Green should be the color of banking

By Andrew Moody (China Daily) Updated: 2014-11-17 10:46

UN official says China needs to adopt a more cohesive approach to environmental issues

Simon Zadek believes China could be soon at the vanguard of delivering a sustainable future for the planet.

The co-director of the United Nations' Inquiry into the Design of a Sustainable Financial System says one area where the country is taking a lead is in building a greener financial sector.

He believes China's work in this area will take center stage after next year's United Nations Climate Change Conference in Paris, the first since Copenhagen in 2009.

"I think it would be a very remarkable leadership step for China in demonstrating the role of central banks and financial regulators in shaping the financial markets toward achieving the post-Paris goals," he says.

Zadek, 57, was speaking in the lobby of the Jinjiang Hotel in Beijing, ahead of a symposium on green finance at Renmin University of China, co-hosted by the People's Bank of China.

Climate change was high on the agenda at the APEC meeting on Nov 12 when the United States and China agreed on a landmark pact.

Zadek believes China is in a strong position to build a financial system that delivers sustainable outcomes since much of it is still being developed and many of the rules and regulations have yet to be finalized.

"What you can do with financial systems is a little bit like you now can do with physical infrastructure. You can focus more intensively on public transport rather than the car and choose low carbon options.

"You have the same options when shaping financial systems. You can build a system that encourages more capital allocation toward tomorrow's economy."

Zadek says many of China's leaders are much more switched on to the issues than their counterparts in the West.

"We established a working group with the PBOC looking at 17 different possible areas where policies and regulations in the financial markets could accelerate the flow of green financing into the Chinese economy. There is no other central bank on this planet even asking this question."

He says there is also a much more cohesive approach to these issues in China than in the West.

"There is much more interconnection within different parts of government here. The minister of environmental protection, for example, works much more closely with the PBOC and the regulators in a way that would simply not happen in other countries."