Climate Cooperation China
On behalf of the International Climate Initiative (IKI)

Sino-German Dialogue on Sustainable Financial Products and Practices – Workshop on Sustainable Debt Instruments

Following the successful kick-off in March, more than 20 Chinese and German representatives and practitioners from financial institutions and experts in sustainable finance gathered in Beijing on 29 May for the first workshop of the Sino-German Expert Dialogues Series on Sustainable Finance Products and Practices. Hosted by the GIZ and supported by the Institute of Finance and Sustainability (IFS) and Climate & Company, the hybrid workshop focused on the pivotal role of small and medium-sized enterprises (SMEs) in the green transformation and sustainable debt-based financial instruments. Participants highlighted areas for mutual learning and collaboration and discussed the importance of international cooperation as well as future initiatives to bridge the gap for sustainable development.

 

 

SMEs make a substantial contribution to the economic transformation, particularly in terms of employment and driving economic growth. The workshop highlighted that SMEs are often seen as potential “hidden champions” in the green economy and urged to support SMEs in their sustainable transition. Participants emphasised the importance of developing tailor-made financial products and support mechanisms that can assist SMEs in adopting sustainable practices. Given that SMEs are responsible for a significant share of emissions in many countries, their transformation is vital for achieving broader environmental goals. The dialogue also touched on the potential economic benefits of supporting SMEs, as they are drivers of innovation and job creation in the green economy.

 

The concept of green transformation and the use of sustainable financial instruments were central to the workshop. Various tools, such as sustainability-linked bonds (SLBs) and sustainability-linked loans (SLLs), were discussed extensively for their potential to drive the green transition. These instruments are designed to attract and mobilise the large-scale investment needed to meet climate goals, such as achieving carbon neutrality by 2060. Participants acknowledged the scale of the financial requirements, estimated at approximately 480 trillion yuan, and discussed effective strategies to mobilise and deploy these funds. Discussions highlighted the role of SLBs and SLLs in scaling up investment in green projects, reducing financing costs, and enhancing market dynamics. There was a consensus that innovative financial instruments could significantly contribute to bridging the funding gap for sustainable development.

 

 

International cooperation emerged as a critical component in advancing sustainable finance. The workshop highlighted the ongoing collaborative efforts between China, Germany, and the European Union in developing a common classification system for green bonds and other financial instruments. This cooperation aims to enhance market transparency, facilitate cross-border investment, and create a harmonised approach to sustainable finance. Establishing platforms for policy dialogue and knowledge sharing between countries was deemed essential, as it can drive innovation and consistency in sustainable finance practices globally. Participants emphasised the importance of leveraging international partnerships to share best practices, align regulatory frameworks, and support the global green transition.

 

Risk management was another key theme of the workshop, with a particular focus on environmental, social, and governance (ESG) factors. Effective ESG due diligence processes within financial institutions were highlighted as crucial for mitigating the various risks associated with sustainable investment. Discussions underscored the role of central banks and regulators in creating supportive frameworks for sustainable finance, ensuring that financial institutions integrate ESG considerations into their risk management practices. Participants discussed the need for comprehensive ESG risk assessment processes to foster a resilient and sustainable financial system, capable of withstanding environmental and social challenges.

 

 

As one participant noted, transitions take time, but there has not been a better moment to change the world,  “it is a massive challenge, but we have the tools”, he argued. Shifting the trillions will indeed be essential and, in the words of the French writer Victor Hugo, “one can not resist an idea whose time has come”.

 

The workshop concluded with several key takeaways and recommendations. Promoting green bonds, including Panda Bonds, using the common classification system was emphasized to enhance market consistency and investor confidence. Encouraging the issuance of such bonds to support sustainable projects and reduce financing costs was deemed crucial. Another significant recommendation was the development of specific financial products and support mechanisms tailored for SMEs, recognizing their essential role in the green transition. Enhancing public and investor awareness about sustainable finance products was also highlighted as a critical factor for driving broader adoption and integration into financial systems.

 

For more information on the presentations, please read the publication by IFS (in Chinese) and the news on the website of Climate & Company (in English).

 

Picture: Sino-German Workshop on Sustainable Debt Instruments

 

Copyrights: GIZ East Asia Climate Team

More project related activities

Sino-German Track 2 Dialogue in Shanghai Advances Climate Change and Sustainable Development Goals

The 8th Sino-German Track 2 Dialogue on Climate Change and Sustainable Development convened at Fudan University in Shanghai from 27 to 28 May 2024, co-hosted by the German Environment Agency (UBA) and the Chinese National Center for Climate Change Strategy and International Cooperation (NCSC), and supported by GIZ. This significant event gathered prominent experts from China and Germany to address urgent global climate challenges. UBA President Prof Dirk Messner and NCSC Director-General Xu Huaqing jointly moderated the dialogue.

Read More »

Enhancing Climate Finance for Accelerating the Low-Carbon Transition

On 13 May 2024, more than 120 participants from the government, financial institutions, companies, academia, and think tanks attended the Subforum on Climate Investment and Finance for Accelerating Urban Transition in Beijing, to share their insights on global trends, international experiences and China’s innovative practices on climate finance.

Read More »

Kicking off the Workshop Series on Sino-German Expert Dialogues on Sustainable Finance

On 14 March 2024, more than 40 Chinese and German experts, practitioners, and policy makers discussed technical approaches on how to make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. The high-level participants included financial regulators, commercial and development banks, rating agencies, academia, global initiatives and think tanks

Read More »

Contact Us

Email:
climatechangechina@giz.de
Address:
Sunflower Tower 1100 (11F)
37 Maizidian Street, Chaoyang District
100125 Beijing, PR China

LinkedIn:

WeChat: