China steps up support for green bonds

CSRC issues guidelines to stimulate market, while Shanghai Stock Exchange announces plans to create special green bond index

Regulators in China have boosted their support for the nation’s fertile green bond market.

Finance watchdog the China Securities Regulatory Commission (CSRC) has published a series of guidelines to back issuance within the thriving asset class – complete with an overall commitment to open up a specific ‘green channel’ for approving bonds of this type.

As part of its new guidance, the CSRC plans to:

1. slash red tape that may be hindering the growth of green bonds;
2. enhance its supervision of the use of proceeds to ensure they are properly invested in green projects; and
3. further incentivise fund management firms, banks and brokerages to invest in green bonds.

In parallel with the CSRC’s measures, the Shanghai Stock Exchange (SSE) has announced that it will create a special index and board for green bonds, providing investors with a transparent trading platform.

The SSE notes that, by the end of February, it had issued a total of 14 corporate bonds and three asset-backed securities in the green segment, raising a total ¥22.3bn ($3.2bn).

Liu Wei, deputy chief of the SSE’s bond division, said: “When conditions become mature, [we] will launch green corporate bonds trading, making it a transparent trading platform for green corporate bonds. Currently, the SSE is compiling a green corporate bond index for companies listed in Shanghai.”

Following those developments, it emerged that green bonds were also becoming a greater economic priority for the Association of Southeast Asian Nations (ASEAN) trading bloc.

In a 13 March statement, the ASEAN Capital Markets Forum (ACMF) announced that it is drawing up a series of formal, green bonds standards for the bloc, designed to drive the market among member nations and produce benefits for their economies.

ACMF officials are collaborating with the International Capital Market Association (ICMA) to create the new standards.

“This initiative,” said ACMF, “will facilitate ASEAN capital markets in tapping green finance to support sustainable regional growth and meet investor interest for green investments, and is part of the ACMF’s broader efforts in developing green finance for the region.”

ICMA’s Green Bond Principles (GBP) will underpin the ASEAN Green Bond Standards.

ACMF added: “The standards are intended to provide additional guidance on the application of the GBP, as well as to enhance transparency, consistency and uniformity of ASEAN green bonds, which will [eventually] contribute to the development of a new asset class.”