Green Credit Policies In China:Overcoming Current Obstacles In Implementation

Human lifestyles have been altered by the rapid development of technology and innovation for the past two centuries.People have also enjoyed the convenience brought by them.However,technology have resulted in the unprecedented human-caused harm to the environment,including warming of the atmosphere,diminishing ofsnow and ice,and rising of the sea level.At the end of the twentieth century,these bad influences have drawn wide attention around the world,contributing to the worldwide cooperation to seek for solutions.After the 1972 UN Human Environment Conference in Stockholm,the 1992 UN Conference on Environment and Development took an important step forward environmental protection and sustainable development.This conference encouraged governments,NGOs,and the public to respond positively to environmental pollution and ecological deterioration,and to make efforts to promote sustainable development.Afterwards,sustainable development,including sustainable finance,became the focus in every field.The 1992 UN Conference on Environment and Development provided a chance for the development of sustainable finance,which was based on the signing of UNEP's Statement of Commitment by Financial Institutions on Sustainable Development for financial institutions.This statement focused on impacts of financial services on the environment and the society,and encouraged financial institutions to take the implications of environmental,social and governance(ESG)factors into consideration when making their decisions.In the twenty-first century,the Equator Principles(launched in 2003)required financial institutions which adopted them to make assessments on environment and social risks before they provided financial services to projects.The UN Principles for Responsible Investment and GRI(Global Reporting Initiative)Sustainability Reporting Guidelines also supplement the development of sustainable finance.All of these principles continually encourage financial institutions in the world to use financial services to advance sustainable development.From the implementing of the reform and opening-up policy in 1978,China's economy has increased dramatically,and the society has been continually improved.However,China is faced with severe environmental deterioration,including air pollution,water pollution,acid rain,and potential climate change impacts,brought about by economic activities and energy consumption at the expense of the environment,and which pose threats to citizens and society within the country.The Chinese government has thus paid attention to these environmental problems,and has tried to use green finance to solve them.In China,green finance(which is the same as sustainable finance)utilizes a number of mechanisms,including green credit,green bonds,green insurance,etc.The implementation of green credit began in 2007,but its policies have not fulfilled expectations,and the amount of green credit still amounts to only a small fraction of total credit.This thesis thus analyzed obstacle factors for the implementation of green credit policies,dividing them into two categories:internal factors,which were those within the financial institutions(i.e.,banks);and external factors,which were those caused by actors outside the financial institutions.The analysis suggests that internal obstacle factors might be addressed by employing such measures as strengthening the social responsibility consciousness of financial institutions,building more sophisticated Environmental Risk Management Systems within such institutions,and providing bank employees with specialized environmental training.For external obstacles,the government could undertake a number of measures,including the development of a more robust legal system for green credit development,improving information sharing systems,strengthen the monitoring and supervisory mechanism,and implementing the Pollution Liability Insurance(PLI)policy and coordinate that policy with green credit.Enterprises have a role to play in green credit as well,mostly associated with ensuring compliance with environmental laws and regulations;providing timely and truthfully-disclosed information;adapting international codes for production standards;and implementing environmental management systems.NGOs and the public need to play an oversight role,monitoring both enterprises and financial institutions to the extent possible,and fostering public awareness about green economic goals..Current obstacles in implementing green credit policies in China are significant,but they are not insurmountable-and green credit could play an increasingly important role in achieving sustainable development within the country.