Report highlights important role fintech plays in transition to low carbon economy in China
Chicago, IL (June 17, 2021)—The Paulson Institute’s Green Finance Center in collaboration with the Beijing Institute of Finance and Sustainability released today a new report, Fintech Facilitates the Sustainable Development of Green Finance in China. The report provides insights into how fintech is transforming the business models of financial institutions in China as they pursue more green investments and seek to mitigate environmental risk.
“In the process of achieving the ‘2030/2060 targets,’ the need for financial institutions to avoid the transformation risk of credit assets and realize green transformation has become urgent. Utilizing the power of fintech, banks can effectively enhance their green identification and environmental risk management capabilities, achieve cost reduction and improve efficiency in business management, and continuously enrich their products through green financial data and ESG information. This is helpful for financial institutions in adopting a green transformation model suitable for their own business,” Liu Jialong, Director, ESG Investment Research Center, IFS.
China’s carbon peak and carbon neutrality goals have created a new sense of urgency, and green finance is one of the country’s main avenues to achieve these goals. “To achieve carbon neutrality, China needs hundreds of trillions of yuan in green investments over the next three decades. In the past, green finance in China focused on supporting green infrastructure projects, which are relatively easy to identify. In the future, however, green finance must support green micro and small businesses, green agriculture, green consumption, and green buildings, which will be conducted on the basis of measuring the carbon footprint and carbon emissions from almost all economic activities. Green identification of these entities, projects, and products is very difficult. This requires big data, Internet of Things, AI, blockchain, and other financial technology tools to empower green finance,” said Ma Jun, Chairman, Green Finance Committee, China Society for Finance and Banking; President, IFS.
The report also highlights two best-in-class case studies using innovative fintech-enabled green finance applications for ESG investing and carbon trading to provide practical solutions for using fintech to achieve global environmental goals in China and beyond.
China, in particular, has to move fast to make headway towards these goals, but it cannot do it alone.
“The cases presented in this report demonstrate how fintech is facilitating ESG investments in China. These case studies provide lessons for China and potentially emerging market countries, in how to use fintech to address environmental risk and promote sustainable investment and carbon pricing,” said Deborah Lehr, Vice Chairman and Executive Director, Paulson Institute.
“China is pioneering ways to incorporate fintech to promote sustainable development. By adopting fintech in both traditional and emerging industries, China can more rapidly reach the country’s climate goals,” said Gracie Sun, Executive Director, Green Finance Center, Paulson Institute.
This report builds on a joint 2020 study by the Paulson Institute’s Green Finance Center and the IFS—Fintech Facilitates Green Finance Development in China: Cases and Outlook. It also provides an update to the case studies included in the 2020 report.
The Paulson Institute is a non-partisan, independent “think and do tank” dedicated to fostering a US-China relationship that serves to maintain global order in a rapidly evolving world. Our focus on US-China is dictated by the reality that it is the most consequential bilateral relationship in the world. We often operate at the intersection of economics, financial markets, environmental protection, and policy advocacy, in part by promoting balanced and sustainable economic growth. Founded in 2011 by former US Treasury Secretary Henry M. Paulson, Jr., the Institute is based in Chicago with offices in Washington and Beijing.
Institute of Finance and Sustainability (IFS)
Institute of Finance and Sustainability is a think tank that provides policy, market and product researches and international cooperation platforms for Chinese and global green finance and sustainable development. As a non-profit organization, IFS’s goal is to become a think tank with global influence in green finance, natural capital financing, low carbon development and energy transition, and makes substantial contribution to improving global environment and addressing climate change.