China needs to close a regulatory loophole for state-owned enterprises issuing green bonds to end fragmentation of the market and ensure all proceeds are used for green projects that support the country’s climate goals, analysts have warned, reports the South China Morning Post.
Despite “significant progress” by China to green its financial markets, investors should remain cautious about investing in Chinese onshore green bonds as not all of them “play by the same rules,” said Christina Ng, debt markets research and stakeholder engagement leader at the Institute for Energy Economics and Financial Analysis (IEEFA) last week.
China published its Green Bond Principles in July, which are closely aligned with international green bond standards and are aimed at unifying the formerly fragmented domestic market. One key improvement includes requiring that all of the proceeds from green bonds fund green projects, instead of the previous 50-70%.
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