Green and sustainable finance are moving to the mainstream of investment practice in China. The survey reveals notably strong support for the country’s green and sustainable economy, with 72% of investors open to investing in it.
Only 22% of investors are not willing to consider investing in a green and sustainable way. Asked why, they give a range of reasons, but the most commonly cited are that they lack the expertise, there are regulatory or legal barriers, they would not make enough return or their clients would not want them to invest this way.
On other measures, too, both issuers and investors demonstrate China’s strong adoption of green and sustainable finance. For example, two thirds of issuers are open to raising finance through green and sustainable debt products.
Moreover, 49% of investors report seeing no obstacles to putting money to work in the green and sustainable economy, despite the relative novelty of doing so. In addition, issuers and investors regard official guidance to encourage green and sustainable finance as effective. Over 40% of respondents say guidance is well developed or very well developed, while fewer than 30% consider it needs improvement.
The success of China’s green bond market in mobilising capital for climate change mitigation projects also shows how green and sustainable finance’s strong traction is bringing it into the mainstream. With its significant official support and investor appetite, China has rapidly developed one of the largest green bond markets in the world.
of investors will consider investing in a green and sustainable way
Mainstreaming is evident from another measure too: the level of banks’ perceived commitment to green and sustainable finance.
Over half of respondents view banks’ commitment as well developed or very well developed, while only 11% believe it needs improvement. This is a more favourable view than investors have of companies, or companies of investors. Each group believes the other has further to go.
Another window into the mainstreaming of green and sustainable finance is how many economic sectors respondents perceive as having potential for innovations that will help sustainability. Over 50% of issuers and investors detect outstanding potential in each of four very different sectors — energy, finance, manufacturing and information technology.