third,the EU Taxonomy Regulation works in strong coordination with other EU policies.For example,the EU Green Bond Standard(EuGB)speci

192、fies that the funds raised through compliant green bonds must be allocated to activities that align with the sustainable economic activities defined in the EU Taxonomy.In essence,if a green bond meets the criteria set forth in the EU Green Bond Standard and the Taxonomy,it can be awarded the EU Gree

193、n Bond label(EuGB).As another crucial pillar of the EUs sustainable finance framework,the sustainable disclosure framework not only provides comprehensive reporting standards for both financial and non-financial institutions but also offers critical information for investors to make sustainable inve

194、stment decisions.The EU has established an extensive disclosure framework,with key components including the Sustainable Finance Disclosure Regulation(SFDR),the Corporate Sustainability Reporting Directive(CSRD),the EU Taxonomy Delegated Act on Disclosures(Disclosure Delegated Act),and other supporti

195、ng regulations such as the EU Benchmarks Regulation,the European Single Access Point Regulation,and the ESG Ratings Transparency and Integrity Regulation.In the following paragraph,we will focus on the SFDR and CSRD.The Sustainable Finance Disclosure Regulation(SFDR),which came into effect in March

196、2021,is one of the key regulatory rules introduced by the European Commission to fulfill its commitment to the United Nations Sustainable Development Goals.The SFDR aims to standardize the sustainability-related disclosure requirements for financial institutions at the governance,financial services,

197、and product levels,with the goal of increasing transparency in financial markets regarding sustainability.Firstly,from the perspective of institutional entities,the SFDR mandates that financial market participants(FMPs)disclose the sustainability risks and impacts of their financial products,busines

198、s activities,and processes to end investors.FMPs include not only the legal entities of financial institutions but also product providers and investment advisory firms.Notably,although the SFDR is an EU regulation,the entities required to comply with its disclosure obligations are not limited to tho

199、se within the EU.For example,FMPs under EU jurisdiction,those headquartered outside the EU but with subsidiaries or offices operating in the EU,and even non-EU FMPs that raise funds or issue financial products within the EU market must also provide sustainability disclosure reports.Secondly,in terms

200、 of financial products,the SFDR imposes sustainability disclosure obligations on seven types of financial products:investment portfolios,alternative investment funds(AIFs),insurance-based investment products(IBIPs),pension products,pension schemes,undertakings for collective investment in transferab

201、le securities(UCITS),and pan-European personal pension products(PEPPs).These financial products,according to SFDR standards,are classified into three main categories:Article 9,Article 8,and Article 6 products.SFDR Article 9 products typically refer to those that have sustainability as their primary

202、investment objective.Article 8 products are those that promote environmental or social factors in their investment strategies.Meanwhile,Article 6 products are standard financial products that do not have sustainability as a core focus of their investment objectives.Since the implementation of the SF

203、DR in March 2021,the EU has gradually increased the standardization of sustainability disclosures at the asset level for various SFDR funds.This has allowed stakeholders to more objectively assess whether the sustainability objectives of SFDR Article 9 funds are being achieved as promised.Stricter r

204、egulatory requirements have led to significant structural changes in sustainable funds within the EU.For instance,a Morningstar report shows that in the fourth quarter of 2022,a total of 307 funds were downgraded from For more information,please refer to the following website:https:/eur-lex.europa.e

205、u/legal-content/EN/TXT/?uri=CELEX:32019R2088.Article 9 products can be understood as dark green,Article 8 products as light green,and Article 6 products as other.For more information,please refer to the following website:Morningstar,EU Sustainable Finance Disclosure Regulation Explained,2023.Article

206、 9 to Article 8,involving assets worth 175 billion,which accounted for 40%of the total assets of Article 9 funds.By the fourth quarter of 2023,facing continued macroeconomic pressures and weakening demand for ESG and sustainable products,investors withdrew 26.7 billion and 4.7 billion from Article 8

207、 and Article 9 funds,respectively.Meanwhile,Article 6 funds absorbed 93 billion in the last quarter of 2023.Despite this,by the end of December 2023,the market share of Article 8 funds remained at 55.5%,and Article 9 funds at 3.5%,both showing an increase compared to the same period in 2022.On the o

208、ther hand,the market share of Article 6 fund products dropped by 3.5 percentage points to 41%compared to the same period in 2022.(See Figure 1-10)Note:The data in the figure is expressed in“%”.Source:Morningstar Figure 1-10 20222023 Market Share of the Three Types of Funds under the SFDR For a long

209、time,the EU has placed significant emphasis on legislation and policy planning related to corporate sustainability disclosures.In order to more effectively measure,monitor,Morningstar,SFDR Article 8 and Article 9 Funds:Q4 2022 in Review,January 2023.Morningstar,SFDR Article 8 and Article 9 Funds:Q4

210、2023 in Review,January 2024.Article 6,44.5Article 8,52.2Article 9,3.32022Article 6,41Article 8,55.5Article 9,3.52023and manage corporate performance and its social and environmental impacts,and to further enhance access to non-financial information,the EU adopted the Non-Financial Reporting Directiv

211、e(NFRD)in October 2014.The introduction of this directive marked an important step in advancing the EUs Corporate Social Responsibility agenda and laid the foundation for subsequent legislation on corporate sustainability reporting.In 2019,the EU announced in its latest growth strategy,the European

212、Green Deal,that it would review the NFRD as part of its broader strategy to strengthen the foundation for sustainable investment.After two years of research,the European Commission adopted the CSRD proposal in April 2021,and the directive officially came into effect in January 2023,replacing the NFR

213、D.Overall,compared to the previous NFRD,the CSRD requires companies to provide more comprehensive,detailed,stringent,and scientifically based disclosures on sustainability-related issues.This is reflected in the following six areas.First,double Materiality Assessment:The CSRD introduces the concept

214、of“Double Materiality Assessment”(DMA),which requires companies to evaluate both their impact on the environment and society(“outside-in”perspective)and how these issues affect the companys own development(“inside-out”perspective).Second,expanded Disclosure Scope and Content:The CSRD expands the man

215、datory disclosure scope to approximately 50,000 companies within the EU.This includes large enterprises,listed companies,and third-country companies established in the EU.Third,phased Implementation:To accommodate companies ability to adapt to the new regulations,the CSRD will be implemented in phas

216、es from 2024 to 2028.For example,starting January 1,2024,the CSRD will apply to large enterprises already subject to the NFRD with more than 500 employees,which must publish their sustainability disclosure reports by 2025.The final group of third-country companies meeting the CSRD standards will be

217、required to publish CSRD-compliant reports by 2028,with their subsidiaries or branches responsible for the reports.Forth,standardization of Disclosure Reports:To address inconsistencies in reporting formats and standards under the NFRD framework,the CSRD requires constrained companies to use the uni

218、fied European Sustainability Reporting Standards(ESRS).The first set of 12 ESRS standards was released in July 2023.Fifth,introduction of Independent Verification Mechanisms:To ensure the reliability of disclosed information and elevate the quality of sustainability information to the level of finan

219、cial information,the CSRD mandates that sustainability disclosure reports must be verified by statutory auditors or independent auditing firms.Sixth,digitalization of Sustainability Disclosure Information:The CSRD requires constrained companies to prepare their sustainability disclosure information

220、in Extensible Hypertext Markup Language(XHTML)format and to employ“digital tagging”.For more information,please refer to the following website:https:/finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_e

221、n#legislation.In summary,the EUs overall framework for sustainability disclosure provides an important institutional and regulatory foundation for promoting sustainable development in the EU financial market.By integrating multiple regulations and directives,the framework offers a comprehensive and

222、unified disclosure system,effectively reducing information asymmetry and enhancing market transparency and comparability.Furthermore,the EUs sustainability disclosure framework achieves innovative breakthroughs in several areas,such as the use of digital technology and“digital tagging”by companies a

223、nd financial institutions to improve the readability and searchability of information,thus enhancing investors access to and utilization of sustainability information.Sustainable development has become a guiding principle for countries addressing global challenges,and China is no exception.Amidst mu

224、ltiple pressures such as climate change,geopolitical tensions,and economic downturns,low-carbon development not only helps mitigate the impacts of the energy crisis and environmental issues but also fosters greater cooperation among major world economies in sustainable development,countering the tre

225、nd of deglobalization.In recent years,as Chinas“dual carbon”goals(carbon peaking and carbon neutrality)have steadily advanced,the countrys sustainable finance market has flourished.The top-level policy framework has been initially established,standard systems and disclosure frameworks are aligning w

226、ith international markets,and innovative incentive mechanisms are continuously emerging.Sustainable financial instruments are becoming increasingly diversified.Currently,Chinas sustainable finance market has largely taken shape with green finance as the core,supplemented by emerging areas such as tr

227、ansition finance and social responsibility finance,forming a diversified development landscape.Based on an analysis of Chinas sustainable finance policy blueprint and market practices,this section will explore the future direction of sustainable finance in China.Considering that Chinas sustainable f

228、inance market is dominated by green finance,supplemented by emerging areas such as transition finance and social responsibility finance,we will focus on the policy development trajectory in the field of green finance.Compared to the global landscape,Chinas green finance began relatively early,partic

229、ularly in the areas of green financing(loans and bonds),where it now leads internationally.This progress is closely tied to Chinas well-established top-down policy framework.For instance,in the field of green bonds,as early as 1995,the Peoples Bank of China issued the Notice on Implementing Credit P

230、olicy and Environmental Protection,marking the inception of Chinas green finance policy.Although the central government had not yet explicitly proposed the concept of green credit at that time and the policy lacked corresponding regulatory and incentive mechanisms,it signaled the initial establishme

231、nt of a direction for Chinas green credit policy framework.In 2020,with the announcement of the dual carbon goals,Chinas green finance experienced a new wave of policy support.At the central level,in October 2020,the Ministry of Ecology and Environment and four other ministries jointly issued the Gu

232、iding Opinions on Promoting Climate Change Investment and Financing,defining climate investment and financing as an important component of green finance,aiming to direct and encourage more capital towards addressing climate change.At the local level,in November 2020,the Standing Committee of the She

233、nzhen Municipal Peoples Congress issued Chinas first green finance regulationthe Shenzhen Special Economic Zone Green Finance Regulations(referred to as the Regulations).The Regulations implement ecological civilization construction through seven aspects,including systems and standards,products and

234、services,investment evaluation,and environmental information disclosure,serving as an innovative local practice of central policies and setting a national example.Following this,the central government successively issued documents such as the Evaluation Plan for Green Banks in Chinas Banking Industr

235、y and the 14th Five-Year Development Plan for Financial Standards.The issuance of these policies and regulations marks a new stage in Chinas policy support and institutional development in the field of green finance,providing strong support for promoting Chinas green economic transition and achievin

236、g sustainable development goals.Chinas progress in building information disclosure systems started relatively early.In 2016,the Guiding Opinions on Building a Green Finance System required green bond issuers to disclose environmental information and recommended gradually expanding this practice to a

237、ll listed companies and bond-issuing enterprises.In July 2021,the Peoples Bank of China,under the Financial Standards Committee,issued the Guidelines for Financial Institutions on Environmental Information Disclosure.This marked the first time that environmental disclosure requirements were introduc

238、ed in the form of national standards.The guidelines incorporated the widely used Task Force on Climate-related Financial Disclosures(TCFD)framework,and they have been widely adopted,particularly by financial institutions in pilot regions for green finance reform and innovation.In terms of aligning w

239、ith international green finance standards,China places great emphasis on comparability with global standards and actively participates in their development.For instance,in June 2022,China and the European Union co-led a comparison of China-EU green and sustainable finance standards,resulting in the

240、publication of the Common Ground TaxonomyClimate Change Mitigation(referred to as the Common Taxonomy).In May 2023,China and the EU officially launched the second phase of work on the Common Taxonomy,focusing on gradually expanding its international basis by incorporating green taxonomies from count

241、ries and regions like Singapore.Moreover,to further enhance the competitiveness of Chinese enterprises and financial institutions in international capital markets,the unification of disclosure standards has become For more information,please refer to the following report:KPMG,Rising Sun,Promising Fu

242、ture:Insights into the Development of Sustainable Finance in China(in Chinese),May 2023.China Construction Bank Corporation,Beijing Green Finance and Sustainable Development Research Institute,China Green Capital Market Green Book(2022 Edition)(in Chinese),April 2023.a key focus in the field of sust

243、ainable finance over the past two years.In May 2024,the Ministry of Finance,along with the Ministry of Foreign Affairs,the National Development and Reform Commission(NDRC),and nine other departments,developed a national unified sustainable disclosure standardthe Corporate Sustainability Disclosure S

244、tandardsBasic Standards(Draft for Comments)(referred to as the Basic Standards).This was based on an evaluation of the applicability of the International Sustainability Standards Board(ISSB)guidelines and reflects both international best practices and Chinas unique circumstances,providing a unified

245、blueprint for Chinas sustainability efforts.In conclusion,China has made significant strides in sustainable finance policy,information disclosure,and international standards alignment in recent years.Through proactive policy support,transparent disclosure requirements,and efforts to align with globa

246、l standards,China has not only fostered the growth of sustainable finance domestically but also played a pivotal role in the global sustainable finance market.This showcases Chinas positive attitude and leadership in advancing global sustainability goals.With the gradual refinement of Chinas top-lev

247、el sustainable finance policy framework,the practice of sustainable finance has entered a rapid development phase.Green financial instruments,such as green bonds and green loans,dominate Chinas sustainable finance market,serving as the primary force driving the development of a low-carbon economy.At

248、 the same time,emerging financial instruments like social responsibility bonds,sustainability bonds,and sustainability-linked bonds have rapidly gained prominence in recent years,becoming rising stars in the market.These new instruments not only diversify Chinas sustainable finance offerings but als

249、o strengthen capital market support for social responsibility and sustainability,further promoting Chinas transition to a green economy.In the area of green loans,Chinas balance of domestic and foreign currency green loans has grown steadily in recent years,with growth rates significantly outpacing

250、those of total loan balances.According to data from the Peoples Bank of China,from 2018 to 2023,the average annual growth rate of green loans was 26.62%,approximately 14.97 percentage points faster than the average growth rate of all loans(see Figure 1-11).By the end of 2023,the balance of domestic

251、and foreign currency green loans in China reached 30.08 trillion,a year-on-year increase of 36.5%,surpassing the growth rate of all loans by 26.4 percentage points.Global Zero Carbon Research Center,National Unified ESG Standards Introduced,Disclosure Business Expected to Grow Exponentially(in Chine

252、se),May 2024.Source:Monetary Policy Analysis Group of the Peoples Bank of China Figure 1-11 20182023 Balance and YOY Growth of Chinas Domestic and Foreign Currency Green Loans In the area of green bonds,the issuance of green bonds in both domestic and international markets in China remained at relat

253、ively low levels between 2018 and 2020,with an average annual issuance of only 240 billion.However,with the introduction of Chinas“dual carbon”goals,green finance entered a new phase of supportive policies,driving rapid market growth.In 2021,the issuance of green bonds in Chinas domestic and interna

254、tional markets reached its first peak,totaling 610 billion,a year-on-year growth of 177.27%.The continuous innovation of green bond products further expanded the issuance scale during 2022 and 2023(see Figure 1-12).In 2022 and 2023,the issuance of new green bonds in both domestic and international m

255、arkets in China hit record highs,reaching 980 billion and 1.08 trillion,with year-on-year growth rates of 60.66%and 10.20%,respectively.Central University of Finance and Economics Green Finance Research Institute,2023 China Green Bond Annual Report(in Chinese),February 2024.8.2310.2211.9515.922.0330

256、.0805101520253035404505101520253035201820192020202120222023%Trillions of YuanThe balance of domestic and foreign currency green loansYOY growth rate Source:Central University of Finance and Economics Green Finance Institute Data Figure 1-12 20182023 Issuance Scale and YOY Growth of Green Bonds in Ch

257、inas Domestic Market Source:Climate Bonds Initiative Figure 1-13 20172023 Sectors Targeted by Chinas Domestic Green Bond Issuance -50.000.0050.00100.00150.00200.0000.20.40.60.811.2201820192020202120222023%Trillions of YuanThe issuance volume of green bonds in ChinaYOY growth rate01002003004005006007

258、008009002017201820192020202120222023100 Million USDRenewable energyLow-carbon buildingsLow-carbon transportationWater resourcesWaste managementLand useClimate adaptation and resilienceIn terms of the allocation of funds raised,renewable energy has consistently been the primary focus,followed by low-

259、carbon transportation.In 2023,financing related to energy and transportation accounted for 84%of the total funds raised by onshore green bonds,an increase of over 10%compared to 2022.Although funds allocated to the energy sector slightly decreased,they remained at similar levels as in 2022,while fin

260、ancing directed toward the transportation sector saw a significant increase,with year-on-year growth exceeding 33%(see Figure 1-13).Apart from green financial products,in recent years,China has also begun to explore the development of emerging sustainable financial products such as social responsibi

261、lity finance and transition finance,yielding significant results.In 2020,to support pandemic control efforts,China issued 1 trillion in special anti-pandemic government bonds.This led to pandemic control bonds becoming a major component of Chinas social responsibility bonds that year.Source:Climate

262、Bonds Initiative Figure 1-14 20212023 Scale and Issuance of Chinas Social and Sustainability Bonds Since 2021,the issuance of pandemic control bonds has decreased,but the issuance of other social responsibility and sustainable development bonds has significantly increased,rising 1.8 times year-on-ye

263、ar to 193.8 billion.This brought the total scale of Chinas social and sustainable development bonds to a six-year peak of 270.3 billion.Subsequently,due to the easing of pandemic measures and global interest rate hikes,the issuance of social and sustainable development bonds in China declined to 125

264、.2 billion in 2022,a year-on-year Climate Bonds Initiative,Central Government Securities Registration and Settlement Co.,Ltd.(ChinaBond),and Industrial Bank Economic Research and Consulting,2022 China Sustainable Bond Market Report(in Chinese),June 2023.0204060801001201401600501001502002502021202220

265、23100 Million USDSocial responsibilitySustainable developmentNumbers of bondsdecrease of 35.4%.However,driven by both the public and private sectors,the total issuance of social and sustainability bonds rebounded in 2023 to approximately 140 billion,with the number of bonds issued increasing to 154,

266、surpassing the previous peak of 124 in 2021(see Figure 1-14).In 2023,the largest share of funding from Chinas social and sustainability bonds was directed toward affordable infrastructure and equality-promoting projects under social responsibility initiatives.Affordable infrastructure projects recei

267、ved$1.58 billion in investments,accounting for 24%of the total bond issuance.Bonds issued for these projects represented 61.9%of the total bond count dedicated to social responsibility initiatives.Meanwhile,equality-promoting projects,which aim to foster gender or income equality,accounted for 11.6%

268、of the total issuance volume and 42.8%of the bond count.(See Figure 1-15)Source:Climate Bonds Initiative Figure 1-15 20212023 Sectors Targeted by Chinas Social and Sustainability Bond Issuance Climate Bonds Initiative,Central Government Securities Registration and Settlement Co.,Ltd.(ChinaBond),and

269、Industrial Bank Economic Research and Consulting,2022 China Sustainable Bond Market Report(in Chinese),June 2023.Affordable infrastructure in China typically includes projects such as social security housing or large public facilities.For more information,please refer to:Climate Bonds Initiative and

270、 Industrial Bank Economic Research and Consulting,2023 China Sustainable Bond Market Report(in Chinese),May 2024.0%10%20%30%40%50%60%70%80%90%100%202120222023Affordable infrastructureHealthcareEducationPromoting equalityEmployment and trainingSocial adaptation and resilienceMicrofinancingFood securi

271、tyGreen projectsIn the field of transition finance,China has gradually introduced various types of financial instruments since 2021,including sustainability-linked bonds(SLBs)and transition bonds.After launching the pilot program for SLB issuance in April 2021,China began piloting transition bonds i

272、n June 2022,covering eight major industries such as power,building materials,and steel.By the end of 2022,China had issued a total of 83 SLBs and 16 transition bonds in domestic and international markets,with a combined issuance volume of 131.9 billion,of which 92%were SLBs and 8%were transition bon

273、ds.Heavy industries such as power,building materials,steel,cement,and chemicals were actively involved in issuance.In 2023,Chinas SLB issuance continued to maintain a global leading position.According to data from the Climate Bonds Initiative,China issued 53 SLBs in 2023,with a total scale of 40.6 b

274、illion.The financial sector replaced industrial companies as the leading issuer,accounting for 30%of total SLB issuance in 2023,followed by industrial companies(28%)and utilities(11%).The chemicals and technology sectors in China participated in SLB issuance for the first time,accounting for 6%of to

275、tal issuance(see Figure 1-16).Source:Climate Bonds Initiative Figure 1-16 20182023 Industry Breakdown of Chinas Sustainability-Linked Bond Issuance Overall,China has promoted the rapid development of sustainable finance through policy support,financial innovation,and enhanced market transparency and

276、 accountability.Both Climate Bonds Initiative,Central Government Securities Registration and Settlement Co.,Ltd.(ChinaBond),and Industrial Bank Economic Research and Consulting,2022 China Sustainable Bond Market Report(in Chinese),June 2023.According to the screening rules established by the Climate

277、 Bonds Initiative for the SLB database,the organization also tracks and compiles data on SLB issuance in major global countries to showcase the scale and credibility of the global SLB market.02444666112830010203040Real estateTechnologySteelOil and gasConsumer discretionaryMaterialsChemical productsG

278、overnmentUtilitiesIndustrialsFinancial industry%201820222023mainstream sustainable finance tools(such as green finance)and emerging ones(such as social responsibility and transition finance)have played important roles in this process.The widespread application of these financial tools has not only f

279、ostered sustainable finance domestically but also elevated Chinas leadership position in the global sustainable finance market,making significant contributions to global sustainable development.Currently,China has gradually developed a policy system centered on guiding principles,incentive mechanism

280、s,and information disclosure,covering both real enterprises and financial institutions,and has made significant progress in market practices.However,compared to developed countries and regions with advanced sustainable finance markets,China is still in a catching-up phase,and relevant policies,stand

281、ards,and mechanisms need further improvement.In terms of building an information disclosure system,there are still some shortcomings in China.First,information disclosure requirements are still primarily encouraged rather than mandated,focusing on the environmental risk management of financial insti

282、tutions and the potential environmental impact of invested assets.In contrast,developed regions like the EU have introduced more specific and mandatory requirements for financial institutions through the SFDR.Secondly,the mandatory disclosure indicators for Chinese companies are still limited,mainly

283、 focusing on environmental management and pollution control,whereas the requirements in developed regions cover a broader range of social responsibility indicators,such as corruption,proxy voting transparency,and employee human rights.Lastly,although the proportion of listed companies in China discl

284、osing sustainability information has increased in recent years,it remains relatively low,and newly released guidelines have not fully mandated information disclosure.In 2010,23.8%of A-share companies in China disclosed sustainability information reports,and by 2023,this proportion had only risen to

285、about 33%.On February 8,2024,the Shanghai Stock Exchange,Shenzhen Stock Exchange,and Beijing Stock Exchange simultaneously released a significant guidelinethe“Self-Regulatory Guidelines for Listed CompaniesSustainability Reporting(Trial)(Draft for Comments),”but these documents also do not fully man

286、date sustainability information disclosure for listed companies.Despite this,these issues are not unique to China.Globally,the regulation of sustainable finance markets is undergoing continuous transformation and improvement,and the advent of a new era of stringent information disclosure regulation

287、is driving China to accelerate its policy reforms.To ensure that Chinas information disclosure system transformation is both suited to national conditions and aligned with international standards,the following two points should be prioritized in the future.First,although China officially released th

288、e national unified sustainable disclosure standardthe“Corporate Sustainability Disclosure GuidelinesBasic Principles(Draft for Comments)”on May 27,2024,its implementation will be gradual.Given that this process Central Government Securities Registration and Settlement Co.,Ltd.(ChinaBond)and Internat

289、ional Capital Market Association,China ESG Practices White Paper(in Chinese),December 2022.The Shanghai and Shenzhen Stock Exchanges have adopted a combination of mandatory and voluntary disclosure.Companies continuously included in the Shanghai Stock Exchange 180 Index,the STAR 50 Index,the Shenzhe

290、n 100 Index,the ChiNext Index,and companies listed both domestically and internationally should disclose a Sustainable Development Report during the reporting period.Other listed companies are encouraged to disclose voluntarily.may take a considerable amount of time,the standardization of disclosure

291、 reports during this period is also crucial for advancing the information disclosure system.Second,China can learn from the EUs experience by gradually introducing verification mechanisms,employing third-party reviews to enhance the reliability and transparency of information disclosure,and promotin

292、g the regulated development of financial markets.In addition to improving the information disclosure system,we must also focus on expanding standards in the sustainable finance sector and aligning with international norms.In recent years,Chinas market regulatory authorities have continuously advance

293、d the integration of sustainable finance market rules,achieving significant results.On one hand,the establishment of new green bond standards has led to the preliminary unification of domestic standards.On the other hand,China has actively participated in international cooperation,gradually realizin

294、g the internationalization of standards.In the future,as domestic and international sustainable finance markets continue to expand,the unification of standards and international cooperation will play increasingly important roles.By participating in and leading the development and revision of interna

295、tional standards,emerging market economies such as China can exert greater influence and voice in the global sustainable finance system.For instance,following the release of the“Common Taxonomy”by China and the EU in 2022,the two parties launched Phase II work in 2023,focusing on gradually expanding

296、 the national basis of the“Common Taxonomy”and building capacities in more countries and regions.On May 3,2024,the Hong Kong Monetary Authority,based on the China-EU“Common Taxonomy,”the EU Taxonomy Regulation and its supplementary acts,and Chinas“Green Bond Support Project Catalog(2021 Edition),”es

297、tablished the Hong Kong Sustainable Finance Taxonomy,serving as a successful example of regional application of the China-EU“Common Taxonomy.”Overall,due to the transnational nature of issues like climate change,environmental pollution,and resource shortages,joint efforts by countries are essential

298、to achieve common goals through coordinated financial tools and policies.Accelerating the expansion of standards and international alignment will not only enhance the standardization and transparency of domestic sustainable finance market operations but also improve the effectiveness and efficiency

299、in addressing global challenges,ultimately achieving comprehensive economic,social,and environmental benefits.s a rapidly evolving field,sustainable finance inevitably faces many controversies and challenges today and in the future,most notably the huge gap between vision and real-world actions.On t

300、he one hand,demand for investment under the Sustainable Development Goals(SDGs)continues to grow.On the other hand,global subsidies for fossil fuels amounted to$7 trillion in 2022,in stark contrast to the embarrassingly low level of sustainable investment.Given this reality,it is particularly import

301、ant to focus on incentives and constraints faced by real-world actors.Therefore,this chapter turns its attention to the carbon reduction practices and related incentives for micro-actors,including financial institutions and corporations.The aim is to provide a data-driven foundation to further explo

302、re how to bridge the gap between the visionary goals of a sustainable finance and real-world actions.Addressing the climate crisis and achieving SDGs require mobilizing substantial financial resources.Given the strong budgetary and debt constraints on public investment growth,the private sector is e

303、xpected to become the primary source of sustainable investment in the future.From an economic perspective,tilting private sector investments toward low-carbon development hinges on the role of carbon premiums or green premiums.The core function of sustainable finance policy tools is to enable compan

304、ies with different environmental characteristics to access differentiated financing services.These tools either raise the carbon premium or reduce the green premium,thereby reshaping the incentive mechanisms of capital markets to favor green and low-carbon projects.To this end,this report will,throu

305、gh literature review and market data analysis,continue to monitor the formation and scale of carbon or green premiums in capital markets.According to the United Nations(UN),the annual funding gap for achieving the goals outlined in the“2030 Agenda for Sustainable Development”has widened to$4 trillio

306、n in 2023.In terms of climate mitigation and adaptation alone,an estimated$3 to$10 trillion in annual investments will be required globally by 2050 to meet the 1.5C temperature control target set for the end of this century.Recent data shows that global climate investment remains significantly below

307、 the level needed to meet these targets.In 2022,global climate investment totaled$1.4 trillion,accounting for approximately 1%of global GDP.Figure 2-1 compares various possible growth trajectories of climate investment.It shows that even with a compound annual growth rate(CAGR)of 10%,by the time cli

308、mate investment reaches a meaningful scale,it would likely be too late.This would result in either catastrophic consequences from climate warming or a rapid and abrupt shift to a low-carbon economy,leading to immense economic and social transition costs.UNCTAD,SDG Investment Trends Monitor(Issue 4),

309、Sep 14,2023.According to the International Monetary Fund(IMF)2022 report,in order to meet the Paris Agreements temperature control goals,including climate change mitigation and adaptation,between$3 and$6 trillion per year will be needed by 2050,as detailed in IMF Staff Climate Note,Mobilizing Privat

310、e Climate Financing in Emerging Markets and Developing Economies,2022/007,International Monetary Fund.Also according to the Climate Policy Initiative(CPI)2023 report,the 1.5C target would require an average of$9 trillion per year until 2030 and$10 trillion per year between 2031 and 2050,see Strinati

311、,C.,C.Alberti,B.Melling and C.Baudry,Top-down Climate Finance Needs to be Invested,2022/007,International Monetary Fund.Top-down Climate Finance Needs,2024-05-31,Climate Policy Initiative.To achieve a smooth transition to a low-carbon economy,it is essential to rapidly scale up climate investment.Ac

312、cording to our estimates,based on the IMFs projected funding needs,the compound annual growth rate(CAGR)of climate investment over the next few years must reach 38%.If we aim to meet the annual$9 trillion target under the 1.5C warming scenario,as estimated by the Climate Policy Initiative(CPI),the r

313、equired CAGR would need to rise swiftly to 71%.Fortunately,achieving this growth target is not out of reach.In 2020,global emergency fiscal spending in response to the COVID-19 pandemic reached$11.7 trillion.Additionally,in 2022,$7 trillion in subsidies flowed into the fossil fuel sector.This highli

314、ghts that the core issue is not the availability of sufficient funds,but rather whether there are adequate incentives to direct these funds towards climate and sustainable investment projects.Note：The solid black line in the figure shows the size of global climate investments in the year as tallied

315、by the Climate Institute,and all dashed lines are projections.Data sources：IMF（2022），Climate Policy Initiative(CPI,2023),by authors calculations Figure 2-1 Climate Investment Growth Targets and Trajectories In terms of funding sources,public and private sectors have each contributed approximately 50

316、%to cumulative climate investment since 2017.Given the growing challenges of public debt crisis,the potential for future growth in climate and sustainable investment will primarily come from the private sector.This is especially critical in developing and low-income countries,where sustainable inves

317、tment from the private sector remains severely underfunded.Increasing private sector participation will be essential for achieving future climate targets.According to the Climate Policy Initiative,the public sector accounts for 51%of cumulative climate investments from 2017 to 2022,and the private s

318、ector accounts for 49%.For details,see Strinati,C.,C.Alberti,B.Melling and C.Baudry,Top-down Climate Finance Needs,2024-05-31,Climate Policy Initiative.We can use the concept of premiums to understand the incentives for sustainable investment in the private sector.A price premium is a neutral concep

319、t in economic definitions,indicating either an additional gain or an extra loss compared to a benchmark(e.g.,the average market price).The concept of green premium has gained widespread attention through Bill Gates book How to Avoid a Climate Disaster.In the book,the green premium represents the add

320、itional cost required to replace traditional,carbon-emitting products with carbon-neutral solutions,for example,using biofuels instead of traditional jet fuel in airplanes or replacing coal power with renewable energy.Clearly,an excessively high green premium could hinder economic decarbonization.In

321、 this sense,green technological innovation,the selection of technological innovation pathways,and policy decisions should surround reducing the green premium.The objective is to make green solutions not only economically viable but potentially more profitable options.In capital market,premiums are o

322、ften closely linked to risk.The green premium generally refers to the additional return investors gain from investing in green,low-carbon assets,that compensates for uncertainties related to future technological developments and the transition process.In contrast,the carbon premium represents the ex

323、cess returns investors earn by holding high-carbon-emitting assets.Under the influence of climate risks,these high-carbon assets may face significant price volatility in the future,and they may even become stranded assets.In this sense,the carbon premium serves as compensation for investors exposed

324、to such transition risks.From the demand side of the capital market,a higher risk premium for capital also translates into higher financing costs,which can,in turn,suppress financing demand and hinder the development of related projects.The key role of sustainable financial policy tools is to provid

325、e differentiated financing services for firms with different environmental characteristics.Their main function is reflected in raising carbon premium and lower green premium of capital,thereby subverting the original capital market incentive,and making the supply of capital tilted towards green and

326、low-carbon projects For example,green loan strategies of banks provide preferential interest rates to environmentally friendly firms or impose punitive interest rates for high-emission lenders.Green bonds attract investors who pursue a balance between economic and social returns and provide low-cost

327、 capital to green projects.These financial tools affect the premiums in financing and eventually regulate the direction of capital flows.In the meanwhile,we can also test the effectiveness of these financial tools by examining whether a premium exists.Literature in recent years have provided conflic

328、ting evidence regarding the existence of a carbon or green premium.Although in general,good environmental performance is correlated with a lower cost of financing,but whether there is effect coming from GHG emissions is not clear.Some analyses tend to support the existence of a carbon premium(e.g.Bo

329、lton and Kacperczyk,2021;Palea and Drogo,2020;Trinks et.al.,2022),but others argue that the correlation between asset returns and carbon emissions is not statistically significant(e.g.Aswani,et.al.,2023).In the next subsection,we will examine whether and how capital markets process carbon-related ri

330、sks indirectly by comparing the returns of different financial assets.A recent analysis by Morgan Stanley shows that the median return of sustainable funds in 2023 was 12.6%,significantly higher than 8.6%of traditional funds.Moreover,sustainable funds outperformed traditional funds across all region

331、s and asset types.As illustrated in Figure 2-2,sustainable funds consistently delivered superior performance in terms of median returns between 2019 and 2021.However,from the second half of 2021 to the second half of 2022,sustainable funds experienced a sharper decline in returns compared to traditi

332、onal funds,a period that coincided with rising inflation in the United States.Morgan Stanleys research also identified significant regional differences in sustainable investment yields.The Americas posted the highest returns,followed by Europe,while sustainable investment returns in Asia,Africa,and

333、Oceania were less than one-tenth of those in the Americas(see Figure 2-3).Note:H1 and H2 represent the first and second half of the year,respectively.Data Source:Morgan Stanley Figure 2-2 Comparison of Sustainable and Traditional Funds Data Source:Morgan Stanley Figure 2-3 Return of Funds by Investment Destination Figure 2-4 compares the annual returns of the Bloomberg Global Aggregate Bond Index