City of London Corporation works with China to green the Belt and Road Initiative
The City of London Corporation‘s Green Finance Initiative, in partnership with China’s Green Finance Committee, will today publish a set of green finance guidelines for the Belt and Road Initiative (BRI).
Building on existing responsible investment initiatives and set to be published in seven languages, the Green Investment Principles aim to incorporate low-carbon and sustainable development into the BRI by encouraging firms involved and invested in projects to sign up to a voluntary code of practice.
The announcement will be made in London at the third meeting of the UK-China Green Finance Taskforce, chaired by Sir Roger Gifford and Dr Ma Jun, who sits on the People’s Bank of China Monetary Policy Committee.
The principles, a project first proposed in the 9th UK-China Economic and Financial Dialogue, were drafted by a number of organisations including the World Economic Forum, UNPRI. Belt & Road Bankers Roundtable, the Green Belt and Road Investor Alliance and the Paulson Institute. A full list of the principles is provided at the bottom of this release.
The news comes as more information is released about the UK-China Green Finance Centre, which was first announced by the Lord Mayor of London in Beijing earlier this year.
Funded by nearly £400,000 from the UK Government’s Partnering for Accelerated Climate Transitions (UK-PACT) programme, the centre will lead the establishment of a secretariat to the principles that will encourage take-up, monitor progress and report at regular intervals.
Supported by a bilingual website, it will also lead on much of the work of the long-established UK-China Green Finance Taskforce, including extending the scope of the successful Task Force on Climate-related Financial Disclosures (TCFD) pilot, which was announced at the UK-China Economic and Financial Dialogue in December 2017.
It will also conduct research into areas of future cooperation in green finance, such as China’s insurance and pension sectors, and how they can be further integrated into UK capital markets.
Sir Roger Gifford, Chairman of the Green Finance Initiative said:
“The UK and China are pioneers in green finance, and the announcements today show again why we are truly leaders in this field.
“The newly-created UK-China Green Finance Centre is a hugely exciting project, and one that will positively drive forward the industry for years to come.
“I’m particularly excited by the Green Investment Principles, the first of their kind, and a potential game-changer in mitigating the potential environmental impact of the Belt and Road Initiative.”
Dr Ma Jun, Chairman of the Green Finance Committee said:
“The world is facing serious environmental and climate challenges. Most of the world’s infrastructure investments in the coming decades will be in B&R countries, and these projects will have a significant impact on environment and climate.
“The Green Investment Principles for the Belt & Road aim to ensure that environmental consciousness, climate resilience, and social inclusiveness are built into new investment projects in the B&R, so that the goals of the United Nations 2030 Agenda for Sustainable Development and the Paris Agreement are met.”
Fiona Reynolds, CEO of the Principles for Responsible Investment (PRI) noted:
“The ambitious Belt and Road Initiative to develop infrastructure linking China to countries along the ancient Silk Road trade route is likely to generate a swath of ESG-compliant projects, with green bond and loan funding crucial to generating capital from international investors to finance the initiative.”
“The guidelines are a welcome development, which complement the PRI’s six principles. Having these in place will be very helpful for investors who might be considering investing in this project.”
The meeting of the UK-China Green Finance Taskforce, the third since the group was established in December 2017, will also produce a progress report and recommendations.
The Green Belt and Road Investor Alliance was formed in London in November 2017.
Notes to editors
The City of London Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally-successful UK. www.cityoflondon.gov.uk
More information about the Green Belt and Road Investor Alliance can be found at www.beltandroad.london
For more information contact:
Financial Services Media Officer, City of London Corporation
Tel: 44 (0) 7864 625086
GREEN INVESTMENT PRINCIPLES FOR THE BELT AND ROAD
Principle 1: Embedding sustainability into corporate governance
We will embed sustainability into our corporate strategy and organisational culture. Our boards and senior management will exercise oversight of sustainability-related risks and opportunities, set up robust systems, designate competent personnel, and maintain acute awareness of potential impacts of our investments and operations on climate, environment and society in the B&R region.
Principle 2: Understanding Environmental, Social and Governance Risks
We will strive to better understand the environmental laws, regulations, and standards of the business sectors in which we operate as well as the cultural and social norms of our host countries. We will incorporate environmental, social and governance (ESG) risk factors into our decision making processes, conduct in-depth environmental and social due diligence, and develop risk mitigation and management plans, with the help of independent third-party service providers, when appropriate.
Principle 3: Disclosing environmental information
We will conduct analysis of the environmental impact of our investments and operations, which should cover energy consumption, greenhouse gas (GHG) emissions, pollutants discharge, water use and deforestation, and explore ways to conduct environmental stress test of investment decisions. We will continually improve our environmental/ climate information disclosure and do our best to practice the recommendations of the Task Force on climate-related Financial Disclosure.
Principle 4: Enhancing communication with stakeholders
We will institute stakeholder information sharing mechanism to improve communication with stakeholders, such as government departments, environmental protection organizations, the media, affected communities and civil society organizations, and set up conflict resolution mechanism to resolve disputes with communities, suppliers and clients in a timely and appropriate manner.
Principle 5: Utilizing green financial instruments
We will more actively utilize green financial instruments, such as green bonds, green asset backed securities (ABS), Yield Co, emission rights based financing, and green investment funds, in financing green projects. We will also actively explore the utilisation of green insurance, such as environmental liability insurance and catastrophe insurance, to mitigate environmental risks in our operations.
Principle 6: Adopting green supply chain management
We will integrate ESG factors into supply chain management and utilize international best practices such as life cycle accounting on GHG emissions and water use, supplier whitelists, performance indices, information disclosure and data sharing, in our investment, procurement and operations.
Principle 7: Building capacity through collective action
We will allocate funds and designate personnel to proactively work with multilateral organizations, research institutions, and think tanks to develop our organizational capacity in policy implementation, system design, instruments development and other areas covered in these principles.