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[2022-August-03] WG3: Financial innovation supporting green transition in Belt and Road regions

On August 3, 2022, the GIP working group 3 held a webinar about "Financial Innovation Supporting Green Finance and Transition Finance in Belt and Road regions".

In the opening speech, Dr. MA Jun, Co-chairman of the GIP Steering Committee and Director of the Green Finance Committee of China Society for Finance and Banking, updated the latest transition finance framework; and the international community has reached a consensus on the five key elements of transition finance.

HU Kun, General Manager of the Investment Banking and Asset Management Department of Bank of China, said that green bond market is developing rapidly. Bank of China has positive performance in issuing blue bonds, sustainability-linked bonds and biodiversity bonds.

Experts from the National Association of Financial Market Institutional Investors, Hungarian Ministry of Finance, Bank of China Hungary Branch and the Asian Infrastructure Investment Bank respectively introduced China’s progress and challenges in green, social and sustainable bond market. They also introduced Hungary's progress in green finance, Bank of China Hungary Branch's experience in assisting Chinese and local green enterprises and project financing. The Asian Infrastructure Investment Bank shared its leading practice in sustainable finance.

Meanwhile, the GIP working group 1 also took the lead in developing the Climate and Environmental Risk Analysis Toolbox (CERAT), which can determine whether the project meets the green classification standard and estimate carbon emissions, other pollutants and water risks based on technical indicators. 

In order to understand the transition risks and opportunities of financial institutions investing in countries and regions along the “Belt and Road”, the GIP working group 1 conducted case studies on the targeted economies such as China, Kazakhstan, Poland and Pakistan; working group 1 developed and launched the paper on Transition Risks and Opportunities with a Focus on the Belt and Road, with case studies on selected economies, including China, Kazakhstan, Poland and Pakistan. The paper found that the transition risks  included heavy reliance on fossil fuels, a lack of green investment and public-private synergy, potential long-term policy inconsistency, and insufficient implementation. On the other hand, there were also many investment opportunities to support climate transition, which could shed light on possible net-zero strategies for financial institutions and enterprises.

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