summary:
As the challenge of global climate change becomes increasingly severe, countries are paying more and more attention to issues related to global environmental protection and sustainable development, and they are gradually fermenting in various industries. As a result, "Green Finance (Green Finance)" related application tools have emerged in response and play a role in Businesses play a key role in achieving the net zero goal, creating tools and opportunities for governments, businesses and investors to jointly achieve environmental sustainability. However, compared with large enterprises, small and medium-sized enterprises have obviously insufficient resources and guidance. They need the government to help cultivate more relevant talents to lower the threshold for small and medium-sized enterprises to implement net-zero transformation and provide special green financial services for small and medium-sized enterprises to cope with the climate change. The impact of changes on small and medium-sized enterprises, and open the way to achieve the 2050 net-zero emissions goal.
1. Background:
As the challenge of global climate change becomes increasingly severe, countries are paying increasing attention to issues related to global environmental protection and sustainable development. Not only that, the issue of sustainable development is gradually fermenting in various industries, which has led to the emergence of "Green Finance" related application tools, and plays a key role in enterprises achieving their net-zero goals, further enabling enterprises to take into account the environment while operating and developing Protect. Not only that, more and more investors are beginning to pay attention to the performance of companies in ESG (Environmental, Social, Governance), and they hope to invest funds in companies with environmental sustainability awareness. Therefore, the development of green finance creates tools and opportunities for governments, enterprises and investors to jointly achieve environmental sustainability.
According to the definition of the United Nations Environment Program (UNEP), financial products or services (including loans, financing, bonds, insurance and investments, etc.) created for environmental protection can be called green finance to assist public and private sectors. Funds from departments and non-profit organizations will flow to sustainability-related causes and increase corporate investment in ESG transformation plans. Therefore, green finance is also called "Sustainable Finance"; the International Monetary Fund (IMF, 2019) defines "sustainable finance" as the integration of ESG principles into operational decision-making, economic development and Investment strategy; The World Economic Forum (WEF) explains that "green finance" is a solution that can satisfy both capitalism and environmental protection, and predicts that by 2023, the market value of global green bonds will exceed US$2.3 trillion. (approximately NT$65 trillion).
Source: Definitions and Concepts: Background Note, UNEP, 2016
Figure 1 Sustainable financial structure
To sum up, the international definition and connotation of "green finance" can also be distinguished from the concepts of low carbon, climate, green, environment and sustainability, prompting the government to help enterprises achieve sustainable development-related plans and goals through financial-related policies and tools. . However, corporate development often achieves optimal resource allocation planning between operations and environmental protection, so the role of green finance and assistance will be the key to companies achieving net-zero transformation. In this regard, the Chinese government released the "2050 Net-Zero Emission Pathway" in March last year (2022), and included green finance in twelve key strategies, striving to achieve the goal of net-zero emissions through green finance. The application of tools enables the sustainable development of both business operations and the environment.
2. Current situation:
1. International trends
In order to actively move towards the goal and vision of environmental sustainability, green financial instruments will play a key role. According to a 2022 study by the Climate Policy Initiative (CPI), the cumulative commitment to climate financing from 2011 to 2020 is approximately US$4.8 trillion, with an average annual growth rate of approximately 7%. However, the current growth rate may not be able to meet the needs of global warming and climate change. 1.5°C temperature rise scenario. To this end, the CPI further stated that if we are to achieve the climate goals of the Paris Agreement, at least US$4.3 trillion in annual funding will be needed by 2030. In addition, although private sector investment is increasing year by year, it has not yet reached the scale and speed required for the net-zero transformation. The average annual growth rate (4.8%) is lower than that of the public sector (9.1%). In recent years, governments around the world have actively proposed green finance. Mechanisms to assist the private sector in accelerating green investment.
In order to implement the net-zero emissions target and climate risk management, the United Nations Framework Convention on Climate Change (UNFCCC) established the "Glasgow Financial Alliance for Net Zero (GFANZ)" at COP26 to urge all countries to Engage financial institutions to respond and commit to funding the net zero transition. In this regard, the European Union proposed in 2018 to officially release the "EU Taxonomy Regulation" in 2020 to improve the transparency of corporate ESG information and promote the EU to achieve its 2050 climate goals. This standard has also become a reference direction for most countries to promote investment in areas that are truly sustainable and make a substantial contribution to carbon reduction.
In order to improve the transparency of ESG-related information, the International Sustainability Standards Board (ISSB) established by the International Financial Reporting Standards Foundation (IFRS) in November 2021 is also committed to promoting sustainability. Disclosure and integration of information. To this end, the ISSB has developed a set of globally applicable information disclosure standards and issued two drafts, including "IFRS S1 General Requirements for Disclosure of Sustainability related Financial Information" and "IFRS S2 Climate -related Disclosures)", these two drafts are constructed based on the four major aspects of "Task Force on Climate-related Financial Disclosures (TCFD)", including Governance, Strategy, Risk Risk Management, Metrics and Targets to help financial markets assess climate-related risks and impacts.
In addition, in order to accelerate the realization of sustainable development goals through green financial instruments, in addition to increasing financial market transparency, cooperation between the public and private sectors is also a key factor. For example, the Monetary Authority of Singapore (MAS) invited representatives from financial institutions, businesses, and non-governmental organizations to establish the "Green Finance Industry Taskforce (GFIT)" and announced green trade in May 2021. Financing and working capital framework, climate and environmental information disclosure guidelines and sustainable infrastructure investment are three principles to further accelerate the development of classification methods to strengthen financial institutions’ environmental risk management practices and improve information disclosure and green financial solutions. Promote the formulation and development of green finance-related mechanisms; in addition, the Ministry of Economy, Trade and Industry (METI) of Japan formulated the "Climate Innovation Finance Strategy 2020" in 2020 to promote industry Development, execution and financing of transformational and innovative advanced technologies. In addition, in 2021, the Financial Services Agency (FSA), the Ministry of Economy, Trade and Industry (METI), and the Ministry of the Environment (MOE) jointly held the "Taskforce on Preparation of the Environment for Transition" Finance), and invited 16 representatives from industry, academia, and research to jointly study and formulate basic policies for climate transition financing.
Therefore, in recent years, major international countries have used green financial tools to assist companies in their net-zero transformation and achieve sustainable development goals, further establishing sustainable actions and net-zero awareness among companies and investors. In addition, in response to the disclosure and data collection of financial market and corporate ESG-related information, it also provides solutions to the information and data gaps faced at the current stage, and serves as a reference for the future development direction of green finance.
2. my country’s Green Finance Policy
In order to guide the financial industry and enterprises to pay attention to climate change and sustainable development issues, China’s Financial Supervisory Commission (hereinafter referred to as the Financial Supervisory Commission) has taken into account the international situation and established a structure that can promote the net-zero transformation and the effective operation of the financial market, including: improving the quality of ESG information disclosure and transparency, establishing sustainable classification standards, guiding financial institutions to invest and finance low-carbon industries, thereby promoting the development and support of net-zero transformation of Chinese enterprises, and strengthening the resilience of financial institutions in responding to climate change risks.
In this regard, the Financial Supervisory Commission promoted the "Green Finance Action Plan 1.0" in 2017, and focused on encouraging financial institutions to invest and finance the green energy industry to support the development of the green energy industry with funds; it later strengthened green finance in August 2020 The content of the plan incorporates ESG aspects into the "Green Finance Action Plan 2.0", which is expected to promote the development of ESG-related content through financial mechanisms and further build a complete sustainable financial ecosystem.
Source: Financial Supervisory Commission, "Green Finance Action Plan 3.0", 2022
Figure 2 “Green Finance Action Plan 3.0” improvement direction
The Financial Supervisory Commission attempts to move and implement "green finance" in the direction of "sustainable finance" and promote the "Green Finance Action Plan 3.0" in September 2022. Its core concept is to build a financial ecosystem (including Financial institutions, enterprises, government agencies, non-governmental organizations and other stakeholders, etc.) to drive various industries towards net zero transformation.
Source: Financial Supervisory Commission, "Green Finance Action Plan 3.0", 2022
Figure 3 "Green Finance Action Plan 3.0" promotion structure
In order to incorporate green and sustainable development factors into financing tools and increase the number of investors and asset managers to consider ESG factors in investment decisions, the Financial Supervisory Commission has strengthened "annual report information disclosure" and "investment fund ESG information disclosure" to require companies to respond Disclose performance and strategies on ESG issues related to operations. Not only that, in order to deal with the problem of "greenwashing" and flooding the market with inappropriate financial products, our country has referred to the "European Union Sustainability Classification Standard" and formulated the "Sustainability Classification Standard" in 2021, listing various sustainable products for important domestic industries. A measure of degree. In addition, climate change risks and financial stability mechanisms have also been incorporated into regulatory policies.
At the current stage of my country's green finance-related products, in addition to financing solutions such as green project financing and credit insurance funds, there are also the issuance of green bonds. As of the end of March 2012, a total of 152 sustainable development bonds have been issued, with a total issuance of approximately 421.3 billion yuan. In order to promote the development of green and sustainable financial products or services in China, the government will continue to encourage financial industry players to promote green financial products, such as green credit cards, green funds, green insurance and other products, and encourage the government, enterprises and the public to jointly implement net zero emissions. Goals and sustainable development vision.
Participation, future development
In order to implement my country's 2050 net-zero emission goal, the Financial Supervisory Commission has taken into account the practices and developments of major international countries and promoted the "Green Finance Action Plan 3.0" to assist companies in obtaining the funds needed to implement low-carbon technology research and development and carbon reduction plans. However, compared with large enterprises, small and medium-sized enterprises have obviously insufficient resources and guidance. They need the government to help cultivate more relevant talents to lower the threshold for small and medium-sized enterprises to implement net-zero transformation, and provide special financial services for small and medium-sized enterprises in the green finance action plan. , to cope with the impact of climate change on small and medium-sized enterprises, and to open the way to achieve the 2050 net-zero emissions goal.
Sponsor: Ministry of Economic Affairs, Small, Medium and New Enterprises Agency, Ministry of Economic Affairs
Execution unit: Plastic Industry Technology Development Center
