China’s climate action in the coming decade will play a decisive role in whether the world can limit global warming to 1.5 degrees Celsius. As the world’s largest source of CO2 emissions, China accounts for nearly a third of the global total. Based on its current trajectory, China’s emissions are expected to increase further by 7%-15% by 2030 above 2015 levels, which would more than offset the global decreasing trend. To ensure that China meets its own goals for advancing an ecological society, as well as its stated commitments to the Paris Agreement, climate and green finance needs to mobilize at an unprecedented scale. The Climate Policy Initiative, in its report titled ‘ The Potential for Scaling Climate Finance in China‘ analyses the current status of the country’s green energy finance sector and highlights future opportunities. REGlobal presents an extract of the report….
China’s Climate Action in the coming decade will play a decisive role in whether the world can meet the ambitious Paris Agreement target of limiting warming to 1.5 degrees
China’s emissions increased by 2.3% and 2.6% in 2018 and 2019, enough to offset the global decreasing trend, and is expected to further increase by 7%-15% by 2030 above 2015 levels. Already, China’s recovery from COVID-19 has led to a rapid rebound in emissions. To reverse China’s increasing emissions trend and ensure that China can meet its own goals for advancing an ecological society, as well as its stated commitments to the Paris Agreement, climate and green finance needs to mobilize at an unprecedented scale.
Recognising the challenge at hand, China has taken significant steps for green financial reform
Led by the central bank’s initiative, China introduced green finance as a major topic for the 2016 G20 summit and endorsed a nation-wide blueprint for establishing a green financial system in 2016. So far, China’s green financial reform has led to more than RMB 10.6 trillion (USD 1.5 trillion) in outstanding green loans, RMB 977 billion (USD 140 billion) in green bonds, hundreds of established green funds, opportunities for green stock indices, and insurance. In total, an average USD 202 billion was deployed annually in climate-related investments and an additional USD 118 billion in other environmental sectors during the period 2017-2018.
However, current levels of finance remain far below what is necessary
As much as RMB 95.45 trillion (USD 14 trillion) over the next decade, or USD 1.4 trillion annually, will be needed to meet China’s climate targets and environmental protection standards established in 2015. This means that investment will need to increase by more than four times the current levels. The estimated investment needs could be much higher, considering that China’s climate targets are not based on absolute emissions reduction, but on carbon intensity, which still allows room for China to continue increasing its emissions. Despite private capital mobilization being one of China’s major goals with green financial reform, evidence presented in this report suggests that the private sector has played a limited role to date.
China’s green financial reform has major implications at a global level
For instance, China’s “Big Four” state-owned banks are also the world’s four largest banks, representing combined assets of USD 14.8 trillion, greater than the combined assets of the 11 largest banks in the US.9 These “Big Four” banks contributed USD 240 billion to the fossil fuel industry in the past four years. 44% of this amount, or USD 106 billion, went towards the coal sector, making China’s Big Four the world’s largest financiers of coal. Furthermore, China’s outbound finance has increased significantly in the past decade, with USD 196 billion in energy-related investments in Belt and Road Initiative countries over the past four years.12 Half of this amount, or around USD 98 billion, went to fossil fuel projects.
So far, however, green financial reform has not impacted China’s support for fossil fuels in a significant way. Green definitions in China have been contested for their inclusion of clean coal and other efficiency-related improvements for fossil fuels.14 On the other hand, exclusionary lists for fossil fuels have not been developed and China’s key financial institutions have not made any public commitments to reduce investments in fossil fuels. Ensuring that progress is made on both climate-friendly and climate-harmful investments will be a key step forward for China’s climate action in the coming years.
2. Domestic Green and Climate Finance Landscape
Public sources accounted for 51% of total green finance, or RMB 1.1 trillion (USD 162 billion). Policy banks were the largest contributors with RMB 643 billion (USD 96 billion), or 44% of public finance. Their main contribution was to the transportation sector, accounting for 71% (RMB 389 billion (USD 58 billion)) of total investment in the transportation sector. CSOEs, including enterprises directly overseen by the central SASAC and other non-bank institutions regulated by the Ministry of Finance, contributed RMB 228 billion (USD 34 billion), or 21% of total public finance. China’s “Big Five” power generation companies and two national utilities accounted for more than half (58%) of all CSOE finance, contributing RMB 90 billion (USD 13.5 billion) and RMB 40 billion (USD 6 billion) to wind and solar respectively.
Green PPP projects accounted for around a fifth of total finance, or RMB 459 trillion (USD 68.5 billion). A majority of these projects were labeled “Ecological Construction and Environmental Protection,” a catch-all term for a portfolio of projects at the village or county level, which include river restoration, constructing wetlands and ecological corridors, improving rural drinking water, and waste management. This category accounted for RMB 315 billion (USD 47 billion), or 15% of all domestic climate finance flows. PPP projects are largely financed through green funds established by government budgets.
Private sources accounted for 24% of total finance at RMB 516 billion (USD 77 billion). These sources included project developers, corporates, leasing companies, and institutional investors. Together they made the largest contribution to the solar industry, with RMB 301 billion (USD 45 billion), or 70% of the sector total. This is indicative of the generous government incentives and subsidies that the solar industry benefited from over the past decade. Solar installed capacity in China grew from 2.5GW in 2011 to 205 GW at the end of 2019. Despite the state’s sudden decision in May 2018 to halt all subsidies for utility-scale solar in favor of competitive bidding, momentum for solar remains relatively strong.
Mitigation vs Adaption
Overall, sectors with mitigation benefits received RMB 1.3 trillion (USD 193 billion), or 60% of the total. Of this total, 55% went to wind and solar. “Other environment” sectors, or sectors with indirect mitigation and adaptation benefits, including AFOLU (agriculture, forestry and other land use), resource conservation, and ecological construction, received an estimated RMB 791 billion (USD 118 billion).
Adaptation related projects received RMB 56 billion (USD 8.3 billion), or 4% of total climate finance. This mainly included financing for disaster risk prevention and flood control measures, such as building sponge cities, dikes, and drainage systems. This figure is likely underestimated considering the potential adaptation benefits of projects such as those in the category of ecological construction and water management, as well as difficulties in tracking adaptation finance among private entities. Tracking adaptation finance is a challenge globally, given the difficulty of defining and measuring adaptation benefits, as well as issues related to drawing boundaries with traditional development finance.
Investments were concentrated north and southeast, especially along the coastal provinces. Solar dominated in the northeastern provinces, led by Hebei, Shanxi, Shaanxi, and Inner Mongolia. Wind was prominent in the southeast, led by Jiangsu, Guangdong, and Henan. The green finance pilot zones selected by the State Council in 2017are well distributed across the country to reflect the different development contexts and natural resource conditions in each. These include Zhejiang in the east, Jiangxi, Guangdong, Guizhou in the south, and Xinjiang and Gansu in the west. The cities in these provinces were selected to establish local green finance policies and establish innovative market mechanisms for mobilizing green finance.
3. Scaling up climate finance
While annual climate finance flows of RMB 2.1 trillion (USD 320 billion) is not trivial, this figure must increase by at least four times to meet China’s annual investment needs of RMB 9.5 trillion (USD 1.4 trillion) over the next decade. Mobilizing private capital will be key to meeting estimated needs. However, the current climate finance landscape indicates that the private sector has played a limited role to date.
3.1 Potential to scale up
There is tremendous potential for climate finance to grow, simply given the size of China’s financial assets. The current green penetration of China’s financial system remains at around 4% .
As China’s capital market continues to evolve and actors become familiar with green financial instruments, uptake in the market will continue to grow.
Already the green credit and green bond portfolios have achieved tremendous growth. Green credit has more than doubled over six years to RMB 10.6 trillion (USD 1.5 trillion), and green bonds have grown to RMB 977 billion (USD 140 billion) outstanding over four years. Around RMB 866 billion (USD 124 billion) worth of green bonds in China reach maturity in the next 5 years, representing new opportunities for green refinancing. As for green stocks, discussions are under way to launch expedited listing processes for green company IPOs, and multiple green indices and funds have been established.
China is providing more support for SMEs. Similar to their green credit guidelines, regulators have advised banks to increase lending to SMEs and track progress on their growth. These recent efforts are part of the state’s ongoing campaign to reduce banks’ preferential treatment for SOEs, reduce the perception of implicit government guarantees, and reduce unsustainable levels of local government sponsored debt. As banks start lending to more SMEs and become more familiar with managing different credit risk profiles, this will increase opportunities for banks to take interest in more innovative, risk sharing arrangements.
New sources of concessional capital for climate finance are on the way. In 2016, the central government announced plans to set up a unified National Green Development Fund (NGDF) to invest in green industries. The Fund was jointly launched in July 2020 by the Ministry of Finance, Ministry of Ecology and Environment, and the Shanghai municipal government with an initial capital of RMB 88.5 billion (USD 13 billion). The Fund will adopt the PPP model for its operation and will largely focus on green development along the Yangtze River Economic Belt, in various projects including environmental protection, pollution prevention and control, ecological restoration, energy conservation and utilization, green transportation, and clean energy.
There is growing interest in exploring innovative structures. For instance, China’s Clean Development Mechanism Fund (CDM Fund) was launched in 2010 to support China’s efforts to address climate change and promote sustainable development. By April 2020, the CDM Fund had implemented 317 clean concessional loan projects in 27 provinces, municipalities, and districts, with a total loan value of RMB 19.4 billion (USD 2.8 billion), and leveraging capital of nearly RMB 100 billion (USD 15 billion). In May 2020, the CDM Fund signed a Green Innovation Investment Cooperation Agreement with the Department of Finance of Jiangsu Province and Industrial Bank Nanjing Branch. The three parties will initiate risk-sharing arrangements to support low-carbon development, energy conservation and emission reduction projects at the local level.
The prevalence of mobile payment technologies and online banking represents new financing avenues for consumers, retail investors, and small businesses. China’s volume of credit asset issuance is expected to grow from RMB 57 trillion (USD 8.4 trillion) in 2018 to RMB 80 trillion (USD 11.7 trillion) in 2022. 54% of this growth will be driven by the expansion of credit to long-tail customers who have had difficulties accessing finance from traditional financial institutions.
Finally, there are growing opportunities for foreign private capital participation. Foreign private capital only accounted for RMB 9 billion (USD 1.34 billion) of inbound climate finance flows in 2017-2018. Chinese domestic actors are increasingly encouraged to establish funds with foreign investors, and restrictions on foreign ownership are gradually being lifted. Several new funds established by foreign investors with participating Chinese institutions include Innovator Capital’s Sustainable Finance & Investment Corporation (SFIC) and Milltrust’s Climate Impact Asia Fund (CIAF). SFIC will receive a RMB 6.85 billion (USD 1 billion) contribution from the Investment Association of China to invest in sustainable technology innovation, while CIAF is targeting RMB 3.4 billion (USD 500 million) to invest in green companies across Asia and make revenue-based donations to WWF conservation programs. Foreign investors may also establish long-term partnerships with local businesses through Joint Ventures.
3.2 Barriers to Scaling up
• Lack of diverse sources of capital. China’s capital market is less developed than those in many developed countries and remains dominated by traditional banking. This means there is a relatively small class of impact-oriented investors. Corporate actors rely heavily on traditional bank loans. According to start-up accelerator Plug and Play’s recent internal survey, the vast majority of start-ups in China looked to bank loans rather than seeking PE/VC funding. Furthermore, domestic concessional capital providers—like NGOs and foundations—that could drive research and early stage climate action through technical assistance and grants are largely missing in China.
• Access barriers to formal financing channels and investment deals. There is a strong tendency for the formal financial sector to prefer large state-owned clients and others with political connections, leaving smaller players to fund growth through informal, more expensive channels. Several factors contribute to the overall inaccessibility of China’s financial system to private actors: 1) implicit government guarantees for SOEs and state-owned banks; 2) senior managers of the major banks are often appointed by the government; 3) government officials sometimes intervene in loan decisions in ways that circumvent traditional credit procedures.5_8_ _Moreover, CDB is the largest provider of concessional capital, but the majority of its clients remain SOEs and local governments. CDB’s decision-making processes are not transparent. Preliminary analysis on PPP projects shows that many of the disclosed private capital participants have actually been central and local SOEs, which could be potentially crowding out private capital opportunities.
• Asymmetric information. There are high search costs for investors interested in impact investing, not to mention investors interested in making climate action their investment thesis. Green definitions and taxonomies often do not identify thresholds for meeting specific standards. Environmental impact reporting is limited to aggregate metrics, not supported by a standardized methodology. Project origination is dominantly led by national and local economic development authorities.
• High policy uncertainty. Even though China is known for long-term planning and sending strong policy signals through key policy documents, it can sometimes unexpectedly reverse those decisions as well. For example, the NDRC announced its decision to abruptly halt solar subsidies on May 31, 2018, reversing an era of generous subsidies that made China the world’s largest renewable energy market. This led to a turbulent period for many solar producers who initially entered the market attracted by the subsidies. Producers with business models that relied more heavily on the subsidies were forced to exit the market.
3.3 Case Studies: Innovative Climate Finance
Some of the barriers outlined above may be addressed through innovative financing structures that align incentives for diverse groups of actors, leverage public funds to catalyze private capital, and channel finance to green project pipelines. The Global Innovation Lab for Climate Finance has produced several ideas for such innovative financing mechanisms, across various sectors and geographies . While China-specific ideas have not been featured in the Lab, the following case studies highlight China’s potential for scaling up innovative climate finance, while overcoming some of the barriers identified in section 3.2.
3.3.1 Green Fintech
Fintech was identified as one of the three major research topics under the G20 Sustainable Finance Study Group for its potential to scale up climate finance. Digital technologies, including big data, artificial intelligence (AI), mobile platforms, blockchain, and the Internet of Things (IoT), can overcome traditional barriers for climate finance such as limited access to capital and cost burden of issuance and verification. Digital finance can also significantly increase data availability and transparency on environmental and financial information. It also encourages greater financial inclusion and innovation, expanding financial access for citizens and SMEs, and cultivating new business models.
China has been a leader in mobile payment systems due to the popularity of Alipay and WeChat pay. In 2019, mobile payment transaction volumes reached RMB 347.11 trillion (USD 51 trillion), an increase of more than 28 times from six years ago. The leading example of green fintech in China is Ant Forest, an initiative led by Ant Financial, the financial arm of Alibaba. It represents the world’s first large-scale effort to promote green consumption behavior by combining mobile payment, big data, and social media.
3.3.2 Matchmaking Platforms
One of the green finance pilot cities, Huzhou, is pioneering new approaches for matching local SMEs with green financing opportunities. Huzhou is one of nine pilot cities for green finance reformation, located in Zhejiang province in Southeast China. To support the green growth of local SMEs, the municipal government launched a Green Finance One-Stop Service Platform in 2018.
The platform provides three primary financial services for SMEs. First, the platform connects business with banks, facilitating the green lending process. By combining 36 local banks and 300+ financial products, it efficiently matches SMEs with banks and products that can support their diverse needs. The platform also compiles information on businesses from 31 government departments including commercial operations, tax, and environmental performance, which makes data-sharing across departments possible. Second, the platform directly connects businesses with investors, lowering administrative costs and increasing transparency. Investors may review detailed information and compare all available enterprises and projects; businesses can attract more investors and expand their financing sources through the platform. Third, the platform establishes a green credit rating system to identify qualified green projects and businesses. The government plans to issue subsidies for those rated as “green.”
Since its launch in 2018, the platform has attracted over 16,000 SMEs, over 30 financial institutions, and nearly 80 investors. In terms of green lending, over 13,000 SMEs have successfully received more than RMB 160 billion (USD 23 billion) in credit from banks. It also connected investors to 73 projects, which received funding totalling more than RMB 6.6 billion (USD 1 billion).
3.3.3 Green Insurance
Green insurance is an important financial tool for internalizing the cost of environmental risks and managing performance risks. The risk prevention mechanism of insurance instruments can help increase climate resilience and encourage investment.
There are two major types of green insurance in China: Environmental Pollution Liability (EPL) insurance and climate risk insurance. EPL insurance was formally established through Guiding Opinions in 2016, which pointed out the need to develop insurance mechanisms for environmental protection. It also provided guidelines to establish compulsory liability insurance in fields with high environmental risks and encouraged innovation of green insurance products and services. The Management Method of Compulsory Environmental Pollution Liability Insurance in 2017 required businesses in high risk industries, such as heavy metal and hazardous waste, to register. The Reform Plan for Ecological Environment Damage Compensation System was also launched in 2017, extending the pilot green insurance schemes in seven provinces to the national level.
Climate risk insurance in China was initially developed to address the vulnerability of the agricultural sector to extreme weather and other climate events. The State Council’s Strategy Plan for Rural Revitalization (2018-2022) proposed to improve the agricultural insurance system by designing insurance products with different levels of protection, as well as to encourage index-based weather insurance. People’s Insurance Company of China (PICC), one of China’s two largest insurance companies overseen by the Ministry of Finance, has been developing a remote damage assessment and claim assessments scheme for its catastrophe insurance product. Currently being piloted in Ningbo, the platform may be used for generating flood maps and a database for residential buildings to calculate the number of affected households and the expected total amount of claims. This process expedites the claim settlement process to as little as four days.
Although green insurance can be an important market mechanism for managing environmental liabilities and climate risks, it is still in the initial stages of development. Additionality, the proportion of China’s insurance funds invested in the green sector is still low. Insurance companies’ assets under management is around RMB 17.8 trillion (USD 2.6 trillion), of which only 5% (RMB 882 billion (USD 130 billion)) is invested in green sectors.63 More innovative products that help de-risk projects and businesses, making them more attractive to private investors, need to be developed and applied at a wider scale.
4. Opportunities for greening China’s outbound finance
There are important opportunities for greening China’s outbound investment: China’s outbound investment was more than USD 2 trillion from 2013-2019, of which USD 730 billion, or 37%, went to Belt and Road Initiative (BRI) partner countries (Figure 7). 138 countries have signed BRI MoUs with China as of March 2020. The investment decision-making processes for BRI are driven by host country demands and largely financed through China’s policy banks and the Big Four state-owned banks.
Energy-related investments to BRI countries over the same period was USD 292 billion, half of which went to fossil fuels (Figure 8). The two leading financiers of outbound BRI energy-related investments were CDB and EXIM Bank, providing 35% of the total (Figure 9). There is little transparency on the composition of the remaining 65%. Available data indicates that many projects are financed through syndicates in which the Big Four state-owned banks are common participants.
If BRI countries follow historical growth trajectories while the rest of the world decarbonizes, their share of global carbon emissions could grow to 66% by 2050 or double the level of emissions required to limit warming to two degrees Celsius. There is an opportunity for China to support the greening of growth trajectories in BRI countries, rather than continuing fossil-based growth. A number of approaches could support this goal, including raising environmental standards in BRI partner countries, establishing fossil exclusion lists for financing institutions, and developing pipelines for green BRI opportunities. Especially in the context of COVID-19 recovery, BRI may support partner countries’ sustainable recovery plans by stimulating investment in green infrastructure.
Finally, there is an opportunity to increase climate investments in developing countries through debt-swap arrangements. Especially in the context of the COVID-19 pandemic, many developing countries have sought debt relief to mitigate the impact of COVID-19 and finance economic recovery. In response, the G20 nations launched a debt service suspension initiative in April 2020 for the poorest countries until the end of June 2021.66 As a participant of the G20 initiative, China has a potentially influential role given its position as the largest bilateral creditor to Africa and many low-income developing countries elsewhere. It accounts for USD 104 billion, or 20% of the total debt owed by 73 countries eligible for the initiative.
5. Conclusions and Recommendations
China’s green financial reform made great progress during the 13th Five-Year Plan. Key factors such as high-level political support, leadership of the central bank, development of green taxonomies and pilot zones, and substantial incentives, all contributed to this success. Green credit and green bonds emerged as particular success stories, mobilizing a combined RMB 4 trillion for green projects in the past five years. Financial and regulatory infrastructure also evolved, with new methodologies for green rating and risk evaluation, the development of numerous green stock indices, and green insurance products.
However, China also has high potential to further green financial reform, particularly by expanding to new actor groups and markets. Access to the pools of green capital that are being mobilized remains concentrated among public actors. Private actors lack incentives or reliable information that would facilitate getting involved in climate-related projects, and few are interested in exploring blended finance structures for sharing risk. The relatively underdeveloped capital markets, dominance of the traditional banking sector, and lack of access to formal financing channels and investment deals inhibits innovation and access by smaller actors. Concessional capital providers that help drive innovative climate action in other regions, like NGOs and foundations, are largely missing in China.
Overall investment needs to scale up by more than four times its current levels to meet investment needs. As much as RMB 95.45 trillion (USD 14 trillion) will be needed over the next decade to meet China’s climate targets from 2015. Average annual climate finance in 2017 and 2018 remained at around RMB 2.14 trillion (USD 320 billion). While private capital mobilization will be key in meeting estimated needs, the current climate finance landscape indicates that private actors have played a limited role to date.
There is great potential to scale up climate finance in China. The current green penetration of China’s financial system remains at around 4%. As China’s capital market continues to evolve and actors become familiar with green financial instruments, uptake in the market will grow. The government has started to direct more financial support for SMEs, there are increasing sources of concessional capital for climate projects, and there is growing interest in exploring innovative structures. Mobile payment platforms and online banking represent new avenues for channeling green finance and changing consumption habits for more than a billion customers. There are also growing opportunities for foreign private capital participation, through funds, joint ventures, and bond markets. Finally, there are opportunities for greening China’s outbound finance, through initiatives such as the Green Investment Principles for the Belt and Road.
While the outbreak of COVID-19 has imposed immediate challenges for China’s economy and green finance development, the government has sent positive signals through policies that increase support for renewables and support small businesses. Stimulus measures emphasize investment in “new infrastructure” projects such as 5G networks, ultra-high voltage transmission lines, high-speed rail and EV charging infrastructure. The State Council also removed the 2020 GDP target to focus on recovery, reversing a decades-long practice. This relieved significant pressure from local governments that would have otherwise increased their unsustainable debt loads to fund investments.
The following recommendations for tapping into China’s potential for climate finance build on the existing strengths of China’s policy framework for green financial reform, which combines top-down design and high-level political buy-in with bottom-up experimentation and innovation. Recommendations include:
- Continue raising the ambition of high-level targets and green standards. Key targets in national policy documents like five-year plans provide important signals for economic actors across the country. The updated Nationally Determined Contributions (NDCs) and 14th Five-Year-Plan which will be released in 2021 are opportunities to raise climate ambitions and demonstrate China’s continued leadership in the field. For instance, absolute carbon emission targets could be introduced in lieu of carbon intensity targets. The coal cap and target share of coal in primary energy consumption could be further decreased (current targets are 1100GW and less than 58%).
- Raising green standards in taxonomies and articulating clear thresholds for exclusion can improve the quality of green assets and projects that receive financing. Currently, three green taxonomies are in place for loans, bonds, and industry, but they allow room for investment in fossil fuels and other high-emission sectors.
- Incentivize experimentation and implementation of innovative financing structures. Regulatory authorities can encourage experimentation by rewarding innovation efforts through inclusion in performance evaluation schemes and other monetary benefits. For example, the qualitative portion of macroprudential assessments undertaken by the PBoC could reward banks for participating in results-oriented, innovative green funds and blended finance structures without encouraging excessive risk taking. The PBoC could also provide increased access to green re-lending facilities at low costs.
- Funds from the National Green Development Fund and the Clean Development Mechanism Fund could be deployed to provide grants and guarantees to fund early-stage projects, feasibility studies, and results-based projects.
- Green insurance schemes could be used not only for protection against environmental liabilities, but also to provide guarantees against performance risks undertaken by private investors in impact-oriented climate projects.
- Build and increase visibility on the pipeline of green projects for private actors. There is little transparency in the investment decision-making processes in large banks and government-established green funds, disincentivizing actors without connections to SOEs or local governments. Matchmaking platforms such as Bank of Huzhou’s Green Credit Management Platform and the Huzhou municipal government’s Green Finance One-stop Service Platform can reduce search costs and increase efficiency by linking interested investors with qualified green projects and investment products.
- Track and monitor finance flows for ultimate allocation and impact. Without robust tracking and impact reporting standards, it will be difficult to ensure that climate finance flows are being effectively allocated to projects that can generate the most impact. Currently, green finance policies only suggest some key metrics that actors can report at the aggregate level, using their own methodologies. Ensuring that reported climate impacts are ex-post, and pro-rated to an actor’s share of contributions to a project could be one way to improve impact tracking and avoid double counting.
- The China Securities Regulatory Commission forthcoming mandatory environmental information disclosure for listed companies is an opportunity to strengthen tracking and monitoring of progress. The measure will ask companies to report on their climate finance and are currently taking suggestions on which metrics to include.
- Introduce mandatory exclusion lists and negative incentives for high-emission sectors. Green financial reform is not only about increasing the green, but also about decreasing support for high-emission sectors. China’s green credit guidelines discourage banks from investing in high-polluting industries and overcapacity sectors but have not introduced mandatory targets or pecuniary measures for continued investment in these sectors.
- The Ministry of Ecology and Environment’s list of polluting industries that require pollution liability insurance is a practice that could be further expanded and applied in other areas.