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Beijing tightens green bond rules, requires 100 per cent of proceeds to be invested in environmentally friendly projects

  • CSRC has instructed the Shanghai and Shenzhen bourses to bring issuances of such bonds in line with the newly published China Green Bond Principles
  • China first to make green bond guidelines mandatory, analyst says

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The Shanghai Stock Exchange in the city’s Pudong New Area. Photo: Xinhua
Reuters
China has raised the bar for issuances in the world’s second-biggest green bond market, taking a major step towards adopting global standards and eliminating “greenwashing”.
Starting this month, the Shanghai Stock Exchange, China’s premier bourse, requires 100 per cent of proceeds from green bond issuances to be invested in green projects such as clean energy – compared with at least 70 per cent previously – according to a notice seen by Reuters.

Separately, the China Securities Regulatory Commission (CSRC) has instructed both the Shanghai and Shenzhen bourses to revise rules to bring issuances of such bonds in line with the newly published China Green Bond Principles, said two sources.

China published the principles, a set of self-disciplinary green bond frameworks largely based on international standards, on July 29. The planned rule changes would make the guidelines mandatory for exchange-traded bonds, and reduce the risk of greenwashing, or exaggerated environment-friendly claims.

Sean Kidney, CEO of Climate Bonds Initiative (CBI), a London-based non-profit body that promotes investment in the low-carbon economy, said the changes would make China a leader in global green bond regulation.

Many securities regulators set voluntary green bond guidelines, “but to the best of my knowledge, China would be the first to make it mandatory”, he said.

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