Note: This article was published in Exploration of Financial Theory, Issue 3, 2024. For ease of reading, footnotes and references are omitted in this edition, and the full text can be found on CNKI. It is worth mentioning that this article is the third in the "Green Finance Trilogy" series co-authored with Dr. Chen Xiao.
Authors: Zhang Ming and Chen Xiao (Zhang Ming is Deputy Director of the Institute of Finance, Chinese Academy of Social Sciences, Deputy Director of the National Finance and Development Laboratory, and Director of the China Chief Economist Forum)
Chen Xiao, Zhang Ming | China's Green Bond Market: Characteristic Facts, Endogenous Drivers and Existing Challenges
Chen Xiao, Zhang Ming | Emissions Trading Market: International Experience, Chinese Characteristics and Policy Recommendations
Abstract:The green credit market is the earliest and largest market in China's green financial system, and will undoubtedly play a pivotal role in supporting green financing and promoting the realization of the "dual carbon" goal. At present, there is no unified standard for green credit in the world, and domestic and foreign standards have different emphasis. In recent years, China's green credit market has developed rapidly, and its size, growth rate and proportion of total loans have continued to rise. From the perspective of structural characteristics, its funds are mainly invested in the fields of green transportation and clean energy, and the participating institutions have expanded from large banks to small and medium-sized banks. From the perspective of changing trends, its policy objectives have changed from calling for guidance to institutional norms, key policy measures have changed from restrictive to encouraging, product categories have changed from simplification to diversification, and the green credit market is gradually moving towards standardization and improvement. However, there are still some shortcomings in China's green credit market in terms of institutional environment, incentives and constraints, and credit disclosure supervision. Based on the above analysis, this paper puts forward four suggestions for the development of China's green credit market: promote the improvement of the green credit system, increase policy incentives and support, accelerate the construction of data and information disclosure system, and strengthen the tracking and supervision of the whole process.
I. Introduction
The first Central Financial Work Conference pointed out that "efforts should be made to create a good monetary and financial environment, and effectively strengthen high-quality financial services for major strategies, major areas and weak links" and "do a good job in science and technology finance, green finance, inclusive finance, pension finance, and digital finance". In the context of the dual carbon goals, green finance has become one of the most important areas for the future financial development of the mainland.
Green credit is one of the earliest and most important forms of green finance in the world. Although there has been no relatively unified definition of the concept of green credit in the world, institutions such as the Loan Market Association and the World Bank have formulated their own standards for green credit. The Equator Principles, the world's most widely accepted guidelines for sustainable project financing, have also become one of the driving forces for the development of green credit. On this basis, countries around the world have carried out diversified green credit practices, and there are also different green credit practices, forming a green credit market with its own characteristics. For China, green credit also plays a crucial role in the overall green financial system. After the "dual carbon" goal was proposed in September 2020, the domestic green credit market has further grown rapidly and has become the second largest credit market in the world.
China has now established a relatively well-established multi-level green finance system (Zhu Lan et al., 2022). On August 31, 2016, the People's Bank of China, together with the Ministry of Finance, the National Development and Reform Commission and other seven ministries and commissions, jointly issued the "Guiding Opinions on Building a Green Financial System", which became the top-level design for the construction of a green financial system in mainland China. The document clearly defines green finance as "economic activities to support environmental improvement, climate change response and resource conservation and efficient use, that is, financial services provided for project investment and financing, project operation and risk management in the fields of environmental protection, energy conservation, clean energy, green transportation, green buildings", etc., and defines the green financial system as "through green credit, green bonds, green stock indices and related products, green development funds, green insurance, Institutional arrangements for financial instruments such as carbon finance and related policies to support the transition to a green economy".
So far, the development of green finance has been uneven, with the green credit market being the largest. In China's financial market, which is dominated by indirect financing, green credit will continue to play a pivotal role in the green financial system, and will also be the most important financing means to support the green, low-carbon and energy-saving development of the real economy. After the "dual carbon" goal was proposed, the domestic green credit market ushered in explosive growth, and green finance-related policies have been intensively introduced in the past two years, and some defects and problems have been exposed in the process of rapid growth of the market. Therefore, we believe that it is necessary to track the latest development of green credit in China on the basis of sorting out domestic and foreign green credit standards and systems, so as to analyze its basic characteristics, face up to the problems existing in its development, and put forward policy recommendations for the better development of the domestic green credit market in the future.
The follow-up content of this paper is arranged as follows: firstly, the domestic and foreign standards of green credit are sorted out, and their similarities and differences are compared; Secondly, the development status and basic characteristics of China's green credit are summarized. On this basis, this paper analyzes the current practical challenges faced by the development of green credit in terms of institutional environment, incentives and constraints, and credit disclosure supervision. Finally, some policy suggestions are put forward to promote the development of China's green credit market.
2. Green credit standards and systems
At present, there is no internationally recognized concept of "green credit", but there are some existing project financing principles that take environmental and climate risks into account, which are similar to the financing concept of green credit. Before discussing the current situation of green credit development at home and abroad, it is necessary to clarify the definition and criteria of "green credit".
(1) Major international green credit standards
At present, there are three standards related to green credit that are the most recognized in the world: the "Equator Principles" initiated by the International Finance Corporation (IFC) and banks around the world, the Green Loan Principles issued by the Loan Market Association, and the "Sustainability-Linked Lending Principles" issued by the Loan Market Association and the Syndicate and Exchange Association.
1. Equator Principles (EPs)
The Equator Principles are a risk management framework for project finance for financial institutions, with the goal of specifically addressing environmental and social risks. Equator Principles Financial Institutions (EPFIs) that subscribe to the Principles will implement the Equator Principles in accordance with a set of criteria for identifying, assessing and managing environmental and social risks when providing project finance to ensure that they meet environmental and social responsibility requirements. The Equator Principles were jointly discussed and initiated by IFC and four banks in London in October 2002, officially released on June 4, 2003 with 14 banks in Washington, D.C., and released the latest fourth version of the text in July 2020. The Equator Principles apply to all project financing in all industries around the world with a total cost of more than US$10 million. The principle divides project financiers into three risk class categories (see table below), among which Class A and some Class B projects need to provide additional assessment information and be subject to stricter scrutiny and supervision during the financing process (He Dan, 2020).
2. Green Loan Principles (GLP)
The Green Loan Principles (GLP) define a green loan as "a lending instrument specifically designed to finance or refinance all or part of a new or existing eligible green project". The specific content of the GLP is similar to the Green Bond Principles (GBP) issued by the International Capital Market Association, which stipulates that the application for green loans must include four core components (Chen et al., 2022): First, the use of funds, and the GLP lists specific categories of green project support for key environmental issues such as climate change, air, water and soil pollution, and biodiversity loss (Table 2). The second is the project evaluation and selection process, which stipulates that the borrower of a green loan should clarify the environmental sustainability objectives of the project to the lender, determine that the project meets the green qualifying category, and encourage the borrower to disclose the green standards or certifications it follows. The third is fund management, the proceeds of green loans should be included in a special account or tracked in an appropriate manner, and borrowers should be encouraged to establish an internal governance process to track the allocation of funds. Fourth, information disclosure, which requires borrowers to provide an update on the use of loan funds at least once a year, and update it when there is significant progress. In addition, GLP also recommends that green loan projects conduct external audits and provide third-party evaluation reports when appropriate.
3. Principles for Sustainability-Linked Loans (SLLP)
The Sustainability-Linked Loan Principles are broader than green loans alone, and they also consider the "ESG" goals of sustainable development, but environmental protection, energy conservation and carbon reduction are also important parts of it. The principle defines sustainability-linked loans as "loan instruments that can help borrowers achieve pre-determined sustainability performance goals" (Chen, 2020). Borrowers should set sustainability performance goals (SPTs) in advance and develop key performance indicators (KPIs) based on them to measure their own sustainability status. The SLLP specifies in detail the evaluation and selection process of sustainability-linked loans, including the selection of KPIs, the adjustment of SPT, the evaluation of loan effectiveness, information disclosure, and review and inspection. It is worth mentioning that the SLLP requires tracking whether the economic effect of the loan after use has reached the pre-set SPT, which is different from the general green loan that directly stipulates that the funds need to be invested in green projects. In other words, SLLP focuses on the results of the use of funds, while general green loans focus on the process of using funds.
(2) Major green credit systems in China
The difference between China's green loan rules and international standards is that the international standard is a rule for the review and disbursement process of project financing, which is very similar to the green bond rules. The domestic rules mainly contain three aspects (Ma Jun, 2016): first, the green credit guidelines, which are the code of conduct for incorporating environmental and social risks into the general loan business, and second, the green credit statistical system, which is the statistical standard for calculating the scale of green credit after the fact; The third is the performance evaluation standard of green credit, which is a series of indicators and scoring rules for the performance evaluation of the green credit business of commercial banks.
1. Green Credit Guidelines
In 2012, the former China Banking Regulatory Commission (CBRC) issued the Green Credit Guidelines (hereinafter referred to as the "Guidelines"), which was the first guiding document for green credit business in China, laying the foundation for domestic banking financial institutions to develop green credit business. The "Guidelines" mainly contain the following aspects: First, banking financial institutions should vigorously develop green credit business, and create conditions to support business development from various aspects such as systems and policies. In terms of organization and management, it is necessary to establish the concept of developing green credit and formulate specific strategies and goals; In terms of policies and systems, it is necessary to clarify the scope of green credit support, assess customers' environmental and social risks, and manage risky customers. In terms of capacity building, it is necessary to establish and improve green credit labels and systems. Second, through the requirements for the management of the green credit process, environmental and social risks are incorporated into credit management; This includes a clear investigation of environmental and social risks before lending, as well as post-lending default relief, environmental and social risk assessment, and risk customer concerns. Third, through internal control, disclosure and supervision, the commercial banking industry should pay more attention to green credit business and ensure business compliance. Specifically, it includes incorporating green credit business into internal control assessments, regularly disclosing the development of green credit, conducting regular comprehensive assessments, and reporting to regulators.
2. Green Credit Statistical System
After the issuance of the Green Loan Guidelines, the former China Banking and Insurance Regulatory Commission (CBIRC) and the People's Bank of China (PBoC) issued statistical rules for green credit, which differed in terms of the institutions covered, the frequency of submission, and the content of submissions (see the table below). Among them, the CBIRC caliber is based on the "Notice on Submitting Green Credit Statistical Tables" issued by the General Office of the former CBRC in July 2013, requiring banks to submit loans for two types of enterprises or projects: one is the credit of enterprises with major risks such as environment and safety, which is mainly used to avoid or reduce environmental pollution caused by the production process, and the other is the loan for energy conservation and environmental protection projects and services, which is mainly used to support projects and services in energy conservation and emission reduction, cleaner production, environmental governance, etc. In January 2018, the People's Bank of China (PBoC) issued the Notice on the Establishment of a Special Statistical System for Green Loans, which stipulates that financial institutions should submit special statistical data on green credit. The document clarifies the scope of financial institutions to be submitted and the management guidance conditions, and formulates indicators for special statistics on green loans from the dimensions of use, industry and quality. In December 2019, the central bank revised it, expanding the scope of green loan statistics and fine-tuning the purpose and industry of the loan.
3. Green credit performance evaluation criteria
The earliest performance evaluation standard for green credit was the Notice on Carrying out Green Credit Performance Evaluation of Banking Depository Financial Institutions issued by the People's Bank of China in July 2018, which carried out green credit performance evaluation for commercial banks across the country at two levels, and incorporated the results into macro-prudential assessment. This has played a positive role in improving the importance of commercial banks to green credit and promoting the steady growth of green credit business. In May 2021, the People's Bank of China (PBOC) issued the Green Finance Evaluation Plan for Banking Financial Institutions, which was expanded on the basis of the 2018 version: first, the scope of business assessment was expanded from green credit to green finance, and second, the scope of assessment banks was newly added to the assessment of urban commercial banks on the basis of the original large state-owned, policy-based, and joint-stock systems.
3. The development of green credit in China
China's green credit emerged early and has undergone a gradual transition from policy-oriented environmental protection financing to standardized and institutionalized green financial instruments. In recent years, with the proposal of the "dual carbon" goal and the continuous improvement of the green financial system, the scale of China's green credit market has expanded year by year.
(1) The origin and development of green credit in China
The development of green credit in China can be traced back to the 90s of the last century (Chen Liuqin, 2010) and has gone through the following four stages:
The period from 1995 to 2006 was the embryonic period for the development of green credit. The government and regulators require the financial sector to take into account the national environmental protection policy in the process of carrying out credit work, so as to support and accelerate the development of the environmental protection industry, adjust the credit investment direction for some industries with excess capacity, and establish and improve the policy system (including credit policy) conducive to environmental protection. During this period, the policy stayed at a higher level of directional planning, reflecting the policy orientation of attaching importance to environmental protection, but the degree of substantive implementation was poor.
The period from 2007 to 2011 was an exploratory period for the development of green credit. The landmark event during this period was the inclusion of environmental law enforcement information into the central bank's credit system in 2007, which had a substantial impact on enterprises, which meant that the environmental regulatory authorities and the financial regulatory authorities formed an information linkage to strengthen environmental supervision with the help of financial power. Since then, the People's Bank of China, the former State Environmental Protection Administration, and the former China Banking Regulatory Commission (CBRC) have issued a series of policies requiring banks to implement environmental protection policies and regulations when granting credit to prevent credit risks. During this period, the policy guidance is to restrict loans to "two high" enterprises with high energy consumption and high pollution, and on the other hand, to strengthen loan support for energy conservation and environmental protection.
The period from 2012 to 2015 was the growth period for the development of green credit. On January 29, 2012, the former China Banking Regulatory Commission (CBRC) officially issued the Green Credit Guidelines, which became the official guiding document for banking financial institutions to carry out green credit business. Subsequently, in 2013 and 14, the former China Banking Regulatory Commission (CBRC) formulated a green credit statistical system and a key evaluation index system respectively, and constructed relatively complete green credit statistical rules. During this period, the national industrial policy continued to support the development of energy conservation and environmental protection industries, while promoting the adjustment of industrial structure and resolving excess capacity, and encouraged financial institutions to implement the national energy conservation and carbon reduction development strategy through energy efficiency credit business.
Since 2016, it has been a mature period for the development of green credit. In 2016, the People's Bank of China (PBoC) and eight other ministries and commissions jointly issued the Guiding Opinions on Building a Green Financial System, which established a top-level design framework for China's green finance development and opened the first year of green finance development in mainland China. Among them, the document puts forward specific requirements such as building a green credit policy system, establishing a green evaluation mechanism, promoting green credit asset securitization, and clarifying the environmental legal responsibilities of lenders in the part of "vigorously developing green credit". In 2018, the People's Bank of China (PBOC) introduced a special statistical system for green loans and a performance evaluation system for banks' green credit, and in 2020, the Ministry of Finance included the proportion of green credit in the assessment of state-owned commercial banks. In June 2022, the former China Banking and Insurance Regulatory Commission (CBIRC) proposed to adjust and improve credit policies and investment policies to support the construction of a clean and low-carbon energy system, as well as energy conservation and carbon reduction in key industries and fields. It is worth mentioning that in order to support the promotion of the "dual carbon" goal, the central bank implemented a carbon emission reduction support tool in 2021-22 to support financial institutions to provide preferential interest rate loans to projects with significant carbon emission reduction effects, which objectively promoted the development of the green credit market. In March 2024, the People's Bank of China (PBOC) and six ministries and commissions jointly issued the Guiding Opinions on Further Strengthening Financial Support for Green and Low-Carbon Development, emphasizing the requirements of increasing green credit support, optimizing green credit processes, products and services, and exploring the provision of credit enhancement services for overseas financing of domestic entities.
(2) The current status of China's green credit market
As mentioned above, the green credit business developed in mainland China relatively early, but it has only gradually become standardized and institutionalized in the past decade. Due to the changes in statistical institutions and systems, the scale of green credit in mainland China has different calibers: the early statistics of green credit business began around 2007, when commercial banks began to count the balance of loans in terms of energy conservation and environmental protection, green and low-carbon in their social responsibility reports, but there were no unified rules; After 2013, the former China Banking and Insurance Regulatory Commission (CBIRC) began to collect statistics on the scale of green credit business of major banks on a semi-annual basis in accordance with the green credit statistics system formulated by the China Banking and Insurance Regulatory Commission. After 2018, the central bank will record and sort out quarterly data on green credit balances in accordance with its special statistical system for green loans, while the CBIRC's data will no longer be published. Judging from the data at the end of 2018, the caliber of the central bank is slightly smaller than that of the CBIRC, but there is not much difference between the two.
In recent years, the scale, growth rate and proportion of green credit in total loans have continued to rise, and the green credit market has continued to grow and develop. The balance of green credit has continued to climb from 4.9 trillion yuan in 2013 to 30.1 trillion yuan in 2023, making it the world's largest green credit market, and the proportion of green credit balance in total loan balance has also increased from 7.1% in 2013 to 12.7% in 2023. From 2013 to 2020, the growth rate of green credit balance was around 10-20%, with an average growth rate of 13%; Since the "dual carbon" goal was proposed, banks have vigorously carried out green credit business, and the growth rate of green credit balance has remained at a high level of more than 30% for three consecutive years from 2021 to 2023, which is significantly higher than the growth rate of total loan balance of about 11% in the same period.
Fourth, the basic characteristics of China's green credit
While the scale of China's green credit market is expanding year by year, it also reflects some structural and trend characteristics. From a structural point of view, its capital investment covers environmental protection, energy conservation and emission reduction, green development and other directions, and the participating financial institutions have expanded from large banks to small and medium-sized banks; From the perspective of changing trends, the development goals of green credit have changed from calling for guidance to institutional norms, the focus of green credit policies has changed from restrictive to encouraging, and green financial products have changed from simplification to diversification.
(1) Structural characteristics of China's green credit market
Green transportation and clean energy are the most important directions for green credit investment. From 2013 to 2017, the green credit under the statistics of the former China Banking and Insurance Regulatory Commission was mainly invested in 12 subdivisions related to environmental protection, energy conservation and emission reduction, and green development, among which green transportation, renewable energy and clean energy projects were the two directions with the largest amount of capital investment, accounting for more than 70% of the credit scale; Industrial energy and water conservation, garbage disposal and pollution prevention, nature protection/ecological restoration/disaster prevention and control are also the directions in which more investment is made. After 2018, the structure of green loans under the central bank's statistics was relatively rough. In terms of industries, green loans were mainly invested in transportation, warehousing and postal services (17.7%), as well as the production and supply of electricity, gas, and water (24.3%). In terms of industries, green loans were mainly invested in green infrastructure upgrading (43.5%), clean energy (26.2%) and energy conservation and environmental protection (14.0%).
The green credit business has gradually expanded from large banks to small and medium-sized banks, but the business concentration is increasing. On the one hand, more and more small and medium-sized banks have begun to disclose data on green credit balances in their social responsibility reports, indicating that the number of banks participating in green credit business is increasing. On the other hand, the proportion of green credit balance in the total green credit balance of the five major banks of China Agriculture, Industry and Construction is rising, and the four major state-owned commercial banks of Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China have the largest scale of green credit business, and their total scale accounts for 54.6% of the total green credit balance from 32.2% in 2013. This shows that the green credit of large banks is growing faster and the business concentration is increasing. In addition, among joint-stock commercial banks, IB is the most leading, with a green credit balance of 809 billion yuan at the end of 2023, ranking sixth in the country. It is worth mentioning that IB is also the first "Equator Bank" in mainland China, and its performance is leading in practicing the concept of sustainable development.
(2) Trends in China's green credit market
Since the development of domestic green credit business, especially after the "dual carbon" goal was proposed in September 2020, the development of green credit business of commercial banks has shown the following major changes.
First, the development goal of green credit has shifted from calling for guidance to institutional standardization. Initially, the green credit business of commercial banks was mainly based on some qualitative requirements and development principles, and most banks put forward goals such as developing green credit, paying attention to the "Equator Principles" and building "green banks" in their social responsibility reports. In recent years, with the introduction of the "dual carbon" goal and the gradual attention to ESG, banks have gradually formulated a series of systems, plans and standards to promote the development of green credit and green-related businesses, forming more specific guidelines for green credit and related businesses. For example, ICBC has formulated the Green Guidelines for Investment and Financing of ICBC (Trial), China Construction Bank has issued the Strategic Plan for the Development of Green Finance (2022-2025), Ping An Bank has formulated a three-year strategy and a five-year plan for green finance, and IB has issued the Standards for Identifying Green Finance Attributes of IB (2022 Edition). At the same time, most banks have included the development of green finance business in the performance appraisal indicator system.
Second, the green credit policy focuses on changing from restrictive to encouraging. The green credit policy guides the flow of credit funds through the propensity of industry loans, which mainly contains two meanings: restriction and encouragement, that is, restrictions on the financing of "two highs and one surplus" industries and encouragement of financing for green-related industries. At the beginning of the implementation of the green credit policy around 2007, the policy emphasized that by restricting loan support for enterprises in this field, they would be forced to withdraw from the market or implement technological transformation. For example, for 10 consecutive years (2007-16), the Industrial and Commercial Bank of China (ICBC) disclosed in its social responsibility report the decline in loans to industries with "two highs and one surplus". With the deepening of the adjustment of the domestic economic and industrial structure, especially after the promotion of supply-side structural reform in 2015-16, the restrictions of green credit policies on the "two highs and one surplus" industries have gradually weakened, and the focus of green credit business has also changed to encourage policies to support the financing of green-related industries.
Third, green financial products have changed from simplification to diversification. Green credit was the most important form of green finance practice in the early days of most commercial banks. In recent years, with the gradual improvement and development of the green financial system, the green finance business of banks has gradually extended from green credit to green bonds, green funds, green financial management, green consumption and other broader fields, and green financial products have become increasingly rich. Taking Bank of China as an example, the "Bank of China Green+" Financial Products and Services Manual compiled by Bank of China has formed a comprehensive green financial service system for providing green financing for corporate customers, helping individual customers live a green and low-carbon life, and responding to investors' green demands.
5. Practical challenges facing the development of green credit in China
In recent years, the domestic green credit market has experienced rapid growth, especially after the establishment of the top-level framework of green finance and the proposal of the "dual carbon" goal, all commercial banks have vigorously promoted the development of green credit business. At present, although the mainland has become the world's largest green credit market, the future development prospects of green credit still face many practical challenges such as institutional environment, incentives and constraints, and credit disclosure supervision.
(1) Institutional environment
First of all, the laws and regulations related to environmental protection in the mainland are insufficient. In the 70s of the last century, the United States passed a series of environmental protection laws, which built a sound and strict legal system for environmental pollution. Since then, a number of laws and regulations have been promulgated on the development of green finance, clarifying the entities responsible for pollution, especially the joint and several liability that banks should bear after issuing loans for environmental pollution. This has given a strong impetus to the development of green credit. Judging from the current situation, although the mainland also has a series of environment-related laws and regulations, the correlation with financial activities is loose, and financial institutions do not substantially bear environmental risks, which to a certain extent also leads to the low enthusiasm of institutions to engage in green finance activities.
Second, the standards and institutional framework of green credit itself are flawed. At present, China's green credit standards and regulatory system still follow the Green Credit Guidelines issued by the former China Banking and Insurance Regulatory Commission in 2012, and the green credit statistical system and key evaluation index system issued in 2013-14. As mentioned above, compared with international green credit standards, which stipulate the detailed review and disbursement process for green project financing, China's green credit rules mainly include guidelines for incorporating environmental and social risks into the lending business, as well as statistics on the scale of the loan after the fact. As for how commercial banks should develop green credit business, the current regulatory system does not provide sufficient detailed and specific implementation plans (Zhou Liang, 2017), which makes most commercial banks can only follow their own understanding in the process of implementing green credit business, lacking professional and standardized guidance, and the operability of green credit business is poor.
Third, there is a lack of post-event supervision of green credit. At present, the scale and balance of green loans issued by banks are growing, but the tracking and use of post-loan funds and the supervision of the actual flow of funds are still not strict enough. For example, the green credit obtained by some "two high" enterprises may not be used for low-carbon environmental protection technology transformation, but for the main business of enterprise production and operation, which is obviously contrary to the original intention of issuing green credit. The reason for this is that the examination of green credit by regulatory and social responsibility values is basically focused on the green credit issuance stage, and there are few requirements for the use of funds. For commercial banks, the tracking and supervision of post-loan funds requires additional costs, which makes them less motivated to carry out post-event supervision of credit funds.
(2) Incentives and constraints
Both parties involved in the green credit business have different incentive constraints, which makes it impossible for green credit to achieve rapid development through the role of market mechanisms. In the absence of policy mandates or effective incentives, both enterprises and banks lack the motivation to vigorously develop green credit financing, which is the main reason why the domestic green credit market has been relatively slow to develop before the "dual carbon" goal was proposed in 2020
From the perspective of enterprises, high-pollution and high-energy-consuming enterprises have insufficient motivation to carry out energy-saving and environmental protection transformation through green credit financing. On the one hand, the main business of the "two high" enterprises is usually more profitable, and most of them are large state-owned enterprises, which themselves face less financing constraints; However, on the other hand, in order to obtain green credit, the "two high" enterprises need to make long-term large-scale investment in green innovative technologies such as energy conservation and emission reduction, which is difficult to make a positive contribution to financial performance in the short term. As a result, the willingness of such companies to make green loans is weak.
From the perspective of banks, there are differences between the requirements for the development of green credit and the business objectives of commercial banks themselves: the "two highs and one surplus" industry is usually large-scale, high-profit state-owned enterprises, and its loans based on the main business are low-risk and high-profit high-quality assets for commercial banks; However, the loan cycle of green-related projects in the fields of low-carbon, energy conservation and environmental protection is long, the economic effect is not obvious, and the profit is relatively low, so the risk of this type of loan is greater. Therefore, the green credit policy requires that while reducing and withdrawing the loans of enterprises with "two highs and one surplus", the loan financing of green-related industries should be vigorously supported, which may bring negative pressure on the financial performance of commercial banks, which leads to the lack of willingness of banks to actively expand their green credit business.
(3) Supervision of information disclosure
In the process of business development, information disclosure and supervision run through the before, during, and after the event, which is an important factor affecting the progress and quality of its development. The mainland still has many deficiencies in this regard.
First, the quality of corporate environmental information disclosure needs to be improved. The approval and issuance of green credit by banks must be based on the environmental assessment data of enterprises or green projects, and the scale, cost and even necessity of loan issuance can be accurately judged after analyzing the environmental protection status of enterprises and assessing the risks faced by their environmental and business operations. With the promulgation of the Administrative Measures for the Legal Disclosure of Environmental Information by Enterprises at the end of 2021, mandatory environmental information disclosure requirements have been put forward for some enterprises (such as key pollutant discharge enterprises, qualified listed companies, bond issuers, etc.). However, there are still a large number of enterprises that are not subject to this restriction, and the completeness, effectiveness and accuracy of their environmental information disclosure are defective, which leads to the inability of banks to obtain accurate environmental information of enterprises, which affects the development of pre-loan assessment of green credit business to a certain extent.
Second, there are deficiencies in the management of information and data disclosed by financial institutions on green projects and green credits. Compared with financial institutions that conduct business, the data disclosure of green credit and projects is also flawed (Li Luxia, 2011) [12]. For example, when most banks disclose green credit business data in their social responsibility reports, they usually only disclose the aggregate data of the increment and balance of green credit, but do not disclose in detail the segments of their capital investment, specific enterprises, and the tracking and operation of related green projects. The lack of information disclosure on green credit has made it difficult for the public to monitor it.
Third, the government has not yet established a communication and coordination mechanism for environmental and green finance information, which further increases the difficulty of obtaining environmental information. At present, the mainland's environmental protection information and green finance information are scattered and diversified, and the environmental protection department and the financial sector have not yet formed a coordinated information disclosure and sharing mechanism. This makes it more difficult for companies to make decisions on improving environmental technologies, for banks to assess their environmental risks, and for the public to monitor the green project activities of companies and banks.
6. Policy recommendations to promote the development of green credit
Since its inception in 2006 and its establishment in 2012, China's green credit market has grown into the world's largest green credit market, and will undoubtedly play a pivotal role in supporting green financing and promoting the realization of the "dual carbon" goals. This paper reviews the development of the green credit market at home and abroad, and analyzes and summarizes its characteristics and facts:
From the perspective of the standard system, there is no unified standard for green credit in the world, but the overseas green credit standard mainly focuses on the process of project financing review and disbursement, while the Chinese green credit standard focuses on the formulation of guidelines for incorporating environmental risks into the loan business and rules for post-event statistics. From the perspective of China's practice, China's green credit emerged earlier, and has experienced a gradual transition from policy-oriented environmental protection financing to standardized and institutionalized green financial instruments. In recent years, with the proposal of the "dual carbon" goal and the continuous improvement of the green financial system, the scale of China's green credit market has expanded year by year. From the perspective of structural characteristics, green credit funds are invested in green transportation, clean energy, energy conservation and environmental protection and other green fields, which strongly supports the promotion of the "double carbon" goal; The number of participating financial institutions has expanded from large banks to small and medium-sized banks, and the concentration of business is increasing. From the perspective of trend characteristics, green credit and related businesses have undergone three changes: its development goals have changed from calling for guidance to institutional norms, its policy focus has changed from restrictive to encouraging, and its green financial product categories have changed from simplification to diversification; The green credit market is gradually becoming more standardized and improved. However, there are still some problems in China's green credit market in terms of institutional environment, incentives and constraints, and credit disclosure supervision, such as insufficient legal and regulatory protection, low quality of credit disclosure, deficiencies in green information and data management, and lack of inter-departmental communication and coordination mechanisms.
Based on the above analysis, this paper puts forward the following suggestions for the future development of China's green credit market.
First, promote the improvement of the green credit system. The development of the green finance market needs a reliable legal system as a guarantee. Therefore, first of all, we should continue to improve the overall legal framework for environmental protection, clarify the subject of environmental responsibility, and increase the penalty cost of environmental polluter. Specifically, this includes increasing the penalties for environmental polluting companies, and even considering other forms of legal liability in addition to fines; Increasing the joint and several liability of financial institutions for environmental pollution caused by loans has fundamentally forced enterprises and financial institutions to raise their awareness of environmental protection. In addition, the standards and institutional framework of green credit itself should be improved, and more operable implementation rules should be formed (Chen Yulu, 2018)[13] to help commercial banks carry out green credit business more efficiently. At the same time, financial institutions are encouraged to optimize green credit processes, products and services, so as to increase credit support for green development and low-carbon transition.
Second, increase policy incentives and support. For green credit, policies can implement different incentives for enterprises, banks and local governments to increase the willingness of relevant entities to develop green credit. For enterprises, in addition to increasing the penalty cost of environmental pollution, the policy level should also increase the incentive for their energy conservation and environmental protection behavior, such as providing subsidies for their energy conservation and environmental protection technological transformation, and providing greater discount support for their green credit. For banks, the characteristics of the green credit business itself determine that there is a contradiction between the bank's goal of pursuing business performance, and the regulator can consider giving banks greater policy preferences and incentives for green credit business, such as including green credit in the scope of qualified collateral and reducing the risk weight requirements of green credit within an appropriate range. For local governments, the assessment of local environmental protection indicators and indicators related to green and low-carbon development should be strengthened, and local governments should be promoted to support green finance business.
Third, accelerate the construction of data and information disclosure systems. The construction of information disclosure system is the guarantee for the effective application of funds to green-related projects. Therefore, the government and regulatory authorities should raise the requirements for environmental and green finance information disclosure at the institutional level, and strengthen cross-departmental cooperation and coordination. Specifically, the first is to improve the requirements for environmental information disclosure of high-pollution and high-energy-consuming enterprises, and increase the cost of enterprise information fraud, the second is to unify and improve the disclosure standards of financial institutions' green-related business, and the third is to establish inter-departmental communication and cooperation from the central level, especially the coordination between the environmental protection department and the financial sector, such as establishing a unified green information platform that combines environmental pollution, energy consumption, carbon emissions and green investment and financing data, and reducing the cost of enterprises, The difficulty of financial institutions and the public to obtain the environment and green, and improve the efficiency of green business development.
Fourth, strengthen the tracking and supervision of the whole process. On the basis of accelerating the improvement of the information disclosure system, it is also necessary to strengthen the whole-process tracking and supervision that runs through the before, during, and after the event, so as to form a healthy and benign green financial market environment. Specifically, it is necessary to strengthen the post-event supervision of green credit, especially the tracking of the use of funds. First of all, the regulator will need to adjust the focus of the assessment of green credit business, from focusing only on the growth of new issuance and balance volume, and gradually increasing the examination of the actual use of post-loan funds. The change in the focus of regulatory assessment will also prompt financial institutions that issue green credit to improve the tracking and supervision of the use of post-loan funds, so that green credit funds can more effectively play a role in helping the growth of green environmental protection and low-carbon fields and promoting sustainable economic development.