Report Assesses and Lauds China's Green Credit Initiative

A recent report by Friends of the Earth and BankTrack, a global network that monitors commercial and investment banks, evaluates measures taken in China to encourage more green-friendly investment. â''In the past year and a half,â'' says the report, â''Chinaâ''s Ministry of Environmental Protection has launched a series of green finance policies that mark an entirely new way of addressing environmental degradation in China, and are proving to be the most powerful factor spurring and influencing sustainable finance in China today.â'' Though Chinaâ''s Green Credit Policy has so far been limited in scope, initially just barring lending to 38 companies, â''the policy has been strengthened by additional policies and tools from financial regulators, green initiatives promoted by international banks, and advocacy from Chinese non-governmental organizations.â''

In the course of big government bailouts of Chinese banks in the late 1990s, FoE contributors to the report have commented, financial institutions were forced to adopt more prudent lending practices, including consideration of environmental impacts. Overall, however, â''Chinese banks still lag behind international best practice for environmental credit risk management systems, public reporting, and stakeholder engagement.â'' Still, the reports finds â''that there has been significant progress in the development of sustainable finance in China, including the creation of influential regulations, internal bank compliance mechanisms, and some public reporting.â''

For example, a new green IPO policy requires companies in polluting or energy-intensive industries to disclose environmental information and allow for a public comment period before selling stock.

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