Belt and Road Green Finance (Investment) Index
ICBC BRI Green Index Research Group

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Abstract
1. The Belt and Road Green Finance (BRGF) Investment Index
1.1 Purpose of Establishing the BRGF Index
1.2 Significance of the BRGF Index
2. Analysis Framework of the BRGF Index
2.1 Sample Selection
2.2 Indicators
2.3 Methodology
3. Analysis of the Green Economy Performance (GEP) Index
3.1 GEP Index Scores
3.2 GEP Sub-index Scores: Climate Change and Environmental Efficiency
3.3 GEP Sub-index Scores: Environmental Governance
3.4 Benchmarking against A Group of Developed Countries as A Control Group
4. Analysis of the Green Growth Capacity (GGC) Index
4.1 Overall Scores of GGC
4.2 GGC Sub-index Scores: Financial Depth
4.3 GGC Sub-index Scores: Policy and Technology Landscape
4.4 Benchmarking against Control Groups from Developed Countries
5. Green Economy Performance, Green Growth Capacity, and Future Environmental Pressure
5.1 Green Economy Performance and Green Growth Capacity of Countries along Belt and Road
5.2 Environmental and Resource Pressures linked to Economic Growth along Belt and Road
6. Conclusions and Policy Recommendations
6.1 Conclusions
6.2 Policy Recommendations

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Leader of the Research Group: Yueqiu Zhou. Deputy Leader of the Research Group: Hong Yin. Research Group Member: Jin
Yan, Muyuan Qiu. Author: Hong Yin, Jin Yan, Muyuan Qiu.
Author’s Acknowledgement: We appreciate the data and methodological support provided by Oxford Economics and the case
support provided by European bank for Reconstruction and Development (EBRD). Thanks to Mizuho Bank, Credit Agricole
Corporate and Investment Bank, UniCredit for their valuable suggestion on this report.
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Abstract
Based on the comprehensive collection and collation of data, this paper constructed a ground breaking Beltand Road Green Finance (BRGF) Investment Index. The BRGF index measures the green economic
performance and green development capability of 79 countries along the Belt and Road. The results showthat there is a tremendous variation in green performance and capacities between countries along the Beltand Road. Pressure on the environment and resources for future growth is particularly significant.
In order to cope with the above challenges, this report recommends countries along the Belt and Road to
tailor individual green development strategies according to the country’s own resource endowment andcapacities for future development. Financial institutions should actively develop green concepts, responsible
investments, and lead capital flow towards green industries and green projects through innovation.
Keywords: Belt and Road, Green Finance, Index3

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1. The Belt and Road Green Finance(BRGF) Investment Index
1.1 Purpose of Establishing the BRGF Index
Climate change and the future availability of natural resources havebecome critical global topics. The implementations of the UN’s '2030
Sustainable Development Goals' and the 'Paris Agreement' are now
top priorities for governments and shared responsibilities for oursociety. While Belt and Road Initiative (BRI) presents new opportunities
in infrastructure construction, urban development, industrial andenergy sector upgrades, the reality of resource constraints is afundamental challenge to be addressed. In a nutshell, sustainable
development is one of the core principles of the BRI. As a result,finding ways to cooperate on sustainable financing and construction of
BRI projects has become a new challenge for all its stakeholders.
As a pioneer in the field of green finance, ICBC initiated the ‘Belt andRoad Bankers’ Roundtable’ (BRBR mechanism)2 in 2017 to jointly
promote a greener “Belt and Road” with financial institutions bothfrom China and other countries. This study is a beneficial attempt tocomplement and cooperate among members. In an effort to provide aquantitative-based approach, ICBC has initiated a joint research
project with Oxford Economics to develop the Belt and Road Green
Finance (Investment) Index (BRGF Index). On the basis of acomprehensive collection and organisation of data, this researchgained the support of European bank for Reconstruction andDevelopment (EBRD) and endorsements of three members under
BRBR mechanism during the establishment of the Index, which include
Mizuho Bank (Japan), Credit Agricole Corporate and Investment Bank(France) and Unicredit Bank (Italy). This Index is designed to help
global policy makers and investors to evaluate green investment
opportunities and environmental challenges that may arise. It alsoseeks to identify potential partners and financing towards the green
economy, and in turn contribute towards sustainable economic andsocial development amongst countries active in the BRI.
The BRGF Index was pre-released at the second BRBR conference on
April 24, 2019, which was unanimously welcomed and praised bymember institutions under BRBR mechanism. It was also included in
the official list of outcome of the Second Belt and Road Forum forInternational Cooperation. For this extended version, it could also bereferred to as a good practice guided by the spirit of “Extensive
During the first Belt and Road Forum for International Cooperation in 2017, ICBC
successfully held the first meeting of ‘Belt and Road Bankers’ Roundtable’. At thisforum, ICBC advocated to establish a formal mechanism in the name of ‘Belt andRoad Bankers’ Roundtable’. This mechanism is aimed to establish a platform forfinancial institution from all around the world under the spirit of openness,
inclusiveness, mutual benefit and business principles, which helps to promote theconstruction of greening “Belt and Road”, to exploit the advantages of forwardlooking research, scientific and technological application, production capacity
cooperation and financing channels among all members.
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consultation, joint contribution and shared benefits” – animplementation of outcome from the Belt and Road Forum, which fullyreflects the importance of the BRBR mechanism in promotinginternational cooperation on green investment and financing along theBelt and Road.

1.2 Significance of the BRGF Index
Overall, the Index has made new breakthroughs in researching anddeveloping quantitative tools for the green developments along BRI.
Understanding the green transformation of countries along the Beltand Road is vital to exploring opportunities in green investments aswell as providing practical guidance for future policymaking.
First, the BRGF index can help investors to unlock potential green
investments and improve international cooperation. Although there
are high yielding investment opportunities, investors are still struggling
to take associated environmental risks into account due to long
investment periods, asymmetric information, and the lack of effective
tools to identify environmental risk. In turn, BRGF index provides aholistic approach and quantitative framework to measure green
performance and green growth capacity of countries along Belt andRoad. As such, it aims to help investors to further explore green
investment opportunities while encouraging policymaking institutions
to establish global joint efforts in green development.
Second, the methodology of our index is benchmarked against
global standards. We collected over 100 relevant indicators from 17
databases such as the International Monetary Fund (IMF), World Bank,
Oxford Economics, and the Environmental Performance Index (EPI).
Taking the credibility, geographical coverage and frequency ofavailable data into account, 17 key indicators were used in the index.
Meanwhile, in order to scientifically determine index weights, theresearch team followed the principles of 'cross-validation' by adapting
two channels of expert review and econometric evidence. Our research
results show that the selected indicators have a large coefficient ofvariation, indicating a high degree of sensitivity and variety ofindicators selected for the index. The range of indicators also helps to
distinguish a full scope of green financial development in different
countries, which better reflects the respective green investment
opportunities along Belt and Road countries.
Third, expertise from both ICBC and Oxford Economics ensured theIndex incorporates both theoretical and practical considerations.
ICBC and Oxford Economics contributed different perspectives during
the modelling of the Index. While Oxford Economics provided advanced
research methods, ICBC – as a global commercial bank – took theinterests of international investors into account, and integrated its
practical experience in many BRI countries. In addition, this research
has also received support from European Bank for Reconstruction andDevelopment, and endorsements of three members under the BRBR
mechanism, which includes Mizuho Bank, Crédit Agricole Corporate
and Investment Bank and UniCredit Bank. All member institutions

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PUBLIC| Belt and Road Green Finance (Investment) Indexleveraged their strengths, and contributed to this cross-boundary
cooperation. Therefore, the results of the Index not only reflectforward-looking insights, but also meet practical needs of financial
institutions to explore synergies generated by the cooperation between
different stakeholders under the BRBR mechanism.

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2. Analysis Framework of the BRGF
Index
2.1 Sample Selection
Belt and Road Initiative covers a variety of geographies. BRI stretchesfrom Asia, Europe, and across to Africa and their nearby island
territories. To enhance the credibility and robustness of the Index, theresearch team has selected 79 countries along the Belt and Road.
According to the World Bank’s classification by per capita GNP, 19 are
high-income countries, 29 are middle- and high-income countries, and
31 are low- and middle-income or low-income countries. These sample
countries cover the majority of BRI countries, representative of thecountries actively involved.

2.2 Indicators
The BRGF Index has two dimensions. The first – Green economy
performance (GEP) – aims to give an indication of the current green
development of BRI countries. The second – Green Growth Capacity(GGC) – assesses the policy, technological landscape and financial
depth of countries in our sample. These two dimensions in aggregate
give a comprehensive perspective on the future demand on theenvironment and resources. See Figure 1 for a summary of the overall
Index structure.
Figure 1: Overall framework of the BRGF Index

Source: Oxford Economics, ICBC

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2.2.1 Green Economy Performance (GEP)The 'Green Economy Performance' measures the environmental
performance in the context of economic growth within a country.
Higher scores indicate that countries are better placed to promote
green development in the future all else equal. Details include thefollowing two aspects:
1. Environmental Efficiency: It includes seven sub-indicators: Carbon
dioxide emissions, methane emissions, oxynitride emissions, air
pollution, air quality, deforestation and wastewater treatment. Amongthem, the first three sub-indicators are greenhouse gases as definedin the Kyoto Protocol. Particularly, the carbon dioxide emissions havethe largest weight of 32.6% and other factors have weights lower than7%.
2. Environmental Governance: A series of behaviours conducted byenterprises, families and governments that may alleviate the impact of
economic growth on the environment, such as waste recycling andformulation of green building criteria are tracked.

2.2.2 Green Growth Capacity (GGC)
The 'Green Growth Capacity' measures the ability of a country tomaintain or improve green development performance. Higher scoresindicate that countries have stronger abilities to improve and promote
green development in the future. Details include the following two
aspects:
1. Financial Depth: The sovereign credit rating of countries covered inthis index is used to assess the overall financial depth and credit
status of a country, and the total amount of credit extended by thefinancial sectors to the private sectors is adopted to measure thefinancial ability of a country to support the real economy.
For the time being, due to country data deficiency, we are only able tomeasure Green Growth Capacity against one indicator of credit supply:
the total amount of credit financing a country has done. However, it isworth mentioning that in recent years, the green bond market ofcountries along Belt and Road has become an importance driver for
local green investments. According to the data of the Climate Bonds
Initiative (CBI) and Moody’s, in 2018, there were USD167.6 billion
green bonds in the world (Figure 2), a continuous increase comparedwith those in 2017. In 2019, green bonds issuance hit a new global
record of USD 250 billion. Despite the fact that Mainland China andthe US are still the largest two green bond issuers; the issuance ofgreen bonds by countries along Belt and Road has grown rapidly inrecent years. In 2018, countries along Belt and Road, such as
Indonesia, Thailand, Seychelles and Lebanon, issued green bonds forthe first time. As relevant data is more abundant and sound, theresearch team will gradually include the above-mentioned indicators inthe scope of consideration.

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Figure 2: Issuance of green bonds by country

Source: Climate Bonds Initiative

2. Policy and Technology Landscape: This aspect of the index reflects
whether the green development policy of a country is well-developed
and whether the relevant technology R&D strength is adequate.
Specific indicators include executions of the emission reduction goals,
environmental protection expenditures of public sectors andproduction of renewable energy.

2.2.3 Challenges in Environment and Resources that Comewith Sustainable Energy Developments
The Green Economy Performance (GEP) and Green Growth Capacity(GGC) dimensions are designed to measure current sustainable
development of an economy, without considering the possiblepressures on the environment and resources due to future economic
development in a holistic way. To analyse the sustainable
development of countries along Belt and Road more comprehensively,
the report uses forecasts of future urbanisation and industrialization of
economies along the Belt and Road by Oxford Economics. This
calculated scoring represents the possible pressure on theenvironment due to future economic development of countries. By
comparing it with GEP and GGC separately, the report has proposed
policy recommendations on green development of countries along theBelt and Road.
The reason why urbanisation and industrialisation are selected as theentry points to measure the pressure on the environment due to future
economic development is that two factors are the most importantsources that result in these environment pressures during economic
development of countries. During urbanisation, public infrastructure
and building related industries have driven energy consumption;
agglomeration effect of population increases consumption levels andpurchases of industrial products such as automobiles, which increases
emissions of greenhouse gas and waste. Industrialisation bringspressure on the environment and resources more directly. The
development of some energy-intensive manufacturing industries will
increase the resource consumption and environmental pollution on anational-wide scale.

92.3 Methodology
The research team has gathered from international experience,
weighted and incorporated all variables via the scoring card, to obtainthe scores of the 'Green Economy Performance' and the 'Green Growth
Capacity'. The main scoring methodology is as follows:1
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3Standardising all indicators to eliminate differences in variable
dimensions. The final index score is a value in the interval [0, 100],
where 100 represents the highest score.
Determining the weight according to the importance and update
frequency of indicators. First, the research team determined theapproximate range of weights of each indicator according to thecoefficient of variation of indicators and the results of principal
component analysis (PCA). Second, the team determined theweights of each indicator in the baseline situation according to thegreen rating experience of internationally renowned financial
institutions. Third, the team conducted weighted incorporation of
all indicators according to the weights to obtain the scores of thetwo indices 'Green Economy Performance' and the 'Green Growth
Capacity' of each sample country. It should be noted that thesettings of indicator weights are inevitably impacted by somesubjective factors, which would have certain influence on the finalscores of indices.
For the sake of international comparison, the research team also
selected nine developed economies (Denmark, Germany, France,
Iceland, Norway, Sweden, Switzerland, the UK and the US) as thecontrol group, employing the above-mentioned methodology forassessing and comparing the results with those selected countries
along the Belt and Road.

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3. Analysis of the Green Economy
Performance (GEP) Index
Based on the methodology discussed in the previous section, thissection provides analysis of the Green Economy Performance Index forthe selected countries along the Belt and Road. Higher scores suggest,at least for the time being, that countries have better green
performance relative to others in the research sample.

3.1 GEP Index Scores
Overall, the average score of the 'Green Economy Performance' ofsample countries is 53.6. From a regional perspective, economies inCentral and Eastern Europe and some Asian countries haveoutstanding green performance. Two possible explanations for thosecountries that have high GEP scores are as the following: first, a great
proportion are developed economies with higher per capita income
and much well-developed environmental protection policies; second,heavy industries and chemical industries feature less in these
economies, indicating less potential pressure on environmental
pollution.
By country, there are similarities and differences as to why somecountries have higher scores. One of the similarities is that thesecountries have less greenhouse gas emissions, which is the indicatorwith the largest weight for measuring the GEP. One of the differencesis that they have different reasons of low emissions. For example, theeconomic activity of Latvia is not that strong. Singapore’s economic
structure heavily relies on its service industry. It is also a developed
economy that has strict environment policies. Qatar mainly relies on its
resource export, and it has a small number of local enterprises withheavy and chemical industries, which explains low emissions per unit
GDP.
According to the results in Figure 3, there is a positive correlation
between the GEP score and the per capita income of a country. Higher
per capita income of a country usually indicates a higher score of GEP.
There are two key reasons: Judging from the supply side, income
improvement has provided more space for industrial upgrading andthe application of green technology; from the demand side, thiscorrelation shows that the environmental protection awareness of themass population is enhanced with income growth.

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Figure 3: Positive correlation between the 'Green Economy Performance' scoresand per capita income of sample country

Source: Oxford Economics

3.2 GEP Sub-index Scores: Climate Change
and Environmental Efficiency
By regions, Central and Eastern European countries scored higher in
the 'Climate Change and Environmental Efficiency' overall. Three outof those top four are from Central and Eastern Europe. This region also
covers half of the top 10 scores.
Although economies in the Middle East and North Africa as a whole
have high scores, it is worth noting that this might be related to thehigh resource endowments and unique economic structures. In
some countries, exports of natural resources account for over 40% of
their GDPs. The resource extraction industry has far less greenhousegas emissions than that in resource utilisation and processing
industries. Therefore, these economies achieved higher scores.
Figure 4 shows that countries in Sub-Saharan Africa have the lowest
scores on 'Environmental Efficiency'. Here, Environmental Efficiency
scores are approximately 23 points less than those of other countries
along Belt and Road. Among the ten countries with the lowest scores,
four of them are in this region.

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Figure 4: Average scores of 'Environmental Efficiency' by region

Source: Oxford Economics

3.3 GEP Sub-index Scores: Environmental
Governance
A similar regional pattern can be observed in the performances of'Environmental Governance', whose deviation is less than that of the'Environmental Efficiency' indicator.
Figure 5: Average scores of the 'Environmental Governance' by region

Source: Oxford Economics

As shown in Figure 5, economies in Central and Eastern Europe also
have the highest average score in 'Environmental Governance',
mainly benefiting from their compliance with EU standards in relevant
fields.3 Scores of Asia-Pacific countries are in the mid to upper range
For instance, as early as February 2003, the European Union Council approved
the Waste Electrical and Electronic Equipment Directive (WEEE Directive) and the313among countries along the Belt and Road without much variation inscores; Sub-Saharan Africa again has low scores on the whole, yetsome countries in the region were exceptions. For instance, over 20%
of domestic sewage was disposed of properly in Ghana andMozambique. Similarly, Cameroon and Kenya both have good
performance in the certification of green buildings.

3.4 Benchmarking against A Group of
Developed Countries as A Control Group
Overall, the average score of the 'Green Economy Performance' of thesample countries in our research is 53.6, which is 30.2 lower than thatof those nine developed economies in the control group (Figure 6).
However, it is worth mentioning that the average score of top ten
countries along Belt and Road is 82.1, basically the same as that ofdeveloped economies in the control group. Judging from the trend inrecent years, the gap in ‘GEP’ between countries along Belt and Road
and developed countries has been narrowing, reflecting a change infocus to environmental protection for countries along Belt and Road
and their willingness to cope with environmental challenges.
Figure 6: Scores of the 'Green Economy Performance' of countries along theBelt and Road and developed countries in the control group

Source: Oxford Economics

Restriction of Hazardous Substances Directive (RoHS). In 2005, it issued the EcoDesign of Energy Using Products (EUP), specifying the obligations and standards ofmember countries for environmental protection from the perspective of law.

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4. Analysis of the Green Growth
Capacity (GGC) Index
The GGC Index measures the ability of a country to maintain or
improve green development performance. Higher scores indicate thatcountries are more capable of improving and promoting green
development in the future. Specifically, it includes two parameters,
Financial Depth and the Policy and Technology Landscape.

4.1 Overall Scores of GGC
Asia-Pacific countries and those in Central and Eastern Europe
deliver the best results. Among them, Australia and Mainland China
rank first and second respectively in terms of GGC, followed bycountries in Central and Eastern Europe (five of the top ten countries).
Kuwait, UAE, and other countries in the Middle East have goodrankings in the GGC, which can be a reflection of sound fiscal
performances. However, countries in South Asia, sub-Saharan Africa,
Latin America, and countries in the Commonwealth of Independent
States have relatively low scores.

4.2 GGC Sub-index Scores: Financial Depth
The 'Financial Depth' mainly measures the ability of public and private
sectors to fund the green economic developments within theirjurisdictions. According to results shown in Figure 7, there are majordifferences between countries along Belt and Road in terms of their
Financial Depth.
Asia-Pacific countries have strong Financial Depth. Among the six
countries along Belt and Road with the highest scores, five of them are
Asia-Pacific countries. Singapore, Australia and Mainland China havehigh rankings, all of which benefit from good sovereign credit ratingsand developed financial markets. In other words, efficient financial
markets will improve the availability of investments in economic
activities related to energy-saving and environmental protection.
Some developing countries relying on resource export have lowscores. As their economic and fiscal income rely heavily on resource
export, the fiscal status of some of these countries deteriorated rapidly
after the global financial crisis in 2008, and their sovereign bondratings declined greatly, causing a dive in their Financial Depth scores.

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Figure 7: Average scores of 'Financial Depth' by region

Source: Oxford Economics

4.3 GGC Sub-index Scores: Policy andTechnology Landscape
Overall, the scores of Policy and Technology Landscape of countries
along Belt and Road (Figure 8) are more evenly distributed thanthose of the 'Financial Depth'. There are potentially two reasons: First,
guided by a series of global initiatives and objectives such as the UN’s
'2030 Sustainable Development Goals' and Paris Agreement, the ideaof sustainable development has been recognised and implemented bymore and more countries. At present, most countries along Belt andRoad have developed clear objectives of energy saving and emission
reduction. Second, green technology innovation has seen a rapid risein R&D, and now starting to become employed commercially. This
process has lowered the cost of production for renewable energy. In
recent years, the total power generation of renewable energy ofcountries along Belt and Road has substantially increased.
Figure 8: Average scores of the 'Policy and Technology Landscape' by Region

Source: Oxford Economics

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4.4 Benchmarking against Control Groups
from Developed Countries
The average GGC score of countries along Belt and Road is 40, 44
scores below that of the control group (Figure 9). Furthermore, theaverage score of 'Financial Depth' of countries along Belt and Road is36, 57 scores less than that of the control groups. The average scoreof 'Policy and Technology Landscape' of sample countries is 43. 32scores less than that of the control group.
The large gap may reflect the sheer range of country scores along theBelt and Road. For example, the average score of top ten countries interms of GGC is 66.5, no major difference compare to developed
countries. The score of the last ten countries with the lowest scores of
the GGC is only 17.7, negatively impacting the overall performance ofcountries along Belt and Road. Such difference constitutes the basis
for the green development cooperation between countries along Beltand Road. By sharing experience in green development, creating
opportunities for green finance, and leveraging the comparativeadvantages, countries along Belt and Road are likely to become
leaders in the global green finance development in the future.
Figure 9: Comparison of average values in 'Green Growth Capacity' of sample
Belt and Road countries and developed countries in the control group

Source: Oxford Economics

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5. Green Economy Performance, Green
Growth Capacity, and Future
Environmental Pressure
5.1 Green Economy Performance and Green
Growth Capacity of Countries along Belt andRoad
To analyse the environmental pressure of sample countries in moredetail, we use the vertical axis to represent the scores of 'GEP and thehorizontal axis to represent the 'GGC, and divide sample countries into
four quadrants (Figure 10).
Figure 10: Classification of sample countries by scores of 'Green Economy
Performance' and 'Green Growth Capacity'

Source: Oxford Economics

Countries in the top-right quadrant: This category of countries rank
top both in terms of the Green Economy Performance and the Green
Growth Capacity among countries along Belt and Road, accounting for33.45% among sample countries, with Singapore being an example.
Their characteristics are that the economy is mainly based on theexport of resources or services, the fiscal revenue is relatively stable,
and the policies and technologies in the field of environmental
protection are in a leading position. This category of countries canprovide strong support for the green development of other countries
along Belt and Road via financing and technology supply.
Countries in the top-left quadrant: Their scores of the Green Economy
Performance are above the average level, but they struggle with thedevelopment of sustainable energy, accounting for 21.2% among
sample countries. Most countries are at the early stage ofindustrialisation. Despite signs of limited pressure on resources andthe environment, there are large fluctuations in fiscal income and18inadequate external Financial Depth, indicating weak momentum forgreen economic development. In anticipation of future strains on theenvironment and resources, these countries need to act in advance.
Within the cooperation framework of Belt and Road Initiative, they canseek for cooperation with governments and institutions vigorously andachieve the goals of green sustainable development by introducing
environmental protection technology and upgrading industrial
technology.
Countries in the bottom-left quadrant: Countries in this quadrant are
at a lower level than the average level of the Green Economy
Performance and the Green Growth Capacity, accounting for 36.25%
among sample countries. They are mostly low-income or low- andmedium-income countries. They generally lack momentum for local
economic development. Furthermore, the environmental factors
negatively impact economic growth. These countries are in desperateneed of external aid in terms of sustainable development.
Countries in the bottom-right quadrant: These countries are higher
than average in Green Growth Capacity, but their performance interms of Green Economy Performance is not satisfactory, accounting
for 9.1% among total samples. Most of them are equipped with certain
industrial capacity, stable sources of fiscal income, and certain
technology advantages in environmental protection. However, they
have already accumulated environmental problems at the early stageof industrialisation and urbanisation. In the future, they should
promote green upgrading of industries, invest more funds inenvironmental protection, and meanwhile, leverage their technology
advantages to seek for cooperation opportunities for green projects
and green investments with countries along Belt and Road.

5.2 Environmental and Resource Pressureslinked to Economic Growth along the Beltand Road
The countries along Belt and Road are amongst the most dynamic
regions in the world, which includes most of the economies with thefastest growth. In aggregate, the GDP of countries along Belt and Road
accounted for 58% of the global GDP in 2018. It is expected thatwithin the next ten years, the GDP of countries along Belt and Road
will grow at a rate of over 4% every year on average. By 2030, theshares of economies along Belt and Road will account for nearly two
thirds of the global GDP (Figure 11).

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Figure 11: Forecast in GDP contribution by countries along Belt and Road to
Global GDP4

Source: Oxford Economics forecasts

Rapid economic development will greatly accelerate urbanisation andindustrialisation. From the perspective of urbanisation, it is expectedthat during the period from 2018 to 2030, there will be 840 million
people in countries along Belt and Road migrating from rural areas tourban areas (Figure 12). Among them, 84% of the migration will
happen in Asia and Sub-Saharan Africa. By country, the urbanization ofIndia and Mainland China will account for nearly half of the abovementioned migration. Meanwhile, the number of urbanized populationin Nigeria, Indonesia and Pakistan will also rank top.

The calculation is based on the constant USD GDP as calculated at the exchange
rate after the adjustment to the purchasing power parity (PPP). It includes all the
88 countries along the Belt and Road defined in our “Belt and Road China
Connectivity Index” whitepaper published in 2018.
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Figure 12: Prediction of Urban Population Growth in Regions along Belt andRoad (2018-2030, unit: 1 million)

Source: UN forecasts, OE calculations

From the perspective of industrial development, the industrial
sectors of countries along Belt and Road will become a significant
driver of GDP growth. According to Oxford Economics forecasts, during
the period from 2018 to 2030, the industrial value-add of countries
along Belt and Road will grow by USD9.9 trillion (Figure 13).
Figure 13: Growth in industrial added value of countries along the Belt andRoad (2018-2030, USD1 billion, PPP constant price)

Source: Oxford Economics

Rapid urbanisation and industrialisation will make significant
contribution to global economic growth, but also raise considerable
requirements for sustainable development capabilities of countries.
First, rapid industrialization will increase greenhouse gas emissions.
As Figure 14 shows, currently industrial sectors account for half of the
global energy consumption, among which the energy consumption of
manufacturing is the main factor. According Oxford Economics
forecasts, during the period from 2018 to 2030, the value add ofmanufacturing sector of countries along Belt and Road will be USD9.9

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trillion in total, indicating huge demands for resources and energy.
Meanwhile, with the continuous flow of rural labour to cities,
mechanisation and industrialisation of agricultural sectors will
accelerate greenhouse gas emissions.
Second, the increase in the car ownership (Figure 14) will exacerbate
greenhouse gas emissions. Transportation is a key sector that
consumes fossil fuels and gas. Its emission accounts forapproximately 11% of global emissions. According to Oxford
Economics forecasts, during the period from 2018 to 2030, theincrease in car ownership of countries along Belt and Road will haveexceeded 370 million vehicles. The increase in car ownership in
Mainland China, South Asia and Central and Eastern Europe cannot be
underestimated. Such increase will inevitably add greenhouse gas
emissions, and exert significant pressures on environment. However, it
is worth mentioning that despite rapid growth in car ownership,
Mainland China has taken a leading position in electric vehicles (EV)technology and in the process of promoting such technology globally,
which will be of great help to Belt and Road countries when it comes toemission reduction.
Figure 14: Growth of car ownership in regions along the Belt and Road

Source: Oxford Economics forecast22

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6. Conclusions and Policy
Recommendations
6.1 Conclusions
First, the BRGF Index provides a useful framework in terms ofassessing the extent of green development of countries along Belt andRoad, facilitating the exploration into green investment opportunities
and providing a ground-breaking quantitative tool.
Second, there are great disparities in green development among
countries along Belt and Road. There is also still a significant gap
between developing countries and developed countries overall.
However, this presents new green investment opportunities.
Third, there might be huge pressure from environment and resource inthe future economic growth along Belt and Road. As the fastestgrowing region in the next decades, counties along Belt and Road will
also be under great pressure from environment and resources.
Fourth, the main purpose of this study is to provide a framework foranalysing the green development along the Belt and Road. Subject tothe availability of data, we restrict our analysis to only 79 countries
and using only 17 variables to establish the index. In the future, there
is still room for improvement. For example, as we lack quantitative
indicators for environment pollution caused by the extractive industry,
countries relying on resource export such as fossil energy generally
have high scores in the Green Economy Performance. In the next
phase, the research team will expand the scope of data collection, andimprove the index measurement methods, in order to align the index
to reflect the green development status of countries and regions along
Belt and Road more comprehensively and provide more accurate
guidance and support for investors seeking green investment
opportunities.

6.2 Policy Recommendations
As the results of the study suggests, Belt and Road countries needto initiate a proactive yet dynamic approach to green development.
First, there is a need to strengthen cooperation between countries
along BRI and economies elsewhere, with the goal of enhancing thedegree of green development by green technology exportation, green
finance and green project cooperation. Second, there is a need tostrengthen cooperation among countries along BRI. For countries withstrong green economy performance and green growth capacity, it isrecommended to encourage export of green technologies related toenergy conservation and market-based emission reduction mechanism.
This will help countries along Belt and Road enhance their capability inresource and environmental risk management. For countries withstrong green growth capacity and poor green economy performance, it
is recommended to improve their green investment and financing

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policy environment through encouraging the implementation ofprinciple of sustainable investment. Third, the unique role of the BRBR
mechanism in promoting green financial capacity, collaborating on
green innovation and developing green financial tools should be
maximised. BRBR mechanism will enhance the communication andcooperation between members on green policy alignment, green
technology innovation, and green finance. Pilot projects for green
investment and financing will leverage the strengths of BRBR
members and create synergies.
It is recommended that all participants in the Belt and Road
Initiative actively develop quantitative tools and innovatively leadthe flow of funds to green industries and green projects. First, it isrecommended that enterprises and financial institutions further
strengthen environmental information disclosure. Second, it isrecommended to build a big data platform that collects, organises,
inquires and applies environmental information along Belt and Road,
so as to provide information for investors, lenders, financiers andother related parties along Belt and Road. Third, it is recommended
that various institutions continue to innovate and develop quantitative
tools for regions, industries, customers and projects to help themunderstand their potential to contribute towards green development.
It is recommended that financial institutions practice the conceptof green and responsible investment in the development of Belt andRoad. First, it is recommended that financial institutions further accept
responsibility for the environmental and sustainability impacts ofprojects they finance. Secondly, it is recommended that financial
institutions establish environmental, social and governance (ESG) risk
assessment methods. Environmental factors should be included in
Belt and Road investment and financing decisions, and the green
concept should be integrated with the whole process of project
development, product innovation and risk management. Third, there isa need to establish an institution to guarantee green investment andfinancing along the Belt and Road, with participation from thecountries along the Belt and Road. This institution will provide thenecessary guarantee and share the risks related to the investment
and financing of projects such as energy conservation and emission
reduction amongst participants. It will also encourage more private
sector funds to enter the green financial system.

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PUBLIC| Belt and Road Green Finance (Investment) Index