There is increasing international recognition of the significance to integrate climate and environmental factors into mainstream financial decision-making. Established in 2015, the Task Force on Climate-Related Financial Disclosures (TCFD) has gained more and more influence, being endorsed by institutions representing $120 trillion of assets globally. In the meantime, developing green finance and promoting the green economy is of major strategic significance for China. In 2016, seven ministries and commissions including the People’s Bank of China (PBoC) jointly issued the first national green finance policy in the world. The China Securities Regulatory Commission (CSRC) also set forth uniform standards for climate and environmental information disclosure by listed companies. The country’s financial authorities began working on a unified system of green finance standards and statistics and introduced a series of regulations and standards, including: the Green Credit Statistics System, issued by the China Banking and Insurance Regulatory Commission (CBIRC) in 2013 which also organised major banks to carry out green finance self-evaluation; in 2015, the Green Bond Endorsed Project Catalogue and the Green Corporate Bond Endorsed Project Catalogue issued by the PBoC and the National Development and Reform Commission (NDRC); and the Green Industry Guiding Catalogue issued in 2019 by seven ministries and commissions including the NDRC and the PBoC. These green finance standards have laid the foundation for climate and environmental information disclosure.
In this context, the Chinese and UK governments, at the 9th UK–China Economic and Financial Dialogue held on 15 December 2017, agreed to strengthen green finance cooperation and encouraged financial institutions of the two countries to jointly pilot climate and environmental information disclosure. Ten Chinese and UK financial institutions joined the UK-China Climate and Environmental Information Disclosure Pilot and received comprehensive guidance from the PBoC and Bank of England. Industrial and Commercial Bank of China (ICBC) and Principles for Responsible Investment (PRI), represent each side respectively, serve as co-chairs of the pilot steering committee. The pilot is a four-year initiative, including one year of preparation and three years of action. 2019 was the second year
of the pilot.
(I) Main goals and measures of the pilot
- Raise awareness and build capacity
- Advanced the disclosure plan and framework
- Implement information disclosure of pilot participants
(II) UK-China action plan and progress
a. United Kingdom
- More quantitative disclosure to measure and identify where exposure to climate-related issues is likely to be concentrated
- Testing of climate scenario tools
- Increased focus on the application of TCFD reporting in company engagement, selection of fund managers as well as setting targets and assessing the investment or lending strategy
- Developing official guidelines for the UK financial industry
b. China
Expanded coverage of participating institutions
As the pilot continues to move forward, the participating institutions have increased from 10 to 13 with the joining — based on a strict process of assessment and selection — of PICC Property and Casualty Company Limited, Ping An Insurance (Group) Company of China and AVIC Trust Co., Ltd. The pilot covers diverse financial sectors including banking, asset management and insurance. The Chinese participating institutions represent approximately RMB50 trillion of assets.
Significant progress of climate and environmental information disclosure
Firstly, the Chinese participating institutions, in light of China’s actual conditions with reference to the TCFD framework, eventually formulated the environmental-related target framework for the Chinese side. Secondly, all the participating institutions across different sectors achieved substantial progress.
Most banking financial institutions, such as ICBC, Ping An Insurance (Group) Company of China and Bank of Huzhou, published independent disclosure reports
and some banking financial institutions made related disclosures as part of their CSR reports. Thirdly, the participating institutions made relatively comprehensive disclosures. Their disclosures included not only qualitative information such as strategies and goals, credit policy, risk control, green products, and research, but also quantitative information including the environmental impact from operating activities and investment and financing activities.
