Legal Infrastructure Of Green Finance

In the context of growing environment challenges,China's economy urgently needs to transition towards a green and sustainable growth model.The establishment of a mechanism that simultaneously stimulates green investment and curbs investment in pollution-intensive industries will be the key to transforming China's current economic growth model into a green model.As stressed by the decisions of the CPC Central Committee on Several Major Issues Concerning the Comprehensive Deepening of Reforming adopt at the Third Plenum of the 18th CPC Congress,"Efforts must be made to establish a systematic and full-fledged institutional system of ecological civilization for the protection of eco-environment,"and "Efforts must be made to establish a market-based mechanism that channels private capital investments to the protection of eco-environment."All these provides a rare opportunity for the development of green finance.The financial market is the main financing channel of our country.To realize the green transformation,incentive measures for the better allocation of capital and other financial resources will be instrumental.Once funds recede from polluting industries and flow into green and environmentally friendly sectors,other resources will follow suit and achieve a more optimized configuration.This vision calls for China to establish a green finance system that strengthens the incentive mechanism for channeling financial resources-and private capitals in particular-into green projects.In the last few years,the government has made considerable headways in the promotion of green finance,but efforts on various fronts remain fragmented and a comprehensive green finance system is still far from a reality.An important issue hindering the growth of China's green finance system is the lack of relevant laws and regulations,lack of monitoring system and accountability system.This mainly reflected on low level of legislative body.Therefore,the green finance legislation becomes very necessary and urgent.Developed countries have already accumulated several decades of experience in developing green finance-related institutional arrangements.So,we should gain a broader,international perspective on green finance,fully take in the successful experiences of other countries to build a more efficient green finance legal system.This document proposing three specific recommendations for China's future green finance legal infrastructure.First identify and clarify environmental responsibilities of banks,amend the Tort Liability Law,clearly specify the statutory obligations and liabilities of banks and other lending institutions in regards to the environmental assessment and environmental impacts of their investment.Second,implement compulsory green insurance for key industries;utilize market mechanisms of the insurance industry to limit investment in polluting projects and provide funding for restoration efforts.Formulate and bring out the Regulations on Compulsory Environmental Pollution Liability Insurance,create an enabling framework for professional risk assessment services,and finally accentuate the synergistic effect of environmental pollution liability insurance and green credits.Last,this document recommend to establish an mandatory disclosure requirement on environmental information,mandatory disclosure requirements are first imposed on polluting industries and then diffuse to other industries.The disclosure requirements should have sufficient detail and be quantifiable.Furthermore,the monitoring,supervision,regulation,and enforcement of environmental information disclosures should be strengthened.