On June 4th Professor Wang Yao participated in the EU Green Week 2021 Virtual Conference, where she shared her views on green and sustainable bonds.
The session of “Redirecting Sustainable Investment: Green Bonds and Beyond” was attended by key representatives from the European Commission and European Investment Bank. Experts discussed how green bonds could effectively direct necessary financial support to create a greener future. In the discussion moderated by Elisa Galvan-Mondié they shared their views on the recent developments and the biggest challenges in the green bonds market.
Professor Wang Yao, Director General of IIGF, introduced the current status of green finance in China and noted that capital markets are key to support the energy transition and provide the required level of investment. At the same time, current financing gap creates many opportunities for development of sustainable finance products.
“In recent years, it has become prominent that both investors and issuers are increasingly interested in financial products that expand beyond “green.” Furthermore, the rapid growth of the sustainable debt market and proliferation of new instruments shows the increasing demand for sustainable finance products,” Prof. Wang said.
Additionally, Professor Wang pointed out the increasing popularity of transition finance in China, especially among the fossil fuel industry, for which green bonds are not always the most suitable tool. She recalled a recent issue of China’s first sustainability-linked bonds by some of the biggest fossil fuel companies. The bonds went very popular showing the considerable potential and demand of the market for this type of financial products.
Prof. Wang recognizes the significance of international cooperation in green finance and provided few examples of successful cooperation between EU and China. For example, the first cross-border green bond index jointly launched by the Luxembourg Stock Exchange and the Shenzhen Stock Exchange in 2017, or a common green taxonomy and joint classification system for the environmental business credentials between EU and China, which will be published later this year.
At the end of the meeting, Prof Wang brought attention to the problem of biodiversity loss and insufficient biodiversity financing. She concluded that the global financial resources are more than enough to close all the financing gaps, but their flow needs to be readjusted. Robust policy frameworks and innovative financial solutions can drive more financial flows to biodiversity conservation.