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G20 finance ministers pledge to scale up green finance

G20 Finance Ministers and Central Bank Governors held their third meeting on July 23-24 in Chengdu, and issued the final Communiqué before this year’s G20 Summit in Hangzhou, emphasising the development of green finance and welcoming voluntary options developed by the G20 Green Finance Study Group (GFSG).

Participants at the meeting. Photo credit: Xinhua

Participants at the meeting. Photo credit: Xinhua

This year, green finance was incorporated for first time into the G20 agenda. At the initiative of the Chinese G20 presidency, the G20 established the GFSG, co-chaired by China and the United Kingdom with support from the United Nations Environment Programme (UNEP) as secretariat.

More than 80 participants from all G20 members, as well as a number of invited countries and six international organisations, actively participated in the GFSG. Over the past six months, the GFSG hosted four core meetings, developed the G20 Green Finance Synthesis Report and submitted it to the Third Finance Ministers and Central Bank Governors Meeting held recently in Chengdu. The Synthesis Report comprehensively examines the necessity and challenges of developing green finance globally. It also provides seven voluntary options to overcome these challenges facing green finance development.

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The G20 Finance Ministers and Central Bank Governors Meeting Communiqué states:

“We recognise that, in order to support environmentally sustainable growth globally, it is necessary to scale-up green financing. We welcome the G20 Green Finance Synthesis Report submitted by the Green Finance Study Group (GFSG), and welcome the voluntary options developed by the GFSG to enhance the ability of the financial system to mobilise private capital for green investment. In particular, we believe that efforts could be made to provide clear strategic policy signals and frameworks, promote voluntary principles for green finance, expand learning networks for capacity building, support the development of local green bond markets, promote international collaboration to facilitate cross-border investment in green bonds, encourage and facilitate knowledge sharing on environmental and financial risks, and improve the measurement of green finance activities and their impacts.”

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Commenting on the report, Ma Jun, Chief Economist of the People’s Bank of China, said: “Promoting the consensus of developing green finance internationally is a key objective of the G20 GFSG. The statements in the G20 Finance Ministers and Central Bank Governors Meeting Communiqué demonstrate that major countries’ financial leaders have realised the necessity and feasibility of developing green finance through various financial instruments, policies, and mechanisms.”

“The Green Finance Study Group has highlighted how important and possible it is for the private sector to work with public bodies in creating the enabling conditions to mobilise green finance,” said Michael Sheren, co-Chair, Green Finance Study Group; Senior Advisor, Bank of England.

Simon Zadek, Co-director of the UNEP Inquiry and lead for UNEP for the GFSG secretariat, added that establishing and co-chairing the G20 GFSG underlines China’s global influence in green finance. “By taking green finance to the G20, China has used its presidency to inspire many countries and financial institutions around the world to take notice of the importance of this agenda,” he said.

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China’s pursuit of green finance has been attracting global attention in recent years. Green credit in China now makes up 10 per cent of the balance of total loans and the country is now home to the world’s largest green bond market. China is also one of just three countries that issued “Green Credit Definitions” and was the first country that officially released its “Green Bond Directives” and Green Bond Catalogue.

Elsewhere, countries including Brazil, Indonesia, Kenya, and Sweden are now advancing green finance plans and practices while financial centres – such as Hong Kong, London, Singapore and Switzerland – are entering a “race to the top” by viewing green finance as a source of competitiveness.


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