Officials from the People's Bank of China, the Bank of England and a number of other public and private agencies attended the Green Finance Forum in Shanghai on Tuesday. The participants focused on how to promote investment in green sectors while curbing cash flows to industries that cause pollution.
Floods, droughts and bad air. Climate change and pollution have had a very real impact on China's society, and many leaders believe financial incentive is one of the most efficient ways to solve such problems in a market economy.
Green finance has for the first time been incorporated into the G20 agenda in this year's Hangzhou summit. On Tuesday, policy makers from the People's Bank of China, Bank of England and a host of other public and private agencies gathered in Shanghai to discuss ways to develop green finance.
"Promoting a green financial system had been proposed in China's 13th five year plan, and the country has made substantial progress ever since. Loans to environmentally friendly companies now account for 10 percent of all outstanding loans in China," said Yi Gang, vice governor of People's Bank of China.
Officials say the government's role in green finance could also be the unification of standards for green financial products, and China is the first country to unify standards for the so-called green bonds.
"So green bonds, we think it's a key pillar of the green economy. Green bonds lets companies and banks that are financing green projects whether it's renewable energy or energy efficiency projects, it gives them a new source of capital by accessing bond markets and investors that want to support green projects," said Morgan Landy, director of Environment, Social & Governance, IFC.
For the first seven months of this year, China issued 120 billion yuan worth of green bonds, accounting for over 40 percent of the world total, making it the biggest green bond market.
Experts say a key prerequisite for the development of green financial products, is whether investors are accurately informed. Therefore some say building a good pollution information disclosure system is key.
"So as companies bottom up such a disclosure of information, it has to be demanded from investors. Investors will learn how to use this kind of information to make their own decision and their own investment decision going forward," said Ee Chuan Ng, head of Bloomberg Greater China.
"They're gonna be able to learn how to price the risks for their firms' face, and do the valuation of firms, and industries in fact."
Information transparency is seen as solid infrastructure building for China's crucial next step in green finance, which is launching a nationwide carbon trading market by 2017.
