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The G20’s race to green the financial system | G20走向绿色金融系统的征程

The G20’s race to green the financial system

Andrew Voysey, Director, Finance Sector 

7 September 2016


At their summit this year in Hangzhou, G20 leaders have been tackling head-on the effects of a languishing and increasingly unequal global economy.

Encouraging more inclusive economic growth was high on their political agenda, perhaps because they understand its connection to the recent surge of anti-establishment politics around the world.

And for the first time, in what may prove to be a watershed moment, they also discussed how to "green" the financial system as part of supporting strong, sustainable and balanced growth. (G20 leaders “Green Finance” communiqué
.)

They were right to do so; risks to growth linked to environmental issues are becoming more complex and interconnected and more material to business. A key question is whether financial institutions are managing environmental risks appropriately? Can better analysis of these risks lead to a more efficient allocation of capital and drive the long-term stable and sustainable global growth that the G20 has aspired to?

This is not a hypothetical conversation. These types of challenges are already being faced and addressed by G20 countries. In recent years, Brazil has suffered its worst drought in decades. The majority of the country’s electricity comes from hydroelectric dams. Shifting to thermal power generation meant that electricity prices soared by up to 70 per cent. Inflation followed, with implications across the Brazilian economy. Had the resulting change in market prices been priced into prior valuations by investors?

And in China, the latest 
Five-Year Plan has committed to continue to grow the Chinese economy while reducing its carbon intensity by 18 per cent against 2015 levels (see graphic below). 

G20 infographic

One major driver for this move is the societal reaction against poor urban air quality, caused by heavy industry. Achieving this target will require significant shifts of capital to underpin the greening of the Chinese economy. Those caught behind the curve of this environmentally-inspired transition will face material risks.

In December 2015, under China’s leadership of the G20, the group created a Green Finance Study Group (GFSG). Its purpose is to identify what options exist for governments to catalyse the private sector to scale up green finance to the order of tens of trillions of dollars over the coming decade. Alone, China has said it needs around US$460 billion (3 trillion yuan) each year to finance its green investment programme.

Importantly, this work has not been led by environment ministers, but by finance ministers and Central Bank governors. Green finance now sits right at the heart of global economic decision-making.

The Cambridge Centre for Sustainable Finance, a research hub on financial market reform, hosted by the University of Cambridge Institute for Sustainability Leadership (CISL), has been formally involved as a Knowledge Partner since the launch of the GFSG.

As part of its work, the GFSG asked us to review current practice of financial institutions globally to understand the degree to which they are already innovating to integrate environmental risks into decision-making. This is critical because unless the institutions controlling so much of the world’s capital are fully sensitised to growing environmental risks, they won’t seek innovative solutions with the determination and focus that is so badly needed.

Our analysis has drawn three clear conclusions:

1. Important innovation is already happening in the financial sector, but it is at the margins of mainstream practice. For example, a Chinese commercial bank, ICBC, has conducted stress testing on the impact of air quality regulations on the credit risk of its heavy polluting clients, finding significant deteriorations. Elsewhere, UK-based insurers have quantified how extreme weather events can drive food price spikes and hit stock markets around the world.

2. There are real challenges to integrate such innovation into mainstream practice and therefore good reason for regulatory attention. The need to make good quality, relevant data available is well understood. Knowing how to process that data by connecting scenario analysis to financial impacts, however, requires multi-disciplinary expertise that is not often found within a single institution.

3. G20 Governments should put in place formal structures to accelerate action on environmental and financial risks across banking, investment and bond markets. Governments and regulators need to help build capacity in local markets, plug knowledge gaps, improve data and level the playing field. All of these sectors need to be ‘greened’ to achieve the mobilisation of tens of trillions of dollars of green finance

It will be important now to turn the recent momentum for green finance from the G20 Summit into concrete action.  It will take everyone’s effort to make this happen, from central banks and investors to credit rating agencies and regulators. .

China’s own actions are a clear example of leadership, globally. For example, as G20 Leaders departed Hangzhou, the China Banking Regulatory Commission revealed separate work it has been doing with the Cambridge Institute for Sustainability Leadership to green the finance of China’s commodity imports.

In the foreword of the report, director Ye Yanfei says:

“The production and trade of agricultural commodities play an important role in generating carbon emissions and impacting sustainable development. China is one of the biggest importing countries of agricultural products.”

“Implementing green credit standards in trade finance processes for agricultural commodities is therefore an urgent task for China’s banking industry still to achieve.”

Across all sectors it seems the race is on to green the financial system.
 

Read the report: Environmental risk analysis by financial institutions – a review of global practice.

The University of Cambridge Institute for Sustainability Leadership (CISL), through its Centre for Sustainable Finance, is a lead knowledge partner for the G20 Green Finance Study Group.

for more information.

This blog was first published on chinadialogue.


 

G20走向绿色金融系统的征程


在今年的杭州峰会上,二十国集团首脑们积极地探讨了应对全球经济增长乏力和日益严重的失衡现象。

在他们的政治议程中,鼓励更具包容性的经济增长是一项重要议题。这可能是因为他们意识到了包容性增长和近来全球范围内反政府政治活动之间的联系。

而且,在此次具有分水岭意义的会议上,他们也首次就如何“绿化”金融系统,并以此促进强劲、可持续、平衡的经济增长展开了讨论。

这么做无疑是正确的。环境问题给增长带来的风险变得日益错综复杂,同时也使企业经营面临着切实的压力。目前一个关键的问题便是:金融机构是否做到了对环境风险进行妥善的管理?对这些风险进行更深入的分析是否能够提高资产配置的效率并实现G20追求的长期稳定可持续的全球经济增长?

这并不是无稽之谈。上述这些挑战早已摆在了G20国家的面前,而他们也不得不加以应对。近几年,巴西经历了数十年以来最为严重的旱灾。对于主要依赖水力发电的巴西来说,转为火力发电后,电价飞涨了70%,随后还引发了通货膨胀,波及巴西经济全局。如果投资者在前期估算的时候就考虑到市场价格变化将导致的结果,我们就可以避免这样的情况!

中国在其最新出台的
五年计划中承诺将继续保持经济的增长势头,且同时在2015年的基础上将碳排放强度降低18%。

G20 infographic Chinese

制定这一目标的主要原因在于社会各界对重工业发展导致的恶劣的城市空气质量不满。落实该目标就需要实现资本的大规模转移,从而支持中国经济的绿色转型,而那些跟不上转型步伐的企业将面临切实的风险。

2015年12月,在中国担当轮值主席国期间,G20成立了绿色金融研究小组(GFSG),致力于研究未来十年各国政府如何才能调动数万亿美元的私人资本进入绿色金融领域。中国曾表示,仅该国一国每年就大约需要融资4600亿美元(约合3万亿元人民币)以支持绿色投资项目。

更重要的是,领导这项工作的并不是各国的环境部长,而是财政部长和中央银行行长。现在,绿色金融是全球经济决策的重中之重。

G20绿色金融小组成立伊始,剑桥大学可持续领导力学院/研究院(CISL)下属的可持续金融中心就作为合作伙伴正式参与其中。

作为项目工作的一部分,G20绿色金融研究小组要求我们对全球金融机构当前的决策惯例进行核查,从而了解他们已经在何种程度上将环境风险分析纳入决策过程。了解这一情况至关重要,因为只有当这些掌握世界上大部分资金的机构充分意识到环境风险与日俱增,他们才会下定决心,集中注意力,寻求新的创新性的解决方案。

我们通过分析明确得出了三点结论:

第一,虽然金融领域已经有了重大创新,但是尚未形成主流趋势。比如,
中国工商银行已经就空气质量管理条例对重污染客户信用风险的影响开展了压力测试,结果发现这些客户的信用会明显恶化。此外,英国的一些保险公司也对极端天气事件造成的食品价格飞涨和全球股票市场动荡进行了量化研究。

第二,将此类创新举措纳入主流实践还面临着许多实打实的挑战,因此更值得监管部门的关注。我们都知道目前需要开放相关的优质数据,但是只有具备多学科背景的专业人才才会知道如何通过将情境分析和(实际)金融影响联系起来,对数据进行加工,而这样的人才往往是可遇不可求的。

第三,G20各国政府应当建立正式的制度,推动银行业、投资和债券市场积极应对环境风险和金融风险。政府和监管部门需要帮助地方市场提升能力,缩小(各级市场的)专业知识差距,完善数据,为他们提供一个平等的竞争环境。为了落实
调动数十万亿美元绿色资金的目标,所有这些部门都需要实现“绿色转型”。

目前重要的是要将G20峰会掀起的绿色金融发展势头化为具体的行动,这就需要各国从央行到投资者,再到信用评级机构和监管部门等各个环节的配合。

中国采取的行动很明显在全球范围内展现了其领导风范。比如,当G20的首脑们离开杭州之际,中国银行业监督管理委员会公布了其和剑桥大学可持续领导力学院合作开展的中国商品进口绿色融资工作报告。

在这份报告的前言中,叶燕斐主任说到:

“中国是世界上最大的农产品进口国,而农产品的生产和销售过程会产生大量碳排放,不利于可持续发展。”

“因此,对中国银行业来说,落实农产品交易绿色信用标准仍然是一个急需完成的任务。”

各部门似乎已经争先恐后地踏上了这场金融系统绿色化的征程。


本博客首次发表在“中外对话”( chinadialogue)上。

剑桥大学可持续领导力研究所(CISL)通过其可持续金融中心担任G20绿色金融研究小组的首席知识伙伴。

 

 

关于作者 | About the author

安德鲁·沃伊齐(Andrew Voysey)负责领导我们的金融部门团队,团队汇集了国际银行、保险公司和投资方,他们的目的是想建立一个重视可持续未来的金融体系。

Andrew Voysey leads our Finance Sector team convening international banks, insurers and investors who want to build a financial system that values a sustainable future.

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剑桥大学可持续领导力学院(CISL)博客刊登的雇员撰文不代表该学院或剑桥大学确认或赞成其观点。

Articles on the blog written by employees of the University of Cambridge Institute for Sustainability Leadership (CISL) do not necessarily represent the views of, or endorsement by, the Institute or the wider University of Cambridge.