Sustainable finance: Why China is tapping into foreign banks’ expertise to aid decarbonisation push
- Beijing is for the first time allowing foreign banks to access a central government facility for green finance
- The move will help Chinese companies tap into overseas funds that are contingent on adherence to ESG norms, a senior banker says
A recent move by Beijing that for the first time allows foreign banks to tap into a central government facility for green finance will lift the standards of Chinese sustainable finance and broaden funding channels, according to a senior banker.
The inclusion of foreign banks in China’s efforts to expand green financing is important because it bridges gaps between Chinese green finance standards and global ESG (environmental, social and governance) norms, said Kamran Khan, head of ESG for Asia-Pacific at Deutsche Bank.
“Currently, the domestic banks are familiar with the Chinese standards, but they are not as well versed on the standards in the EU and elsewhere,” Khan said. “We are in an ideal position to advise Chinese clients on how to prepare ESG transactions that meet global standards.”
Meeting international standards will allow Chinese companies to tap into overseas funds that are contingent on adherence to ESG norms.
China’s green credit balance had tripled to 15.9 trillion yuan (US$2.3 trillion) as of the end of last year compared with eight years ago, making it the largest in the world, according to the People’s Bank of China (PBOC).
