China for strengthening green finance rules

Says delayed exit from high-carbon sectors will result in heightened financial risks

HONG KONG:

China’s central bank on Saturday warned that climate change and a global move to a low-carbon economy posed risks for domestic financial institutions and said stronger regulation was required.

“Climate change and low-carbon transformation will have a major impact on the wealth pattern and the asset management industry,” Xuan Changneng, Deputy Governor of the People’s Bank of China, told the Shanghai Bund Summit via video link.

Loans to high-carbon industries account for a relatively high proportion of financial institutions’ assets in China, he said.

Xuan added that an accelerated withdrawal or delayed exit from high carbon sectors would result in heightened financial risks.

“Therefore, [we] should strengthen financial regulations, conduct stress tests and other means to guide financial institutions to continuously improve their green financial capabilities in accordance with the carbon peak and carbon neutral timetable,” he said.