CHINA GREEN
BOND MARKETREPORT

2020

A USD44bn
Chinese green
bond market

Published jointly by the Climate Bonds Initiative and China Central Depository & Clearing Research Centre (CCDC Research).
Funding for this publication was provided by HSBC as a Gold Partner and UK PACT.

China Green Bond Market Report 2020 Climate Bonds Initiative1

Introduction
In December 2020, the global green bondmarket reached the milestone of USD 1 Trillion
cumulative issuance. Despite the impact of
COVID-19, global green bond market volume in2020 reached USD293.2bn, marking another new
annual record- up by 9% on the 2019 figure.
The COVID-19 pandemic had clear implications
for the green finance universe in China: Although
it remained one of the largest sources of green
bonds, China’s domestic and overseas green
bonds issuance witnessed a slowdown year-onyear, with the impact more pronounced in the firsthalf of 2020. The drop in green bond issuance also
partly resulted from the surge of other labelleddebt instruments in the country – specifically
Pandemic Prevention and Control bonds.
The total amount of green bonds issuedby Chinese entities1 on both domestic
and overseas market reached USD44bn(RMB289.5bn) in 2020, representing a 21%
decrease from the USD55.8bn (RMB386bn)
achieved in 2019. China’s green bond market
slowed in the first six months of last year as theauthorities focused instead on COVID-19-related
financial instruments but a second-half recovery

About Climate Bonds Initiative
Climate Bonds Initiative is an internationalorganisation working solely to mobilise thelargest capital market of all, the USD100tn
bond market, for climate change solutions.
The mission is to help drive down thecost of capital for large-scale climate andinfrastructure projects and to support
governments seeking to increase capital
market investment to meet climate goals.
The Climate Bonds Initiative carries out
market analysis, policy research and market
development. It advises governments andsaw the nation again positioned as the number
one emerging market economy in green bondissuance and China’s cumulative green bondissuance remained the world 2nd largest. In themeantime, China’s green bond market had also
shown positive development in many aspects,
such as the release of a consultation draft ofChina’s 2020 Green Bond Catalogue, jointly
released by China’s central bank – People’s
Bank of China (PBoC), the China Securities& Regulatory Commission (CSRC) and the
National Development & Reform Commission(NDRC) that removed clean coal related projects
and brought China and the EU Taxonomy into
closer alignment. Further, the market saw acontinued increase of non-financial corporate
issuers, and it had one of the largest offshore
green bond market.

Contents
1. Introduction 2
2. Green bonds 3
3. Climate-aligned bond market 13
4. Social and sustainability bonds 14
5. Green bond policy development 15
6.Outlook 17
Appendix Terminology 18
Endnotes 22

This is our fifth China Green Bond Market annual
report, produced in association with China
Central Depository & Clearing Company (CCDC)
and with support from HSBC. It summarises the
major green bond developments that have takenplace in China and also dives into the social andsustainability-themed bond issuance.

regulators and administers a global green
bond certification scheme.
Climate Bonds Partners range frominvestors representing USD14tn of assets
under management and the world’s
leading investment banks to governments
such as Switzerland and France.
The Climate Bonds Initiative is the leadpartner in the Green Infrastructure
Investment Coalition. Sean Kidney, Climate
Bonds Initiative CEO, is a member of theEuropean Commission’s Technical Expert
Group on Sustainable Finance.

China Green Bond Market Report 2020 Climate Bonds Initiative

All figures are rounded in this report.
Exchange rates may vary throughout
the report: the actual exchange rate oneach bond’s issuance date is reflected.
Data sources for this report include WIND
and Refinitiv Eikon, as well as bondprospectuses and company websites.
Figures in this report refer to both onshore
and offshore green bonds issued by entities
domiciled in mainland China.

2

Green bonds

Beijing Jingneng Clean Energy is the largest
Chinese issuer in 2020, with a total of RMB15bn

Snapshot of China green
bond market in H1 2021
China’s green bond market had shown astrong momentum in H1 2021. There was a
total of USD37.6bn green bonds issued both
onshore and offshore, representing a 58%
surge year-on-year. It had already reachedalmost 85% of the annual total issuanceof 2020 and it is expected that the strong
rebound would continue in the second halfof 2021. In addition, the market had seen theclose-up of the gaps between China’s local
green definitions and the international ones.
58% (USD22bn) of H1 volume is aligned with
Climate Bonds green definitions.

2100

200

Other countries’ issuance(aligned with CBI green definitions)

1400

100

700

0

0
2015

2016

2017

2020

2019

2018

Amount issued in RMB bn

Amount issued in USD bn

China’s issuance (aligned with Chinese definitions only)

Source: Climate Bonds Initiative

China’s green bonds in a global context
350
Issuances that are aligned with Climate Bonds
green definitions
Issuances that are not aligned with Climate
Bonds green definitions

40
30

280
210
140

10

70

0

0

Si

ng UK
ap
or
e
Ita
ly
Ch
i
A
Ot u lehe strr c al
ou ia
nt
rie
s

20

Amount issued in RMB bn

50

Source: Climate Bonds Initiative(USD2.1bn) green bonds issued. This was the firsttime that a non-financial corporate became thelargest issuer. Among the green bonds that arealigned with Climate Bonds green definitons, Low
Carbon Transport remained the largest theme(30%) among bonds aligned with Climate Bonds
Initiative’s definition, followed by Energy (29%).

China’s green bond market in
the global context
In 2020, China was the world’s fourth largest sourceof green bond issuance accounting for aligned green
bonds only (or second if including all issuance).

The US market had the largest number ofindividual issuers (144) and the largest volume(USD52bn), but its private sector green bondmarket is still underdeveloped and continues tolack large, benchmark-sized green bonds withadequate transparency. The market is dominatedby municipal issuers (local government) andgovernment-backed entities.
The amount of green bonds originating from
Germany more than doubled from USD18.7bn in2019 to USD41.8bn in 2020. Two sovereign green
bonds propelled Germany into second place in 2020
(by Climate Bonds green definitions). The inaugural

China’s quarterly green bond issuance (2016-2020)
China’s issuance (aligned with both Chinese and CBI green definitions)20
15

China’s issuance (aligned with Chinese definitions only)

140

Pending

105

10

70

5

35

0

0

Amount issued in RMB bn

Screened against the Climate Bonds Initiative
Green Bond Database Methodology (2020 version),
we have identified USD23.8bn (RMB157.5bn)
worth of Chinese green bonds that are alignedwith both Chinese and Climate Bonds green
definitions (henceforth referred to as ‘aligned
green bonds’), while a further USD20.2bn(RMB132bn) are only aligned with China’s local
definitions of green. The volume of aligned green
bonds will continue to grow as standards areharmonised and transparency improves over time.

300

US
Ch A
Ge inarmany
Ne Fra
th nc
er e
la
n
Sw ds
ed
en
Su
pr Jap
an a
at n
io
na
Sp l
a
Ca in
na
No da
rw
ay

Late May 2020 saw the removal of fossil fuels in
the updated ‘Green Bonds Endorsed Projects
Catalogue (Consultation Draft)’, which has brought
China into closer alignment with international
green classification systems, such as the new
EU Taxonomy as well as the Climate Bonds
Taxonomy. The final draft was published in April
2021 and has improved the prospect of taxonomy
harmonisation and the confidence of international
investors. However, discrepancies still exist between
China’s local green bond guidelines and theinternational ones, for example, some local green
bond guidelines continue to allow the proceeds ofgreen bonds to fund general working capital.

China’s issuance (aligned with both Chinese and CBI green definitions)

Amount issued in USD bn

China has, for the last 6 years, been one of theworld’s largest green bond markets and yet, themarket in 2020 was bumpy. Total Chinese green
bond issuance in the domestic and overseas
market reached USD44bn (RMB289.5bn),
representing a 21% decrease from the USD55.8bn(RMB386bn) achieved in 2019. Onshore issuancestood at USD36.3bn (RMB234.9bn), translating
into a 13% decrease from 2019. Offshore
issuance also plummeted by 38% to USD7.8bn(RMB54.6bn). The labelled green bonds only
accounted for less 1% of China’s overall bondmarket in 2020, the potential for growth is huge.

China’s green bond market year on year

Amount issued in USD bn

Overview: China’s green bondmarket 2020

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016
2017
2018
2019
2020
2021

China Green Bond Market Report 2020 Climate Bonds Initiative

Source: Climate Bonds Initiative3

10-year green Bund was priced in September,
followed by a 5-year deal in early November witha combined size of EUR11.5bn (USD13.8bn).
France landed in third place with a total of
USD37bn. The green government bond (GrOAT)
was tapped three times for a total of USD7.4bn in
2020. The GrOAT is the single largest green bondin the market, with a total amount outstanding of
EUR27.4bn (USD31.1bn).
In China, the green bond market has clearly been
affected by the ramifications of the COVID pandemic,
with many issuers preferring to issue social-themedbonds, especially those pertaining to the pandemic
response. This was also a result of the shift ofregulatory focus to COVID-related financing in
the first half of the year. However, the green bondmarket saw a rebound in the second half of theyear, especially in Q3 when China made its carbon
neutrality commitment. In addition to this policy
announcement, China’s green bond market also
showed positive development in many aspects, suchas the continued increase of non-financial corporate
issuers. China also continues to have one of thelargest offshore green bond markets in the world.

Onshore vs offshore
18% of green bonds were issued in theoffshore markets
16 issuers raised a total of USD7.8bn (RMB54.6bn)
in offshore green bond issuance. Despite the
38% decrease in volume from the USD12.5bn(RMB87.5bn) achieved in 2019, 11 of them were
new to the overseas green bond market. This
mainly included real estate developers such

Currency denominations of Chinese green bonds in 2020

as Landsea Green Properties, Yango Justice,
Yuzhou Group, and Zhenro Properties, as well
as renewable energy operators ENN energy,
Concord New Energy, and CIFI Holdings.
Most (86%) of the offshore deals were denominatedin USD, and EUR ranked the second (7%), followedby CNY (5%). Hong Kong Exchange (HKEX)
remained the largest listing venue for Chinese
offshore green bonds, accounting for 54% of
the total offshore volume in 2020. London Stockexchange (LSE) was the second largest offshore
market for Chinese deals, with Singapore Stock
Exchange (SGX) being the third. Green building was
the largest sector financed by offshore green bonds(35%), followed by low carbon transport (29%).

Listing venue of Chinese offshore
green bonds
Nasdaq SE 1%

All Paris
German 7%
SE 8%

USD 15%

Offshore
18%

Offshore
RMB 1%EUR 1%SEK <1%

Amount issued in USD bn

As of December 2020, there had been a total of
USD30bn (RMB210bn) Kung Fu bonds labelled
as green, representing 68% of overall Chinese
green bonds issued offshore since 2015. Amongthe 40 green Kung Fu bond issuers, Industrial
and Commercial Bank of China (ICBC) is thelargest issuer with a total of USD6.75bn issued
cumulatively, followed by Bank of China(USD5.1bn from via three branches).

HKEX
54%

LSE
15%

Source: Climate Bonds Initiative

Source: Climate Bonds Initiative

Chinese offshore green bonds by currency

Green kungfu bonds
Kungfu bonds - referring to Chinese bonds
denominated in USD and issued offshore, are arising asset class gaining traction in the global
market. Greater onshore regulation and risingfunding costs in China’s debt capital market are
driving the growth of Kung Fu bonds. There is anincreasing preference for corporates to source
funding for their activities from the dollar bondmarket. Kung Fu bonds also give the issuer
exposure to a new investor base. For global
investors looking to capture higher yields, Kung Fu
bonds are an appealing way of gaining exposure to
the Chinese market while managing financial risks.

SGX
15%

12

84

10

70

8

56

6

42

4

28

2

14

0

0
2015

USD

China Green Bond Market Report 2020 Climate Bonds Initiative

2016
JPY

2017
HKD

2018

2019

CNY

EUR

Amount issued in RMB bn

Onshore
RMB
82%

2020
SEK
Source: Climate Bonds Initiative4

Cumulatively, USD1.6bn (RMB11.4bn) of
Chinese green bonds listed on Hong Kong
Exchange are denominated in RMB - henceclassified as Green Dim Sum bonds. Bankof China is the largest green Dim Sum bondissuer, with a total of three issuances in2016 (RMB1.5bn), 2019 (RMB2bn) and 2020
(RMB3bn), respectively.

bonds to access regional financing from foreign
creditors without restrictions or strict oversightfrom Chinese authorities.
Hong Kong Exchange is the largest marketplacefor offshore Chinese green bonds, with a total
listing volume of USD15.4bn (RMB107bn). Thisaccounts for 37% of all Chinese offshore green
bond issuance since 2015.

EUR 2%

2016

2017

98

12

2018

2019

2020

84
70

8

56

6

42

4

28

2

14

0

0

Ot
he

X

SE

Al
l

Ge

rm

an

HK

rs

10

EX

USD
82%

2015

SG

Amount issued in USD bn

RMB
11%

14

LS
E

HKD 5%

Amount issued in RMB bn

Chinese offshore green bonds by listing venue (2015-2020)

LG
X

Denominated currency of Hong
Kong listed Chinese green bonds

Du
bl
in

A dim sum bond refers to an RMBdenominated bond issued in Hong Kong.
Dim sum bonds are marketed to foreigners
who wish to circumvent Chinese capital
controls, but still have direct exposure to
RMB-denominated assets. Multinational
corporations may choose to issue thesePa
ris

Green dim sum bonds

Source: Climate Bonds Initiative

Source: Climate Bonds Initiative

The China Interbank Market is the largest
marketplace for green panda bonds that has
a total of USD571m issued, representing 47%
of all cumulative issuance. Shenzhen Stock
Exchange is the second largest, with USD342m(28%), followed by Shanghai Stock Exchange(USD300m, 25%).

0.6

4.2

0.5

3.5

0.4

2.8

0.3

2.1

0.2

1.4

0.1

0.7

0

0
2016

2017

China interbank

2018

Shanghai Exchange

2019

Amount issued in RMB bn

Panda bonds are onshore RMB-denominateddebt issued in China by foreign/overseas issuers.
The panda bond market is used as a capitalraising platform for foreign entities targeting
domestic investors and hence, domestic
investors are the main purchasers of thesebonds. The New Development Bank is the largest
green panda bond issuer (RMB3bn, 2016), while
Beijing Enterprise has the most deals (a totalof three deals issued in 2016, 2019 and 2020).

Amount issued in USD bn

Green panda bond issuanceGreen panda bonds

2020

Shenzhen Exchange
Source: Climate Bonds Initiative

Overview of the green themed bonds
Green kungfu bonds

Green dim sum bonds

Number of issuers

40

5

5

Number of bonds:

64

5

9

RMB210bn

RMB11.4bn(USD1.6bn)

RMB8.5bn(USD1.2bn)

Total amountissued(USD30bn)

China Green Bond Market Report 2020 Climate Bonds Initiative

Green panda bonds

5Issuer types

The evolution of green bond issuer types

2020 was marked by new developments in China’s
profile of issuer types. The most noticeable was
the strong growth in the total volume of green
bonds issued by government-backed entities that
increased by 18%, representing 38% of the total
volume of issuance in 2020.

100%

Non-financial corporates had the highest sharesince 2015. Beijing Jingneng Clean Energy was thelargest non-financial corporate issuer in 2020, with
one bond amounting USD2.1bn (RMB15bn). The
bond’s net proceeds were exclusively directed tofinancing and refinancing wind and solar projects, aswell as to supplement the working capital that was
related to the company’s wind and solar business.
Among the total 53 corporate issuers, 45 were
new to the market. These included Shenhua New
Energy – a fully owned subsidiary of Shenhua whichis the largest state-owned coal mining enterprisein Mainland China and in the world – that issued
a RMB1bn green bond purely financing wind andsolar project development. Chongqing Rail Transit,
Jiangsu Railway and Shenyang Metro were also
among the new issuers bringing finance to intercity
and urban rail construction.
Financial corporates’ share decreased by 19% yearon-year. The actual amount and share of financial
corporates both dropped from 2019, witnessing
the lowest annual issuance in absolute terms since2016. There were only 14 financial corporates
issuing green bonds in 2020, totalling USD6.6bn(RMB46.2bn). USD2.9bn (RMB20.3bn) were
issued in the domestic market, while USD3.7bn(RMB25.9bn) were issued in the offshore market.
Among the nine domestic issuers, five werecommercial banks and four were financial

40%
20%
0
2016
ABS

2017

Financial corporate

Government-backed entity

2018

2019

Non-financial corporate
Policy bank

2020
Local government
Source: Climate Bonds Initiative

Government-backed entity green bond issuance
16

112

12

84

8

56

4

28

0

0
2016

Country-level city

2017

2018

Prefectural-level city

2019

Amount issued in RMB bn

There are four formal levels of administrationin China - provincial, prefectural, county andtownship. The issuance of government-backed
entity green bonds varies significantly acrossprovinces. Metro and urban public transit projects
are the most funded project type by governmentbacked entity issuers. Local water authorities
such as Guizhou Water Investment, Qingdao
Water Group and Hangzhou Water Affaires Groupare among the largest government-backed
entity issuers. In 2020, the amount issued bygovernment-backed entity green bonds volume
was up 30% from the preceding year.

60%

Amount issued in USD bn

Government-backed entities contributed
USD17bn (RMB119bn) to total green bondissuance in 2020, representing 38% of 2020
issuance. Climate Bonds Initiative categorises
local government financing vehicles (LGFVs) as
government-backed entities in China’s context.
LGFVs are financing firms established and ownedby the local government in order to fund theconstruction of public projects. Green bonds
issued by LGFVs largely reflect Chinese local
governments’ ambitions to address climatechange and local environmental issues.

80%

2020

Province or provincial-level city
Source: Climate Bonds Initiative

leasing companies. Huaxia Bank, Bank ofGanzhou, Auhui Maanshan Rural Commercial
Bank, Chongqing Rural Commercial Bank andFuyang Yingquan Rural Commercial Bank are
first-time issuers that brought a total of USD2bn(RMB14.1bn) to market in 2020.

water management and low-carbon transport.
The types of securities have also become morediversified and included revenues from windturbines and other renewable energy equipment
leasing, green commercial building mortgage
receivables, and account/bill receivables.

Offshore issuance included Industrial Bank’s debut
offshore green bond (USD450m) that provided
financing for the implementation, construction,
maintenance, and development of energy
efficiency-enhancing technologies that must
result in at least 20% of energy savings. Bank of
China brought a dual currency (USD and RMB)‘Blue’ bond through its Paris and Macau branches
respectively, adding USD942m to its existing
green bond programme. The offshore green
deals from China Construction Bank (USD1.2bn)
and China Merchants Bank (USD800m) both carry
Climate Bonds Certification.

In 2020, however, ABS issuance saw a 33%
decrease from the 2019 basis. There werealso eight green ABS deals that did not meet
the Climate Bonds Database requirements
either because the underlying assets were
not considered green or there was a lack ofdisclosure. Examples include Chongqing Yuanda
Flue Gas Treatment Franchise Co and Xi’an Hitech Zone.

ABS issuance fell by 33% year on year. The
first Chinese green ABS were issued in 2016.
however, green securitisations remain a small
proportion of the green bond market, and thepotential for growth is huge. Allocations havecovered a variety of use of proceeds categories
such as renewable energy, low-carbon buildings,

China Green Bond Market Report 2020 Climate Bonds Initiative

By aggregating smaller-scale funding into acommon structure split into tranches withdifferent risk profiles, securitisations enableinstitutional investors with different mandates
to finance small-scale assets and small- andmedium-size businesses. An ABS instrument
can be defined as “green” when the underlying
cash flows relate to low-carbon assets or where
the proceeds from the deal are earmarked forinvesting in low-carbon assets.

6External reviews
The majority of green bonds carry a SPO
The profile of external reviews obtained by
Chinese issuers changed significantly in 2020. The
total volume of green bonds that carried any formof external reviews dropped drastically from 78%
to 61%. Specifically, all offshore issuance carriedat least one form of external review, while 47% ofbonds issuance onshore did not carry any external
review - which is a substantial increase versus
only 28% of non-reviewed deals in 2019. Thesemainly comprised private placements, ABS deals
and bonds approved by NDRC whose green bondguidelines do not require an external review.
Second-Party Opinions (SPO) remained themost popular external review type in both
onshore and offshore markets, representing
62% and 42%, respectively.
The volume of Certified Climate Bonds (CCB)
increased by 24% year on year. CCB remained
a larger share on the offshore market – 25% of
all Chinese offshore green bonds volume carry
Certification, compared to 5% on the domestic
market. Domestic CCB from 2020 included bonds
from Nanjing Jiangbei New Area Public Assets
Investment & Development, Anhui Maanshan Rural
Commercial Bank, and China Development Bank.
See appendix 4 on the differences between
types of external reviews, including green bondassurance, SPO, Climate Bonds Certification andgreen bond rating.
Lianhe Equator became the largest external
reviewer with USD7.2bn deals including a USD57m(RMB400m) Certified Climate Bond. This is followed
by EY, with a total of 6.7bn including USD2.9bn
offshore and USD3.7bn onshore deals. EY remained
the largest external reviewer in the offshore market.
Local external review providers are gaining
substantial market share despite three of the top
four still being international firms (by volume).
The rise of local external reviews is largely due tothe rise of SPOs, which are provided by a diverse
set of environmental consultants – many ofwhich are Chinese – as opposed to a relatively
small group of assurance providers.

Chinese green bonds
external reviews by markets

investments. China Maanshan Rural Commercial
Bank has signed an agreement with IFC, and was
the first partner to adopt the framework. The
RMB400m issuance, marking the first green bondfrom a commercial bank issued in China’s onshore
market that carries Climate Bonds Certification, hasdemonstrated the bank’s commitment to adopt
the international best practice. All net proceeds
are allocated to solar and water infrastructure.

100%
80%
60%
40%
20%
0
Offshore

Certified Climate Bonds

Assurance
None

OnshoreSPO

Source: Climate Bonds Initiative

Other top local reviewers include CCX, CECEP,
iGreenBank, and Golden Credit. All of these wereable to increase their volumes considerably in 2020.
China remains one of the largest global
sources of Certified Climate Bonds
In 2020, Chinese issuers brought four new Certified
deals to the market. In addition to these, China
Development Bank’s four tap issuances following theinitial deal that carries Climate Bonds Certification. In
total, there were USD3.6bn green bond issuance are
Certified, representing a 24% increase from the 2019.
Nanjing Jiangbei New Area Public Assets
Investment & Development (RMB490m),
debuted with a green bond Certified against theWater Infrastructure Criteria of the Climate Bonds
Standard, maturing in three years’ time. The
proceeds will be used to refinance the constructionof three new sewage treatment plants in Jiangbei
New Area, which is part of the Yangtze River deltaarea. Annual reports will have information on the
allocation of the proceeds, as well as indicatorsof the sewage treatment plants, including theamount of water treated. It is also the first time the
Climate Bonds Standard Version 3.0 being used
for a Certification in China.
Maanshan Rural Commercial Bank. In 2017, IFC
launched an innovative framework to encourage
Chinese commercial banks to mainstream green
finance and channel more capital into climate-smart

China Development Bank. In 2020, China
Development Bank received Certification for new
tap issuances of a green bond it had issued in
November 2019. These taps were the first onshorebond to be sold in the interbank bond market, theShanghai Stock Exchange, the Shenzhen Stock
Exchange, the Bond Connect scheme and theover-the-counter market all at the same time.
China Construction Bank. The first Certified
Climate Bond from the issuer was through its
Luxembourg branch in 2018, the bond refinancedloans that they have made to companies thathave build projects in the relevant Sector Criteria.
For example, the loan portfolio includes loans
made to a 344km electrified railway, a 200MW
wind farm and a sewage treatment plant. In 2019and 2020, the bank has brought another two
Certified Bonds through its Hong Kong branch.
China Merchants Bank. The first Certified issuancefrom China Merchants Bank was issued throughtheir Hong Kong branch. The proceeds will beallocated to 7 urban metro projects in China.
The Climate Bonds
Standard andCertification Scheme
is a labelling scheme forbonds, loans & other debt
instruments. Rigorous
scientific criteria ensure that it is consistent
with the goals of the Paris Climate
Agreement to limit warming to under 2°C.
The Scheme is used globally by bondissuers, governments, investors and thefinancial markets to prioritise investments
which genuinely contribute to addressing
climate change.

Certified Climate Bonds
Issuers

Date

China Merchants Bank
China Construction Bank

Size (in issuancecurrency)

Size (USD)

09/2020

USD800m

08/2020

Sector Criteria

Climate Bonds
Approved Verifier

USD800m

Low carbon Transport

EY China

USD500m

USD500m

Low carbon Transport

EY China

USD700m

USD700m

Low carbon Transport

EY China

Low carbon transport

EY China

China Development Bank

08/2020

RMB6bnUSD1.43bn

Anhui Maanshan Rural Commercial Bank

06/2020

RMB400m

USD57mSolar, water

Lianhe Equator

Nanjing Jiangbei New Area Public Assets
Investment & Development

04/2020

RMB490m

USD69mWater

The iGreen Bank

China Green Bond Market Report 2020 Climate Bonds Initiative

7

Use of proceeds

Use of proceeds (by Climate Bond Initiative definition)

Use of proceeds by Climate Bonds
Initiative definition
Low Carbon Transport remained the largest theme(30%) among bonds aligned with Climate Bonds
Initiative’s definition, followed by Energy (29%).
In the meantime, proceeds going to Low Carbon
Building assets have seen a big surge in bothabsolute values and shares. In 2020, USD5.2bn
worth of proceeds are allocated to green building
or energy efficiency in the built environment thatare in line with Climate Bond definitions. This morethan doubled the volume in 2019 and represents
22% in the overall CBI-aligned green bonds. The
other sectors, including Water, Waste, Land use
have decreased in relative shares and volumes.

Use of proceeds by China’s local definition
In 2015, the People’s Bank of China (PBOC)
issued Guidelines defining criteria and category forgreen bond projects, which cover green financial
bonds within the inter-bank market. It sets out theofficial requirements for what projects qualify as
green, management of proceeds and reporting,and a taxonomy in the form of a Green Bond
Endorsed Project Catalogue. May 2020 saw therelease of a consultation draft of China’s 2020
Green Bond Catalogue, jointly rolled out by
PBoC, China’s central bank, the China Securities &Regulatory Commission (CSRC) and the National
Development & Reform Commission (NDRC). The
official version of the new green bond catalogue
was released in April 2021. The consolidation of
the multiple pre-existing green bond catalogues
means that going forward, the identification of the“green” attributes of all bonds will be based on
the criteria of the Green Bond Endorsed Project
Catalogue (2021 Version), regardless of their typeor the market in which they are issued.

Use of proceeds by China’s
local definition
Resource
Conservation &Recycling 10%

Pollution
Prevention &Control 9%

Clean
Energy
22%

80%
60%
40%
20%
0
2017

2016
Renewable Energy
Waste

Land Use2018

Low Carbon Building

2019
Low Carbon Transport

Industry

The draft catalogue classifies green projects
into 6 level-I industry categories: Energy-saving
and Environmental Protection Industry, Cleaner
Production Industry, Clean Energy Industry,Eco-environment Industry, Green Upgrading of
Infrastructure, and Green Services, thereafter,
followed by 25 level-II, 48 level III and 203 levelIV categories.
The 2020 Catalogue aims to form a unified
catalogue, and adjustments have been madein the following aspects. First, it removes
controversial coal investments such as “clean”
coal usage including super-critical coal-fired
powerplants, coal mining and coal washing,
bringing China into closer alignment withinternational standards. Secondly, it follows the
structure of the 2019 Green Industry Guidance
Catalogue and made re-categorisation from the2015 version. The further alignment with the

2020
Water

Source: Climate Bonds Initiative

industry catalogue together with its associatedtechnical criteria instruction document enables,in principle, multiple Chinese authorities tobetter coordinate policies regarding investment,
pricing, budgets and taxation to facilitate thedevelopment of green industries. For example,
Energy-saving, and Pollution Prevention andControl sectors in the 2015 version are integrated
into the Energy-saving and Environmental
Protection Industry in 2020 Catalogue andClean Transportation is replaced by the Green
Upgrading of Infrastructure, etc.
In Climate Bonds Initiative’s research on Chinese
green bonds, use of proceeds (UoP) allocation inaccordance with the 2015 version catalogue has
been analysed as the new 2020 catalogue had notbeen adopted by the majority of issuers. However,a hight level mapping can be seen as follows.

Comparisons between 2015 and 2020 version of China green bond catalogue
2020 Catalogue
3. Clean
EnergyIndustry

5. Green
4. Ecoenvironmental Upgrading of
Infrastructure
Industry

6. Green
Service

Energy Saving
17%

2. Cleaner
1. EnergyProductionsaving andEnvironmental Industry
Protection
Industry

Clean
Transportation
22%

1. Energy
Saving

3. Resource
Conservation
and Recycling

5. Clean
4. CleanTransportation Energy

6. EcologicalProtection
and Climate
Adaption

N.A. 2%
General use
or refinancing
13%

100%

Ecological Protection& Climate Change Adaptation 5%
Source: Climate Bonds Initiative

2. Pollution
Prevention
and Control

2015 Catalogue

China Green Bond Market Report 2020 Climate Bonds Initiative

8

20

140

15

105

10

70

5

35

0

0
UP to 5Y

ABS

Policy Bank

5-10Y

10-20Y>20Y

Financial corporate

Non-financial corporate

Maturity profile of the onshore
green bond market

Perpetual
Government-backed entity
Source: Climate Bonds Initiative

Maturity profile of onshore Chinese green bonds
35

245
Aligned with both Chinese and CBI green definitions

30

Only aligned with Chinese local green definitions

25

Amount issued in USD bn

By the end of 2020, the total outstanding
amount of China’s domestic green bond market
stood at USD139bn(RMB917bn), including
USD71bn(RMB468bn) of internationally aligned
green bonds and USD68n(RMB448bn) of bonds
which only comply with China’s local definitions.
A total of USD111bn(RMB732.6bn) worth of green
bonds in China reach maturity in the next 5 years,
representing 80% of the total outstanding – thisreflects that most Chinese bonds are medium- or
short-termed. Meanwhile, the maturity profile
suggests a significant opportunity for green bondrefinancing. The potential of future increase
could also be coupled with the potential of green
bond labelling from climate-aligned issuers. This
would naturally be further encouraged by policy
incentives by providing more incentives to green
bond issuers.

175

Amount issued in RMB bn

55% of China’s domestic market is composed ofshort-dated bonds (term up to 5 years) and theseare primarily issued by Non-Financial Corporates.
Bonds with a tenor of 5-10 years make up 30%of the total, and government backed entity
dominate this bracket. Bonds with a tenor longer
than 10 years make up 8% of the total.

25

210
175

20

140

15

105

10

70

5

35

0

0

Amount outstanding in RMB bn

Tenor & Rating

Green bonds tenor

Amount issued in USD bn

The share of Clean Transport that fits
PBOC definitions fell to 22% - thiswas despite the increase in absolutevolume from USD11.8bn(RMB82.3bn) to
USD14.4bn(RMB100.5bn). The share of proceeds
raised to support Ecological Protection & Climate
Change Adaptation and Resource Conservation &Recycling also experienced a fall as compared to
2019. The largest increase came from the Clean
Energy sector).

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
onwards
Source: Climate Bonds Initiative

China Green Bond Market Report 2020 Climate Bonds Initiative

9

Climate Bonds Initiative Green Bond
Database Methodology (2020 version) in asnapshotTo reflect the green bond market evolution as
well as changes made in the recently published
the Climate Bonds Standard Version 3.0 and the
new Climate Bonds Taxonomy, the Green Bond
Database Methodology (2020 v1.1) was released.
The revised Methodology is a substantial revisionof the 2018 Methodology and seeks to provide
significantly greater transparency and clarity
on the process, considerations and distinctions
between different segments of the Climate Bonds
Green Bond Database.

• Eligible expenses are a new aspect. Historically,
the focus has been on direct financing ofphysical assets and projects and indebtedness
incurred to finance physical assets. This has
been expanded to other related and supporting
expenditures for physical assets that conformto the eligibility criteria. For example, Climate• The EU taxonomy may be used as a point ofreference or proxy for sector-specific criteria
for which there are no relevant Sector Criteria
yet under the Climate Bonds Standard. This
will be re-assessed as Climate Bonds Initiative
develops and releases new Sector Criteria.

CBI-aligned vs non-aligned green bonds
60
50

Amount issued in USD bn

What’s new?
• 100% of net proceeds need to be aligned. Only
bonds which are expected to allocate all net
proceeds to aligned green assets, projects
and activities will be included in the Climate
Bonds Green Bond Database. Climate Bonds
Initiative previously required at least 95% ofgross proceeds to be aligned as a Databaseinclusion criterion and allowed issuers use
up to 5% of proceeds to cover issuing costs orother expenses.

Bonds Initiative is supportive of Research &Development (R&D) aimed at improving ourcollective ability to address climate change
for example by helping to commercialise new
low-carbon technologies. We encourage latestage R&D spending that is likely to provide an
immediate to near-term investment in capital
assets that can deliver positive climate benefits.

The change from 95% to 100% primarilyreflects the current market practice wheremost issuers tend to disclose the use of net
proceeds, which is the amount received after
all costs and expenses are deducted. The
new requirement will better reflect the green
credentials of a bond in the database.

Aligned with both Chinese and CBI green definitions

420

Aligned with Chinese definitions only

350

40

280

30

210

20

140

10

70

0

0
2016

2017

2018

2019

Amount issued in RMB bn

Alignment with
Climate Bonds
Initiative Green
Bond Database
Methodology

2020
Source: Climate Bonds Initiative

Identifying Climate Bonds Initiative
Taxonomy Aligned Bonds
Debt
labelled by
the issuer†

Climate
Bonds
Certification*

Green andequivalentlabelsSustainability, Socialand related
bonds

The Climate Bonds
Green Bond Database

Certified debt instrumentsthat are publicly available

Aligned Green Bond List

Non-debt instrument

Non-debt instrument list

Confidential deals

Confidential deals list

Debt meets CBI Green Bond
Database requirements
Debt does not meet Green
Bond Database requirements

Non-aligned Green Bond List

All proceeds are for green
purposes and meet CBI Green
Bond Database requirements

Climate Bonds Initiative
Social and Sustainability
Bond Database

Note: these bonds will be included in both green
bond and social & sustainability bond databases

Proceeds are partly or solely
for social purposes

China Green Bond Market Report 2020 Climate Bonds Initiative10• Clearer rules on Adaptation and Resilience(A&R) measures. Most green bond financing
to date has been allocated to climate change
mitigation. Climate change adaptation andresilience (A&R) measures are also eligible.
Climate Bonds Initiative published new Climate
Resilience Principles in late 2019 year whichshaped our views around database inclusion.
Financing of A&R will be included in the
Climate Bonds Initiative Green Bond Database
if the issuer can demonstrate that the A&R
use of proceeds do not finance assets oractivities that undermine emissions reductions
goals. For example, adaptation and resilience
projects that lock in fossil fuel technology will
not be eligible and may lead to the bond not
being included.
Although regulators in China have madetremendous efforts to bridge the gap between
green bond definitions, the continued
discrepancy between local and international
definitions on green assets means that someprojects considered green in China are notaligned with the Climate Bonds Initiative Green
Bond Database Methodology (2020 version). In
2020, the volume of non-aligned green bonds
has reached USD20.2bn (RMB132bn), or 46%
of the total issuance. Steps toward addressing
the discrepancies in the Use of Proceeds (UoP)
requirements by some Chinese regulators would
further encourage international investors toaccess a significant amount of labelled green
bonds from Chinese domestic market.
Our analysis of green bond data has identified
three main factors leading to this non-alignment:
1. proceeds allocated to working capitalthat is not linked to green projects/assets;
2. proceeds used for financing projects
that are not in line with Climate Bonds
Taxonomy, and3. lack of information on the use of proceeds

Proceeds allocated to general
working capital accounts for thelargest non-alignment category
As required in the updated methodology, all net
proceeds of a green bond proceeds should beclearly linked to specified green assets, projects
and/or activities. However, this thresholdrequirement has been relaxed for several
subsections of Chinese domestic markets,
irrespective of the rolling out of an unified green
bond catalogue that defines what projects can beconsidered as green.
For example, NDRC – the regulator overseeing
China’s Enterprise Bond market - allows green
bond issuers using up to 50% of bond proceeds
to fund general working capital. The Shanghai

Categories of non-alignment
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
2017
Insufficient information

2018

2019

Non-aligned projects

2020
General working capital
Source: Climate Bonds Initiative

Stock Exchange also sets rules for green Corporate
Bonds listed on its platform, allowing issuers withmore than 50% of operating revenue generated
from defined green industries to issue green
corporate bonds without specifying the underlying
green projects, and and issuers can label the bondas ‘Green’ as long as a minimum of 70% of thefunds raised is used in green sectors.2
In 2020, over USD15bn (RMB97.5bn) worth oflabelled green bonds did not meet the green
asset threshold due to proceeds allocation to
general working capital, accounting for threequarters of total non-aligned volume in 2020,
reaching the highest share and representing asignificant surge from a mere 1.4% of in 2016
when the market started to grow.

The share of bonds financing
non-aligned projects has
continued to fall
In 2020, USD3.6bn (RMB23.4bn) worth of bonds
are excluded from the Climate Bonds Initiative
Green Bond Database due to the use of proceeds
in non-aligned projects. However, the share (byvolumes) in the overall non-aligned categories
continued to fall, dropping from 83% in 2016 to
17% in 2019. The fall reflects the effectiveness ofthe efforts made to harmonise the China’s local
green bond definitions with global ones.
In the 2020 catalogue, the following project types
related to ‘clean coal’ are removed, including the
Ultra-low emissions retrofits of coal-fired power
plant, clean fuel production, clean utilizationof coal, manufacturing of non-regular oil andgas exploration and development equipment,
manufacturing of offshore oil and gas explorationand development equipment, manufacturing

China Green Bond Market Report 2020 Climate Bonds Initiativeand operation of extraction and utilization
facilities of coalbed methane (coal mine gas),renovation project and operation of peak shaving
for coal-fired generator sets, etc.
However, gas remains in the new Chinese green
bond catalogue, and this has led to exclusionof some Chinese bonds. For example, Tianjin
Nengyuan Investment finances ‘coal-to-gas’ - aswitching by retiring existing coal-fired capacity
and replacing it with new and high efficiency gas
plants. Similarly, Chongqing Yuanda Flue Gas
Treatment Franchise and Xi’an Hi-tech Zone’s
issuance backed by gas-related projects are also
excluded from Climate Bonds Initiative’s database.

A small amount of bonds is
considered as non-aligned dueto the lack of information
The lack of sufficient information on a bond’s
green credentials may also result in the
non-alignment to international green bonddefinitions. USD1.6bn(RMB10.4bn) worth ofgreen bonds has been excluded due to the lackof transparency in 2020.
The minimum disclosure requirements on green
bond issuers at issuance include:
1. specifying the use of proceeds category
definitions, e.g. energy efficiency financing
should be linked to a sector such as buildings,
transport, grids, etc;
2. clarifying if social programmes also havespecific green objectives or benefits, e.g. energy
efficiency upgrades to social housing; and3. confirming that no financing is directed towards
fossil fuel power generation or related technologies.

11

The potential for future internationally aligned green bond market
By Climate Bonds’ definition, if not 100% of
net proceeds is used for projects or assets thatmeet the eligibility criteria the bond will not be
eligible for inclusion.
Our research on the proceeds allocation of nonaligned bonds uncovers that of the USD20.2bn(RMB132bn) of Chinese green bonds that failed
to meet the criteria in 2020, at least USD7bn(RMB45.5bn) was in fact allocated to eligible green
projects but could not be included as a part of thesame bond was financing general working capitalor there was a lack of transparency.

If the general working capital rule wasremoved, the CBI-aligned allocation ofproceeds could have reached USD30.8bn(RMB200.4bn) in 2020.

Volume of proceeds potentially aligned with CBI definition60

420
Issuances that are aligned with Climate Bonds green definitions

Issuances that are not aligned with Climate Bonds green definitions

40

280

Potentially aligned with Climate Bonds green definitions

30

210

Ch
ile

Ot
he

Si

an
rm

Ge

Ch
in

Au
st
ra
lia
rc
ou
nt
rie
s

0

Ita
ly

0

UK
ng
ap
or
e

70

Ja
Su
pa
pr
n
an
at
io
na
l
Sp
ai
n
Ca
na
da
No
rw
ay

10

y
Fr
an
Ne
ce
th
er
la
nd
s
Sw
ee
de
n

140

a

20

US
A

Amount issued in USD bn

350

Amount issued in RMB bn

50

Source: Climate Bonds Initiative

China Green Bond Market Report 2020 Climate Bonds Initiative

12

Climate-aligned bond market
Labelled bonds, including green bonds, benefit
from a greater degree of transparency, as
disclosure on the green credentials of the funding
is often provided alongside financial information.
This is due to well-established green definitions
and market guidelines, which provide investors
additional transparency on the use of proceeds.
In the meantime, the identification of a wider
range of climate investment opportunities thatare not necessarily labelled - is also crucial. In
2018, Climate Bonds identified more than USD1tn
of climate-aligned bonds, with an additional
USD389bn of labelled green bonds. To date,
the labelled green bond market has more thandoubled, having reached more than USD1tn.
Climate Bonds Initiative identifies climatealigned bonds. These bonds are not labelled as
green bonds by the issuer, but finance climatealigned activities/assets. Climate-aligned bonds
are identified via two research phases: the ‘issuer
screening’ and the subsequent ‘identificationof climate-aligned bonds’. (See Climate-aligned
methodology in Appendix A)
With USD325bn of climate-aligned bonds
outstanding, China accounts for 36% of the overall
climate-aligned universe identified by Climate
Bonds Initiative. Most of the country’s climatealigned debt comes from the Transport theme,with railway companies being the most prevalent.
The commitment to become net-zero by 2060
will require a shift to the country’s energy
paradigm with a drastic change in its energy
generation mix. The ambitious carbon neutrality
pledge also requires trillions of dollars inprivate-sector capital to finance both green andtransition activities. The Chinese bond market islarge enough to fill in the gap in climate funding.

96 climate-aligned issuers
69 fully-aligned issuers
27 strongly-aligned issuers
USD325bn outstanding climate-aligned debt
Top three climate themes: Transport (USD261.2bn),
Energy (USD48.5bn), Water (USD10.6bn)
Top 3 currencies: RMB (USD321.3bn), USD (USD2.7bn),
HKD (USD1bn)
Therefore, scaling up climate finance via labelledgreen bonds will be one of the key paths for
China if to push ahead its net-zero target.
Rail dominates China’s climate-aligned
universe. China Railway Corp is the top issuer
with a cumulative USD230.1bn of aligned
outstanding bonds, which make up for 25% of
the overall climate-aligned universe and 71% ofthat of China.
Energy is the second largest climate theme
The Energy theme is China’s second largest
climate theme after Transport and accounts
for approximately 15% of climate-aligned
outstanding volume (USD48.5bn and 37
climate-aligned issuers). The top three issuers
are China National Nuclear Corp (3% of China’s
volumes, USD10.6bn), China Three Gorges Corp
(3%, USD9.1bn) and China Yangtze Power (2%,USD7.8bn).
Water, Waste and Land use & agriculture accountfor over USD1bn of climate-aligned outstanding

Issuer screening: revenue stream analysis
Pool of eligible
climate-aligned
issuersdebt. Water represents 3% of total volume(USD10.6bn and 22 climate-aligned issuers)
with Beijing Enterprises Water Group being the
top issuer (USD2.7bn). With USD2.4bn and 13
climate-aligned issuers, waste makes up roughly
1% of the volume; Yunnan Water Investment Co
Ltd (USD<1bn) tops the theme’s ranking. Land
use & agriculture also accounts for 1% of volume(USD2.2bn and 3 climate-aligned issuers), with
Sinar Mas Paper China Investment Co Ltd being
the top issuer (USD1.5bn).
Opportunities for scaling up labelledbond issuanceMore than half of China’s outstanding climatealigned bonds (56%) will mature by 2024. Thishighlights opportunities for climate-aligned
issuers to refinance their debt with labelledgreen bonds. Most opportunities come fromthe Transport theme, followed by energy andwater. An additional USD69.7bn will mature by
2029, indicating more opportunities from 2025,
particularly for transport and energy issuers.

Identification of climate-aligned bonds

Fully-aligned
issuers(≥95% climatealigned revenues)

100% of theiroutstanding bonds

Strongly-aligned
issuers(≥75% climatealigned revenues)

Pro-rata alignment(%) of outstanding
bonds

Issuers not aligned(<75% climatealigned revenues)

Bonds excluded

China Green Bond Market Report 2020 Climate Bonds Initiative

Climate-aligned
outstanding bonds+

13

Social and sustainability bonds
The COVID-19 pandemic had clear implications
for the green finance universe: Although China
remained one of the largest sources of green
bonds, both domestic and overseas issuancewitnessed a slowdown year-on-year, with theimpact more pronounced in the first half of2020. The drop in green bond issuance also
partly resulted from the surge of other labelleddebt instruments in the country – specifically‘Pandemic Prevention and Control’ bonds(‘Pandemic’ bonds or ‘COVID’ bonds).

Policy developments
On January 31, 2020, five ministries including
the People’s Bank of China, Ministry of
Finance, CBIRC, CSRC and Ministry of Foreign
Exchange jointly issued the “Notice on Further
Strengthening Financial Support to Prevent andControl the Pandemic”, created a ‘fast registrationroute’ for bonds whose proceeds are used for
pandemic control.
Issuers are eligible to label the bond as‘Pandemic prevention and control’ if the entity isregistered or operated in a region that is severely
affected by COVID, and/or operates in an industry
that either affected by COVID or can contribute to
the control of pandemic.

Market developments
The COVID pandemic impacted the issuanceof all types of bonds towards the end of thefirst quarter 2020. However, the bond market
proved to be a flexible source of finance tohelp with both the immediate impacts as well
as longer-term recovery plans. This led to therapid growth of the sustainable and social debt
markets globally, and the massive increase in
Pandemic Prevention and Control bonds in
February and March.

The first Pandemic bond of 2020 was issued on
5 February, a RMB1bn (USD143m) deal from
Zhuhai Huafa Group from China. Pandemic
themed issuance peaked in February andcontinued to decline until June when the seriesof sovereign Pandemic control bonds were
issued (RMB1trn, USD156bn). As of December
2020, the total Pandemic bonds in China reached
RMB1.55trn (USD210bn).
There are also two ‘Pandemic’ bonds categorised as‘International Organisation’ panda bonds issued by
the New Development Bank and AIIB respectively.
The New Development Bank’s Pandemic bond raised
funds to provide Emergency Program Loan to thePeople’s Republic of China for Supporting China’s
Economic Recovery from COVID-19. Specifically,
it provides support to the provincial governmentof Guangdong, Hubei and Henan Provinces.
The Asian Infrastructure Investment Bank (AIIB)
brought its inaugural renminbi-denominatedSustainable Development Bond (Pandemic
Prevention and Control) in the China Interbank
Bond Market in June. The RMB3bn issuance
has a maturity of 3 years with a coupon rateof 2.40% and carries the Combating COVID-19
label approved by the National Association of
Financial Market Institutional Investors.
The bonds were 2.78 times oversubscribed bymore than 20 investors with 35% allocated todomestic and 65% to international investors.
The bond is zero percent risk weighted in
China, and was priced at 23bps lower than thevaluation of China Development Bank Bonds asof close of business June 10, 2020. The proceeds
will be used to support public health, such asby providing emergency loans to China’s publichealth departments, and to support economy
recovery as well as investment in infrastructure.

Climate Bonds
Initiative’s Socialand Sustainability
Bonds Methodology
Social and sustainability
Market participants have
not yet developed a “social
taxonomy” or equivalentclassification and screening
system, though work on this isongoing in the EU and elsewhere.
Climate Bonds does not screen social andsustainability bonds’ use of proceeds against
performance thresholds. The use of proceeds
is, however, classified in accordance with therespective labels and categorised as follows:
Sustainability: label describes a combinationof green and social projects, activities, or
expenditures e.g., sustainable; SDG; SRI; ESG, etc.
Social: label is exclusively related to social
projects e.g., pandemic, COVID-19, housing,gender, women, health, education, etc. Thus,
any instrument financing only green projects
is included in the green theme irrespective of
its label. On the other hand, a sustainabilitylabelled bond that only finances social projects,
as well as one that finances a combination ofgreen and social, is considered to fall under thesustainability theme. Because of this, our analysis
of other themes provides an initial indicationof capital market funding aimed at each theme
based on the deal label (see Appendix B). NB:
Throughout this report ‘Pandemic’ refers to deals
with a COVID-related label such as pandemic
response, COVID-19 etc.

The development of COVID bonds in China
Non-financial corporate

140

980

International Org
30

Government-backed entity

25

ABS

20

Financial corporate

15

Sovereign

210
175
140
105

10

70

5

35

0

0
February

March

April

May

June

July

AugustSeptember

Amount issued in RMB bn

Amount issued in USD bn

Local Government

December
Source: Climate Bonds Initiative

China Green Bond Market Report 2020 Climate Bonds Initiative

14

Green bond policy development
Throughout the year of 2020, and especially after
the announcement of China’s pledge to becomecarbon neutral by 2060, the nation’s top policymakers and regulators continued to double down
on providing incentives to market stakeholders
to incorporate environmental, social and climate
considerations into their investment decision.
Nevertheless, the discrepancies in the UoP rules
and the regulations around the green external
review providers are still in the process of being
studied. We have identified several noteworthy
policy developments as follows.

China’s Five-Year Plan (FYP) for
carbon emissions reduction
On March 11, 2021, the National People’s
Congress (NPC) of China released the country’s
14th Five-Year Plan (2021-2025), setting a 18%
reduction target for CO2 intensity and 13.5%
reduction target for energy intensity. 3 The FYP
also aims to boost the share of non-fossil sourcesin the energy mix to around 20% and increase
forest coverage to 24.1% by the end of the period.

A 2060 climate target
Chinese President Xi Jinping pledged at theUnited Nations General Assembly in Septemberthat China would peak carbon emissions by
2030 and achieve carbon neutrality before 2060.
China’s carbon goal will have a profound positive
impact on the world and itself. In December,building on the “30-60” target, President Xi
further proposed several milestones: By 2030,
China’s carbon dioxide emissions per unit of GDP
will be reduced by 65% compared with 2005,
non-fossil energy will account for about 25%
of primary energy consumption, and the total
installed capacity of wind and solar power willreach more than 1.2 billion kilowatts. In the nextten years, China’s economy and society will havea comprehensive low-carbon transition

CBIRC issued requirements for
ESG risk management
In January 2020, the China Banking andInsurance Regulatory Commission issued“Guiding Opinions on Promoting the HighQuality Development of the Banking andInsurance Industry”, which puts forward higher
requirements for ESG risk management ofChinese financial institutions in banking industry.
The Opinions states clearly to develop green
finance. Its requirements for banking financial
institutions are to: a) to put in place a soundenvironmental and social risk management
system, and incorporate ESG factors into thecredit granting process; b) encourage setting up
green finance departments and green branches; c)encourage green financial products innovation. The
unprecedented importance has been attached to

ESG, and in the future, the ESG risk management
will be a key indicator for the performance appraisalof banking financial institutions.

green project, and sets additional information
disclosure requirements including environmental
benefit targets.

China Scraps Quota Limits
on QFII, RQFII Foreign
Investment Systems

Green bonds included in
the new Green Financial
Performance Evaluation
Plan for Banking Depository
Financial Institutions

On May 7, 2020, the PBOC and the State
Administration of Foreign Exchange (SAFE) jointly
issued the Regulations on Funds of Securities
and Futures Investment by Foreign Institutional
Investors, which removes the remaining quotas
for QFII and RQFII investments, further easing
the restriction of foreign investors in accessing
China’s financial market.4

New Green Bond Endorsed
Projects Catalogue(2020 Edition) released
for consultation
In July, the People’s Bank of China, together
with the National Development and Reform
Commission and the China Securities Regulatory
Commission, publicly solicited opinions on
the “Notice on Promulgating the Green Bond
Endorsed Projects Catalogue (2020 Edition) (Draft
for Solicitation of Opinions)”.
The updated version was jointly issued by thethree ministries marking the harmonizationof domestic green definitions. The exclusionof clean coal projects was a remarkable step
towards the harmonization with international
standards. The consultation draft also refined thethree-level classification of the original catalogue,
increased it to a four-level classification, andexpanded the scope of endorsed projects in thefields of agriculture and ecological protection.
Note: In May 2021, the Green Bond Endorsed
Projects Catalogue (2021 Edition) was released.
The new edition incorporates constructive
feedbacks collected during consultation period,
and unifies domestic green standards.

Shanghai Stock Exchangeannounces new regulation on
green company bonds
On November 27, 2020, the Shanghai Stock
Exchange (SSE) issued the “No. 2 Guidelines
for the Application of the Review Rules for theIssuance and Listing of Corporate Bonds-SpecificTypes of Corporate Bonds, which includes
regulatory standards, information disclosureand verification requirements for six specifictypes of bonds including short-term company
bonds, renewable bonds, green company bonds,
poverty alleviation bonds, innovation bonds,
and disaster relief bonds.5 The Guide stipulates
that no less than 70% of funds raised from thegreen company bonds should be used in the

China Green Bond Market Report 2020 Climate Bonds Initiative

In July 2020, the People’s Bank of China issued
the “Notice on Releasing the Green Financial
Performance Evaluation Plan of Banking
Depository Financial Institutions” (Draft for
Solicitation of Opinions). This consultation draft
revised the “Green Loan Performance Evaluation
Plan of Banking Depository Financial Institutions(Trial)” formulated by the PBOC two years ago inthree places:
1. the evaluation scope was expanded to cover
not only green loans, but also green bonds, androom reserved for further incorporation of green
equity and green trust;
2. evaluation indicators were revised accordingly
based on the expanded scope;
3. the evaluation results can be applied in morescenarios, for instance, it will be referenced toby the central bank in the ratings of financial
institutions. It showed the central bankupgraded its evaluation methods on banks’
green finance performance.
On 9 June 2021, after consultation, the “Green
Finance Performance Evaluation Plan for
Banking Financial Institutions” was officiallyreleased. Green bond holdings of financial
institutions are explicitly included in theevaluation alongside green credit balances andare assigned the same weighting.

Five Ministries promote climate
investment and financing
In October, five ministries with the Ministry of
Ecology and Environment issued the “Guiding
Opinions on Promoting Climate Investment and
Financing”. The Opinions proposed to create apolicy environment conducive to the developmentof climate investment and financing, to set
standards for climate investment and financing,
and to initiate local-level pilot programs.

Green finance standards
and green bond market
development in the Greater Bay
Area (GBA).
China is speeding up the unification of green
finance standards and green bond market in the
Greater Bay Area (GBA). In May, four ministries
including the People’s Bank of China issued
the “Opinions on Finance Supporting the15Construction of the Guangdong-Hong KongMacao Greater Bay Area (GBA)”, calling for green
financial cooperation in the GBA.
The Opinions proposed to establish a unified setof green finance standards in the GBA, which will
gradually conform to international standards,
and attract international investors. It supported
Guangdong local financial institutions to issue
green bonds and other green financial productsin Hong Kong and Macau, and to support green
enterprises in the GBA with raised funds. The GBA
is on frontier of China’s green finance reform.

CSRC Includes ESG informationin listed firms’ Investor Relation
Management
On February 5, 2021, China Securities Regulatory
Commission (CSRC) published a consultation
draft of its Investor Relations Management
Guidelines for the Listed Companies.6 One of the
key updates has been that the Environmental,
Social and Governance (ESG)-related information
is now required, for the first time, in the
Company’s investor relation management. The
guidelines also emphasize that the listed firms
must be proactive in managing their investor
relations and encourage a culture of long-term,
rational, and value-driven investment.

MEE Launches Public
Consultation of National ETS
Draft Law
On March 30, 2021, the Ministry of Ecology andEnvironment (MEE) issued a new draft national
ETS legislation7 for public consultation. The
Interim Regulations for the Management of Carbon
Emissions Trading” refines the existing measuresand moves the regulations one notch higher
within China’s legal hierarchy. For the first time,the draft law connects national ETS to the carbon
emissions peaking and carbon neutrality targets.8

China Green Bond Market Report 2020 Climate Bonds Initiative16

Outlook
2020 has been a tumultuous year for China’s
green bond market as the country, like the restof the world, rushed to respond to the impactsof the COVID-19 and to find its own path topost-pandemic recovery with coordinatedmacroeconomic policy, regulatory, institutional
and technological developments.
Chinese regulators have continued to stimulatemarket growth through an array of financial
and regulatory incentives, and sought to further
integrate China’s green financial market into
the global capital market. The year has seen an
important market consolidation with a longawaited unification and update of its domestic
green bond standards, which will improve
the attractiveness of Chinese green bonds foroffshore investors and pave the way for bettertaxonomy coordination between China and therest of the world.
Outside of the green bond universe, there was a
growth in other labelled bonds s, with a spike inthe issuance of sustainability and social-related
debt instruments, and a cluster of new products,
such as “carbon neutral” bonds, sustainabilitylinked bonds (SLBs) and social bonds.
Nonetheless, the gaps that remain between
Chinese and international green bondstandards have the potential to dent foreign
investors’ enthusiasm, while the international
investors still need to grow understanding andconfidence in the emerging products including
the “carbon neutral” and transition bonds fromthe Chinese market.
Going forward, the government’s role inproviding consistent and credible policy
signals will continue to be paramount forthe sustained and orderly growth of China’s
domestic green bond issuance volume, yet themarket stakeholders will need to keep abreastof the rapidly evolving and proliferation ofdebt instruments. The key “gatekeepers” ofthe labelled bond market, such as the external
review providers and underwriters, also need toinsist on high standards.

Transition financeis becoming aprominent theme
China’s green debt
instrument universe has
seen an impressive growth
in recent years, with a broadening number ofcommercial banks, government-backed entities
and corporates engaging with both local andoverseas investors to finance projects, assetsthat can delivery positive environmental andclimate impact. Large emitters, however, are stilllargely absent and present an opportunity forthe markets to aid their sustainable transition.
In order to fill this gap, the ‘transition bond’concept and label can be introduced for thosebonds that do not meet the criteria and market
adopted standards for green bonds but which
are associated with issuers who are transitioning
to decarbonized business models -- and areparticularly targeted at the high carbon-emitting
sectors.

A China sovereign
green bond?
As of December 2020, 22
national governments had
issued sovereign green, socialand sustainability bonds totalling USD96bn.
The rise of the sovereign green bonds is tosupport the growth of a local green bond market.
Sovereign issuers can serve as role models forother types of issuers. They can provide investors
with safe, liquid investment opportunities andcontribute to larger strategic initiatives such as
the strategic initiative to achieve NDC and carbon
neutrality targets. Over 110 countries that havecommitted to becoming carbon neutral by midcentury, including China. Governments must act
on these commitments by implementing largescale green infrastructure plans as part of the
post-covid recovery to build back better.

There are a number of themes to watch forunderstanding the further development of one of
the world’s most important green financial markets.

China Green Bond Market Report 2020 Climate Bonds Initiative

Carbon neutrality bonds
expected to expand China’s
green bond market and bringit closer to international green
definitions
The National Association of Financial Market
Institutional Investors (NAFMII) issued a notice inMarch 2021 introducing carbon neutrality bonds
mechanism that aims to further support the lowcarbon transition and green growth. According to
the Notice, projects that receive investment via
the carbon neutrality bonds should comply withthe local green bond catalogue or internationalclassifications of green industry (including the
Climate Bonds Standards) and should focus on
low-carbon and emission reduction projects suchas clean energy, clean transport, sustainablebuildings and low-carbon renovation of industrial
projects. According to Climate Bonds Initiative’s
analysis, bonds that carry a Carbon Neutrality
label has shown a closer alignment with Climate
Bonds green definitions. We expect this will
turbo-charge China’s green bond market in 2021
and attract more attention from international
investors.

Sustainability
linked-bonds to fueltransition finance
China’s National Association of
Financial Market Institutional
Investors (NAFMII) introduced an innovative
debt capital market tool “Sustainability-Linked
Bonds (SLB)” to the interbank market in April
2021, for the purpose of broadening financing
channels for enterprises engaged in sustainable
development. NAFMII defines SLBs as any typeof bond instrument for which the financial and/or structural characteristics can vary dependingon whether the issuer achieves predefinedsustainability or ESG objectives. It is a forwardlooking performance-based instrument with aflexible structure. Entities that issue SLBs can
set key performance indicators (KPIs) which
are aligned with their sustainability strategies.
Allowing the issuer to set more general,
overarching sustainability goals, rather thanbeing tied to financing specific projects may
further accelerate the transition finance market
in certain sectors such as steel, cement, andutilities. However, science-based tools for theevaluation of the targets are important to provide
transparency to investors.

17

Appendix 1 Methodology
We cover three sustainable debt themes basedon the projects, activities, and expenditures
financed: green, social, and sustainability.
Pandemic bonds are included as a sub-set of thesocial theme.
The themes can be described as follows:
Green: dedicated environmental benefits(captured since 2012)
Social: dedicated social benefits(captured since 2020)
Sustainability: green and social benefits
are combined into one instrument(captured since 2020).
The methodology used to identify climatealigned bonds and issuers is described below
and is independent.

Methodology overview
This report is based on the Climate Bonds
Green Bond Database, as well as the Social andSustainability Bond Database. To qualify forinclusion, debt instruments must a) have a label
and b) finance sustainable projects, activities,
or expenditures. Debt labels describe the typesof projects, activities, or expenditures financed,
and/or their benefits. ‘Green’, ‘Social’, and‘Sustainability’ labels are the most common ineach theme, but a broad range of labels is used.

Green
All deals in the green theme have been screened
to verify their integrity. Screening is based on aset of process rules stipulated in Climate Bonds
Green Bond Database Methodology, including
the following two overarching criteria:
1. Deals must carry a variant of the green label
2. All net proceeds must verifiably (basedon public disclosure) meet Climate Bonds’
green definitions based on the Climate Bonds
Taxonomy.9

Social and sustainability
Market participants have not yet developed a“social taxonomy” or equivalent classificationand screening system, though work on this isongoing in the EU and elsewhere. Climate Bonds
does not screen social and sustainability bonds’
use of proceeds against performance thresholds.
The use of proceeds is, however, classified
in accordance with the respective labels andcategorised as follows:

Sustainability:
Label describes a combination of green andsocial projects, activities, or expenditures e.g.,sustainable; SDG; SRI; ESG, etc.

Social:Label is exclusively related to social projects e.g.,
pandemic, COVID-19, housing, gender, women,
health, education, etc.
Thus, any instrument financing only green
projects is included in the green theme
irrespective of its label. On the other hand, asustainability-labelled bond that only finances
social projects, as well as one that finances a
combination of green and social, is considered
to fall under the sustainability theme. Becauseof this, our analysis of other themes provides
an initial indication of capital market funding
aimed at each theme based on the deal label(Appendix B).

Climate-aligned methodology
Climate-aligned bonds are identified via two
research phases: the issuer screening and thesubsequent identification of climate-aligned
bonds.

1. Issuer screening
In the first phase, climate-aligned issuers are
identified through an analysis of the revenue
streams of a global pool of public and privatecompanies and entities. Revenue streams
are assessed based on their alignment with
the Climate Bonds Taxonomy across eight
climate categories: Renewable Energy,
Transport, Buildings, Water, Waste, Land Use
and Agriculture, Climate Adaptation, and ICT(Information and Communications technology).
Only companies (or their subsidiaries and/or financing arms) with outstanding debt are
eligible for inclusion.
• Companies that derive at least 95% of theirrevenue streams from climate-aligned
activities are classified as fully-aligned issuers• Companies that derive between 75%-95% of
their revenues from climate-aligned activities
are classified as strongly-aligned issuers

2. Identification of climate-aligned bonds
In phase two, the amount of climate-debt iscalculated. Bonds issued by climate-aligned
issuers are defined as climate-aligned bonds as
they finance and/or refinance operating activities
that have been identified as climate-aligned.
The total climate-aligned outstanding debt iscalculated as follows:• The combination of climate-aligned
outstanding volume issued by fully- andstrongly-aligned issuers is defined as climatealigned outstanding debt, and this is thebasis for the charts and market analysis below.

Methodology notes and caveats
1. Due to the methodological difference between
Green and other themes, our analysis of otherthemes is merely an indicator of the financing
aimed at each, based on the deal’s label. For
instance, some deals labelled as ‘SDG’, andtherefore included under the Sustainability
theme, may only actually finance social projects.
Importantly, there will also, for example, bevarious deals under the Social and Sustainability
themes that finance, in whole or in part,
pandemic-related investments. Climate Bonds
is developing the more granular UoP analysis forother themes.
2. Some of the analysis is shown in terms of‘number of issuers’ rather than ‘amount issued’– this reflects the number of issuers in eachindividual theme. The total number of issuers
is slightly lower than the total adding acrossthemes, since some issuers have printed deals
that cover more than one theme.
3. Our Green Bond Database includes manyloans and ABS (securitised) deals. We havehistorically treated these as issuer types, andthe same applies to this report. However, under
our new methodology, these are considereddifferent instrument – not issuer – types. It
remains uncommon to see loans or ABS deals
with a sustainability, social, or pandemic label (areminder that performance-linked loans are notincluded).
4. In addition to the exclusion of performancelinked instruments and transition labels, we
excluded several deals because we could not
find publicly available labels. This included
some by repeat issuers, most of which had
issued clearly labelled deals – where possible,
we suggest improving the availability and clarity
of information related to each deal, including
labels.

• For fully-aligned issuers: 100% of outstanding
debt is considered climate-aligned• For strongly-aligned issuers: a pro-rata amountbased on the issuers’ percentage alignment is
considered climate-aligned. For example, if an
issuer is 80% aligned, then 80% of its outstanding
debt is considered climate-aligned.

China Green Bond Market Report 2020 Climate Bonds Initiative18

Appendix 2 Terminology
Terminology
Labelled green bonds

Non-aligned green bonds

In China’s domestic market, labelledgreen bonds are either approved by regulators
or registered at stock exchanges with a greenlabel in the bond name. In the overseas
market, issuing documents or external review
reports are used to identify the green label.

If a bond’s use of proceeds (UoP) is not alignedwith the Climate Bonds Taxonomy, the bond is
not included in the Climate Bonds Initiative Green
Bond Database. The same applies if more than 5%of proceeds are expected to be used for general
corporate purposes, working capital, social assets
or projects/assets that are not aligned with the
Climate Bonds Taxonomy. Lack of sufficient
information to determine the alignment of use ofproceeds also results in exclusion. These bonds
are also referred to as excluded green bonds, nonaligned green bonds or green bonds only alignedwith local definitions.

Aligned green bonds
Only bonds with 95% or more ofproceeds dedicated to green assets or projects
that are aligned with the Climate Bonds
Taxonomy are included in Climate Bonds
Initiative Green Bond Database. These bonds
are referred to as green bonds aligned with CBIdefinitions in this report.

Certified Climate Bonds

green issuance under the Climate Bonds Standard
and Sector Criteria. Independent approved
verifiers provide a third-party assessment thatthe use of proceeds comply with the objective of
capping global warming at 2°C.

Unlabelled Climate-aligned bonds
The term refers to bonds that support thetransition to a low carbon economy but have notbeen labelled as “green” by the issuing entity.
These go beyond the green label and indicates amuch larger set of bonds issued by entities thathave at least 75% of revenue derived from “green”
business lines in at least one of the climate themes
defined by Climate Bonds Taxonomy.

Climate Bonds Initiative administers the Climate
Bonds Certification Scheme. Issuers can certify their

Appendix 3 Climate Bonds Taxonomy
Climate Bonds Taxonomy
WATER

Solar

Private transport

Water monitoring

Residential

AgricultureWind

Public passenger
transport

Water storage

Commercial

Geothermal

Freight rail

Water treatment

Bioenergy

Aviation

Water distribution

Hydropower

Water-borne

Flood defence

MarineRenewables

BUILDINGSLAND USE &MARINERESOURCES

TRANSPORTENERGYINDUSTRY

WASTE

ICT

Cementproduction

Preparation

Broadband
networks

Commercial
Forestry

Steel production

Reuse

Telecommuting
software andservice

Products &systems for
efficiency

Ecosystem
conservation& restoration

Glass
production

Recycling

Data hubs

Urban
development

Fisheries &aquaculture

Basic Chemical
production

BiologicaltreatmentPowermanagement

Supply chain
management

Fuel production

Waste to energy

Nature-based
solutionsLandfill

Electrical Grids& Storage
NuclearRadioactive waste
management

Certification Criteria approved
Criteria under development
Due to commence
08/2021

China Green Bond Market Report 2020 Climate Bonds Initiative

19

Appendix 4 Index performance
Secondly, is to propose solutions to thedifferences in the identification of clean fossil
energy projects and pollution prevention projects
among the four green bond standards prevailingat home and abroad, that is, to fully consider the
positive effects of these projects on the current
environmental benefits.

The third is to dig deep into the green informationof stock financial bonds, define the scope of “green
loans” and other factors based on loan investment
projects, and calculate the proportion of bonds
raised to green project loans in the funds raised
from bonds, thus achieving the identification andclassification of green financial bonds purpose.

ChinaBond China Green Bond Index

As of 31 December 2020, there were 394 constituent bonds includedin the ChinaBond China Climate-aligned Bond Index with a total
outstanding amount of RMB1.27tn. The average duration is 3.58 years
and the 1-year total return of the index was 3.83%. 99.98% of theproceeds of index constituents were allocated to green projects.

As of 31 December 2020, there were 2009 constituent bonds includedin the ChinaBond China Green Bond Index with a total outstanding
amount of RMB4.01tn. The average duration is 4.72 years and the
1-year total return of the index was 3.44%. 86.85% of the proceeds ofindex constituents were allocated to green projects.

Total return: Chinabond China
Climate-aligned Bond Index

Total return: ChinaBond China
Green Bond Index

160

160

150

150

140

140

130
120
110
100
90

Total return Index (Total value)

Total return Index (Total value)

ChinaBond China Climate Aligned Bond Index

130
120
110
100
90

Jan-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

ChinaBond China Green Bond Select Index

ChinaBond CIB Green Bond Index

As of 31 December 2020, there were 1834 constituent bonds includedin the ChinaBond China Green Bond Select Index with a total
outstanding amount of RMB3.77tn. The average duration is 4.89 years
and the 1-year total return of the index was 3.44%. 87.28% of theproceeds of index constituents were allocated to green projects.

The index was launched jointly by CCDC and China Industrial Bank.
Eligible projects have to be confirmed by China Industrial Bank’s
Green Finance Criteria (2016). As of 31 December 2020, there were 471
constituent bonds with a total outstanding amount of RMB805.4bn.
The average duration is 1.75 years and the 1-year total return of theindex was 3.38%. 90.23% of the proceeds of index constituents wereallocated to green projects.

Total return: Chinabond China Green Bond
Select Index

Total return: ChinaBond CIB Green Bond Index

160

160

150

150

140
130
120
110
100
90

Jan-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total return Index (Total value)

Total return Index (Total value)Jan-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Data source: all index performance data is provided by CCDC

With regard to the identification method of index
sample bonds, CCDC made three innovations.
Firstly, the index goes beyond the labelled green
bond and identified non-labelled bonds that are
actually financing green assets. It encourages andguides investment in broader green sectors.

140
130
120
110
100
90

Jan-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Note: all the four indices are Fortune Indices

China Green Bond Market Report 2020 Climate Bonds Initiative20

Appendix 5 External review types
Type of review

What it covers

Service Providers

Third party Assurance

Assurance reports state whether the green issuance is alignedwith the Green Bond Principles and the Climate Bonds Standard

Audit firms

Second Party Opinion

Provide an assessment of the issuer’s green bond framework,
analysing the “greenness” of eligible projects/assets. Somesecond party opinions also provide a sustainability rating, giving
a qualitative indication

Environmental Social Governance (ESG) service
providers (such as Oekom, Sustainalytics, Vigeo
Eiris, DNV GL) and scientific experts (such as
CICERO, CECEP Consulting). Other environmental
consultants and assessment organisations.

Green Bond Rating

A number of rating agencies assess the bond’s alignment with theGreen Bond Principles and the integrity of its green credentials

Rating agencies such as Moody’s, S&P Global
Ratings, JCRA, R&I, RAM Holdings

Pre-issuance verificationof the Climate Bonds
Certification according to the
Climate Bonds Standard

The Climate Bonds Standard is the only Paris Agreement aligned
standard available in the market. Independent verification
confirms that the use of proceeds adhere to the Climate Bonds
Standard and sector specific criteria (e.g. Low Carbon Transport)

Verifiers approved by the Climate Bonds
Standard and Certification Scheme

Appendix 6 A CCDC Study on Information Disclosure on
Environmental Benefits by Chinese Green Bonds
China’s labeled green bond market has grown
fast in recent years. Meanwhile, there are also alarge number of bonds that are not labeled but
actually financing green projects, which provide
substantial support for green development.

Over the past three years, CCDC and CECEP haveidentified 2,017 substantively green bonds. The
results of identification are published on www.
chinabond.com.cn and updated on an ongoingbasis.

In 2018, China Central Depository & Clearing
Co., Ltd. (CCDC) and China Energy Conservationand Environmental Protection Group Co.,
Ltd. (CECEP) accomplished a research project
entrusted by the Green Finance Committee (GFC),
where they created a practical set of indicatorsfor environmental benefits disclosure of green
bonds, as well as a method for identificationof unlabeled green bonds. According to thismethod, a bond can identified as substantively
green if the use of its proceeds meets one of thefour major green bond standards (Green Bond
Endorsed Projects Catalog (2015) by People’s
Bank of China, Guidelines for Issuance of Green
Bonds by the National Development and Reform
Commission, Climate Bonds Taxonomy by
the Climate Bond Initiative and Green Bond
Principles (2015) by the International CapitalMarket Association) and at least 50% of theproceeds are invested in green projects (orat least 50% of the issuer’s principal businessrevenue is green).

With a growing base of market participants, theChinese green bond market has made steadyprogress. As of December 31, 2020, the outstanding
amount of all green bonds had hit RMB3,968.954
billion, of which RMB847.55 billion was labeled.

ChinaBond Green Bond Environmental
Benefit Disclosure Indicator System
To facilitate the goal of “peaking carbon emissions
before 2030 and achieving carbon neutrality by2060” and consolidate the green bond market,
CCDC R&D Center and Shenzhen Customer Service
Center released in April 2021 the ChinaBond Green
Bond Environmental Benefit Disclosure Indicator
System (Exposure Draft) (“the Indicator System”)
as well as the data disclosed on environmental
benefits by green credit bond samples in 2020 for
public consultation.

The Indicator System, comprising 30 generalindicators and 13 sector-specific indicators,
covers all 203 green sub-sectors of 6 industries
set out in the 2021 Catalog. Given actual green
contributions made by bonds, it extends thescope to include green local government bonds
and green railway bonds.
The Indicator System presents China’s firstquantitative indicators for sub-sector-level
data in line with the 2021 Catalog. This setof measurable and verifiable indicators on
environmental benefits will provide reliablereference for regulators in their statistics ofcarbon neutrality data.

2.2 Information disclosed on
environmental benefits
With the assistance of the Indicator System, westudied information disclosed on environmental
benefits by outstanding green bonds. Excluding
green financial bonds and local government
bonds due to insufficient disclosure, the study
focuses on 917 substantively green credit bonds .

It is in line with Green Bond Endorsed Projects
Catalog (2021 Edition) (the “2021 Catalog”)
and also compatible with the 2015 Catalog.

China Green Bond Market Report 2020 Climate Bonds Initiative21

Endnotes
1. Note that in this report ‘Chinese green bonds’ ferefer to any
green bonds issued by an entity with China as its country of risk as
designated by Bloomberg. Bonds may be issued in any currency.
2. http://www.sse.com.cn/assortment/bonds/corporatebond/latest/c/4694310.pdf
3. Xinhua News, The Fourteenth Five-Year Plan for the National
Economic and Social Development of the People’s Republic of China
and the Outline of Long-Term Goals for 2035, March 12, 2021 http://
www.xinhuanet.com/2021-03/13/c_1127205564.htm.
4. SAFE, PBOC & SAFE Remove QFII / RQFII Investment Quotas andPromote Further Opening-up of China’s Financial Market, May 7, 2020,
https://www.safe.gov.cn/en/2020/0507/1677.html.
5. SSE, Notice on the issuance of the “Shanghai Stock Exchange No.
2 Guidelines for the Application of the Review Rules for the Issuanceand Listing of Corporate Bonds-Specific Types of Corporate Bonds”,
November 27, 2020, http://www.sse.com.cn/lawandrules/sserules/
main/issue/c/c_20201127_5268003.shtml.
6. CSRC, Guidelines for Investor Relations Management of Listed
Companies (Draft for Solicitation of Comments), February
5, 2021, http://www.csrc.gov.cn/pub/zjhpublic/zjh/202102/
t20210205_392304.htm.
7. MEE, Interim Regulations for the Management of Carbon Emissions
Trading, March 30, 2021, http://www.mee.gov.cn/xxgk2018/xxgk/
xxgk06/202103/t20210330_826642.html.
8. ICAP, China publishes new draft national ETS legislation, https://
icapcarbonaction.com/fr/news-archive/766-china-publishes-newdraft-national-ets-legislation.
9. We review all green debt instruments to ensure their green
credentials.

Published jointly by the Climate Bonds Initiative and China Central Depository & Clearing Research Centre (CCDC Research).
Funding for this publication was provided by HSBC as a Gold Partner and UK PACT.

Lead Author: Alan Xiangrui Meng
Co-authors: Wenhong Xie, Huan Shao, Jin Shang, with help from Zhula Qiqige
Design: Godfrey Design© Published by Climate Bonds Initiative, July 2021 www.climatebonds.net

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation
or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external
websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should
be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use ofproceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours.
The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole
or in part on any information contained within this, or any other Climate Bonds Initiative public communication

China Green Bond Market Report 2020 Climate Bonds Initiative

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