3. Implementation of the pilot issuance of green bonds (cont.) Hochiminh City: • Issuance volume: VND 523.5 billion (over a total volume of VND 3,000 billion of municipal bonds issued in October 2016) • Terms: 15 years • Proceeds from issuance of municipal green bonds were used in 11 green projects in the sector of sustainable water resources management, climate change adaptation and sustainable infrastructure. • Proceeds from green bond issuance have been disbursed for green project. Dept. of Banking and Financial Institutions-MoF 19
3. Implementation of the pilot issuance of green bonds (cont.) Ba Ria Vung Tau • Issuance volume: VND 80 billion (over a total volume of VND 500 billion of municipal bonds issued in September 2016) • Terms: 5 years • Proceeds from issuance of municipal green bonds is expected to be used for 1 project in water resources management • Ba Ria Vung Tau is finalizing the disbursement procedure for the project using proceeds from issuance of municipal bonds. Dept. of Banking and Financial Institutions-MoF 20
IV. DEVELOPMENT ORIENTATION FOR THE GREEN BOND MARKET
Objectives • Promulgate a complete mechanism and policy on issuance, listing, trading of green bonds • Establish the green bond market: scale-up, product diversification; standardize the mechanism of market monitoring, evaluation and surveillance; encourage the participation of green investment funds Dept. of Banking and Financial Institutions-MoF 22
1. Completion of the legal framework • For corporate green bonds: § Additional provisions on the purpose of bond issuance for capital mobilization for green projects/programs; § Provide guidelines on reporting mechanism, information disclosure on issuance, management of use of proceeds from bonds • For government bonds and municipal bonds: § Provide guidelines on issuing mechanism, management and monitoring the proceeds from green bonds Dept. of Banking and Financial Institutions-MoF 23
1. Completion of the legal framework (cont.) • For provisions on information mechanism: § Develop a set of criteria for information disclosure on green projects § Issue the green project catalogue prioritizing to use green credit, green bond capital • Research on tax mechanism applied for green bonds Dept. of Banking and Financial Institutions-MoF 24
2. Solutions to promote the green bond market development • Implement solutions to promote the green bond market development, increasing the liquidity of the secondary market following solutions in Decision no.1191 ( product diversification, development of the information disclosure system, develop a network of market makers, review tax and fees provisions,etc.) • Encourage corporates to issue green bonds to mobilize investment funding for green projects • Promote and encourage international investors, investment funds specializing in green bonds to participate in the market • Active cooperation with relevant stakeholders, fora, international organizations to exchange and research on market development Dept. of Banking and Financial Institutions-MoF 25
3. Recommendations of tasks for several stakeholders • Ministry of Finance: § Develop a Decree on supporting policies for green bond issuance § Regulations on control of information disclosure, use of proceeds, project monitoring • Ministry of Natural Resources and Environment: § Develop criteria for green project classification § Study the process of technical assessment of green projects and technology • Localities: § Project proposal using the proceeds from green bonds § Develop a proposal for green bond issuance for submission to the Ministry of Finance § Issuance, information disclosure, management and monitoring of green bonds and projects using proceeds from green bonds Dept. of Banking and Financial Institutions-MoF 26
THANK YOU VERY MUCH!
DEVELOPMENT ORIENTATION OF THE GREEN CAPITAL MARKET AND GREEN FINANCIAL PRODUCTS IN VIETNAM Speaker: Dr. Ta Thanh Binh Securities Market Development Dept. - SSC Hanoi, 11/2017
Main content Ø Legal framework for green growth Ø Green finance activities on the securities market Ø Orientation of green finance and green financial products for the securities market
Legal framework for green growth ü Decision no.1393/Q Đ -TTg dated 25 th September, 2012, the Prime Minister approved the National Green Growth Strategy for the period 2011 – 2020 with vision to 2050 ü Decision no.403/Q Đ -TTg: dated 20 th March, 2014, the Prime Minister approved the National Green Growth Action Plan for the period 2014 – 2020. ü Decision no.2183/Q Đ -TTg dated 20 th October, 2015, the Minister of the Ministry of Finance approved the Action Plan of the finance sector in implementation of the National Strategy on Green Growth for the period 2014 – 2020.
Green finance activities on the securities market Task assigned in the Action Plan of the finance sector in implementation of the National Strategy on Green Growth until 2020 : “Develop and finalize the financial policy framework for development of green capital market and green financial products”
Green finance activities on the securities market Circular no.155/2015/TT-BTC issued by the Ministry of Finance includes guidelines on environmental & social disclosure Requirements of public companies to disclose information on sustainable development (Clause 2 Article 8 Circular no.155/2015/TT-BTC). SSC, in coordination with IFC, GRI, and two stock exchanges, implements training programs on capacity building for listing companies on ESG information disclosure.
Green finance activities on the securities market Ø The Sustainability Report Award was presented in the Annual Report voting Ø Bidding of government bonds investing in green projects Ø Hanoi Stock Exchanges, in cooperation with GIZ provides technical assistance for localities such as HCM City and Ba Ria – Vung Tau Province to issue pilot green municipal bonds Ø HCM Stock Exchange: Launching of the Sustainability Index (VNSI) on 24th July 2017
Policy orientation for green capital market development Ø Continue to study and complete the sustainability report, with the requirement to separate it into an independent report and to better comply with GRI’s criteria Ø Conduct research to integrate concepts of green investment, green securities (including green stocks, green bonds) into legal regulations such as revised Securities Law Ø Conduct research to develop criteria for offering, listing, supervision of green - labeled products
Policy orientation for green capital market development Encourage enterprises to offer, mobilize investment capital for green growth through capital market of green enterprises, green projects and green products such as listing and issuance of green shares, green bonds, investment certificates for green projects/programs
Development of products for green capital market Ø Green bonds include green corporate bonds, issued for green projects or green products; Ø Government bonds and municipal bonds for green targets, green programs, and green projects. Ø Green index Ø Green investment certificates issued by investment funds for green projects, programs and sectors. Ø Futures based on green index and green securities
Policy orientation for green capital market development Ø Conduct research to develop guidelines on ESR management, improve CSR of listing companies and public companies. Ø SSC is focusing on research to finalize the policy framework for modern bond market development in line with international standards; prioritizing the green bond market development.
Slide 1
Conference “Development of the Green Capital Market in Vietnam” Hanoi, 10th November 2017 Slide 2
Content 1. Why Green Finance matters to us 2. Green Finance @ GIZ 3. 10 Green Finance “Action Areas” 4. Conclusion 10.11.17 Green Finance at GIZ Slide 3
Content 1. Why Green Finance matters to us 2. Green Finance @ GIZ 3. 10 Green Finance “Action Areas” 4. Conclusion 10.11.17 Green Finance at GIZ Slide 4
Two major challenges in Green Finance 1 Transforming existing financial flows (Greening the financial sector) 10.11.17 Green Finance at GIZ Slide 5
Two major challenges in Green Finance 2 Leverage public funding in the most efficient way 10.11.17 Green Finance at GIZ Slide 6
Content 1. Why Green Finance matters to us 2. Green Finance @ GIZ 3. 10 Green Finance “Action Areas” 4. Conclusion 10.11.17 Green Finance at GIZ Slide 7
Green Finance at GIZ Strengthen political and regulatory frameworks • Green banking regulation • Green listing and reporting requirements (ESG criteria) • Support financing components of national green strategies (e.g. NDCs) Promote green financial instruments • FIs: Green product development, e.g. loans for RE/ EE in SMEs • Identifying, quantifying and managing ecological risks/ ESRM Systems • Incorporate natural capital risk management in investment and lending Mobilize finance for green investments • Green bond market development • Identifying green investment opportunities • Due Diligence of Financial Institutions (NAMA Facility, GCF) Develop innovative insurance solutions • Weather and agricultural risk insurance • Sovereign risk transfer solutions, e.g. for natural disasters 10.11.17 Green Finance at GIZ Slide 8
Green Finance at GIZ Green Finance at GIZ Mainly Green Finance activities Partly Green Finance activities Part of global / multi national project 10.11.17 Green Finance at GIZ Slide 9
Content 1. Why Green Finance matters to us 2. Green Finance @ GIZ 3. 10 Green Finance “Action Areas” 4. Conclusion 10.11.17 Green Finance at GIZ Slide 10
10 Action Areas in Financial Systems Development for Environmental and Climate-related Investments Improve political and Mobilize private capital 1. 6. for green investments regulatory frameworks Promote financial Allocate subsidies 7. 2. infrastructure where needed Provide liquidity for Strengthen financial 3. 8. green investments institutions Develop innovative Enhance sustainability 4. 9. financial services in the financial sector Establish climate Advance impact 10. 5. risk insurances measurement 10.11.17 Green Finance at GIZ Slide 11
2. Promote Financial Infrastructure Efficiency and Capacity Financial infrastructure is insufficient and inefficient Rating agencies specialized in Deposit guarantee green and sustainability aspects schemes Credit information Training centers for agencies financial institutions GIZ Contribution: - Develop investment- and credit guarantee-funds - Develop rating agencies for environmental and sustainability aspects - Promote ESG principles in established rating agencies - Develop Energy Service Companies to bundle small investments in energy efficiency 10.11.17 Green Finance at GIZ Slide 12
3. Strengthen Financial Institutions Experience Financial institutions are unexperienced in funding green and climate related investments Other actors: • Local banks • Insurances Pioneers in promoting green finance: • Credit & guarantee institutions • National and regional development banks • Leasing and investment • Specialized banks companies • Environmental banks GIZ Contribution: Supporting (partner) financial institutions in: - Capacity building in risk management, transparency and reporting - Expanding of product portfolio with regards to green investment products - Refinancing through strengthening the equity and liquidity basis of financial institution - Raise awareness for future markets and investment opportunities 10.11.17 Green Finance at GIZ Slide 13
4. Develop Innovative Financial Services Suitable financial services Financial products unfit to finance green investments Integrate local capital markets into green finance through: Develop designated products • structured financial products for green investments: • mezzanine financing Credit • venture capital • Energy efficiency • guarantees • Renewable energy • green bonds Leasing • greening SME- and Explore possible • Innovative technologies microfinance business cases GIZ Contribution: - Develop and standardize products in order to distribute them profitably - Capacity-building and training of staff 10.11.17 Green Finance at GIZ Slide 14
10. Advance Impact Measurement Tracking No standard definition and no standardized Consider measuring methods for green finance measurability of revolving public funds and further Clarify differentiation double-counting between private and public capital Define Define starting point to Establish causality between measure for measure mobilization investment and environmental “additionality” of private capital or climate effect GIZ contribution: - Internal project tracking and evaluation - Commission and publish research in relevant areas - Facilitate dialogue between different actors (industries, governments, local organizations) 10.11.17 Green Finance at GIZ Slide 15
Content 1. Why Green Finance matters to us 2. Green Finance @ GIZ 3. 10 Green Finance “Action Areas” 4. Conclusion 10.11.17 Green Finance at GIZ Slide 16
Conlusion • Investment needs are high (but sufficient capital exists) • Green finance / climate finance is high on the political agenda – and there to stay • Growing GIZ portfolio to enable green transformation in partner countries • Challenges both on the financing side and the investment side (pipeline of investible projects, business environment, risk appetite) • Strong, innovative partnerships between public and private sector are key • The green transformation is as much about financing as it is about adopting a new mindset integrating sustainability considerations into the DNA of financial and economic systems 10.11.17 Green Finance at GIZ Slide 17
Thank you for your attention! Roland Gross Head of Competency Centre Financial Systems Development and Insurances giz│Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Postfach 5180 65760 Eschborn Telephone +49 6196 79 1231 Deutschland/Germany Email roland.gross@giz.de 10.11.17 Green Finance at GIZ Slide 18
Back-up Slides Hanoi, 10th November 2017 Slide 19
How much funding is still missing to reach SDGs? UNCTAD : Annual gap to reach the SDGs in developing countries is 2.5 Trillion USD 10.11.17 Green Finance at GIZ Slide 20
(Green) Investments: what do investors look for??? Source: GIZ SV FSD “Finance Toolbox” (currently being developed) 10.11.17 Green Finance at GIZ Slide 21
Green Finance at GIZ Global Emerging Market Sustainability Dialogues (EMSD): • Improve partnerships, knowledge exchange and cooperation among stakeholders, especially in emerging countries • Communication of EMSD contributions to international bodies Global Strategic Alliance on Green Bond Market Development in G20 Emerging Economies with SEB Bank: • Organisation of trainings for second opinion providers • Development of a common methodology to be used as global benchmark for climate footprints 10.11.17 Green Finance at GIZ Slide 22
Green Finance at GIZ Global The Alliance on Climate Risk Transfer Solutions w/ Swiss Re: • Conducting workshops with relevant government stakeholder in Africa and Asia • Follow-up workshops and risk- assessment with selected partner governments • Introduction of a community of practice for expert audience Ghana Promoting Integrated Climate Risk Management and Transfer: • Identify and implement preventive and risk reduction instruments (such as climate smart agriculture) for smallholder farmers • Support the Govt. of Ghana in the African Risk Capacity’s accession process • Assuring access to and promotion of ICRM concepts 10.11.17 Green Finance at GIZ Slide 23
Green Finance at GIZ Brazil Green Finance • Identify policy areas with impact on green financial markets and develop suggestions for improvements • Improve conditions for the implementation of regulations on management of social and environmental risks • Capacity development and consultancy for enterprises with innovative and sustainable concepts Costa Rica NAMA Coffee: • Promotion of sustainable, climate- neutral coffee production • Technical support to prepare projects for funding • Technical support for financing projects 10.11.17 Green Finance at GIZ Slide 24
Green Finance at GIZ India Bangladesh Responsible Enterprise Finance Programme: Support of Safety Retrofits and • Implement effective sustainability standards for the financial sector Environmental Upgrades in the • Development of an appropriate supply of sustainable products and Bangladeshi Garment Sector: services for SMEs • Improve the conditions for financing • Enabling environment for MSME finance and inclusive business investments in SE measures in the models textile sector in Bangladesh • Improve the information available to the management of textile factories on the advantages of and financing options for SE investments • Increase the range of services available for profitability analyses and/or investment plans for SE measures Vietnam Social Dimensions of Sustainable Green Growth: • Development of green financial products for a sustainable economic development • Drafting green economic guideline to enhance a favourable framework 10.11.17 Green Finance at GIZ Slide 25
1. Improve Political and Regulatory Frameworks Vietnam: Setting up a Green Financial Policy Framework Consistent and adequate policies • Credit-, refinancing-, fiscal- and financing policies • Green tax incentives • Green investment guidelines Green investments only profitable if • Directives of central bank to price relates to costs promote green credit • Fees policies for green securities • To support channeling funds into the green economy Cut fossil fuel Consider • In cooperation with World Bank, IFC, subsidies externalities ADB, GCF, KfW and international green financial funds GIZ Contribution: - Design, negotiation and implementation of policy concepts and specific measures - Increasing understanding and capacities of climate policy makers 10.11.17 Green Finance at GIZ Slide 26
2. Promote Financial Infrastructure Efficiency and Capacity Financial infrastructure is insufficient and inefficient Rating agencies specialized in Deposit guarantee green and sustainability aspects schemes Credit information Training centers for agencies financial institutions GIZ Contribution: - Develop investment- and credit guarantee-funds - Develop rating agencies for environmental and sustainability aspects - Promote ESG principles in established rating agencies - Develop Energy Service Companies to bundle small investments in energy efficiency 10.11.17 Green Finance at GIZ Slide 27
3. Strengthen Financial Institutions Experience Financial institutions are unexperienced in funding green and climate related investments Other actors: • Local banks • Insurances Pioneers in promoting green finance: • Credit & guarantee institutions • National and regional development banks • Leasing and investment • Specialized banks companies • Environmental banks GIZ Contribution: Supporting (partner) financial institutions in: - Capacity building in risk management, transparency and reporting - Expanding of product portfolio with regards to green investment products - Refinancing through strengthening the equity and liquidity basis of financial institution - Raise awareness for future markets and investment opportunities 10.11.17 Green Finance at GIZ Slide 28
4. Develop Innovative Financial Services Suitable financial services Financial products unfit to finance green investments Integrate local capital markets into green finance through: Develop designated products • structured financial products for green investments: • mezzanine financing Credit • venture capital • Energy efficiency • guarantees • Renewable energy • green bonds Leasing • greening SME- and Explore possible • Innovative technologies microfinance business cases GIZ Contribution: - Develop and standardize products in order to distribute them profitably - Capacity-building and training of staff 10.11.17 Green Finance at GIZ Slide 29
5. Establish Climate Risk Insurance Schemes Adaptation Economic and financial loss through extreme weather events and natural disasters Products: Integrated risk Climate risk Levels: insurance can - drought insurance - government management systems absorb/soften - extreme weather risk - communities à national adaptation losses insurance - companies strategies - agricultural insurance - households - individuals GIZ Contribution: - Develop public-private-partnerships - Connect international insurers to governments and markets in developing countries 10.11.17 Green Finance at GIZ Slide 30
6. Mobilize Private Capital for Green Investments Crowding In Risk-return-structure of green investments does not comply with private investors preferences Products: Pool refinancing of multiple • Equity contribution in Provision of risk financial institutions on a funds capital for: regional or global level • First-loss tranches • Political risks • Diversification • Provision of long-term • Exchange rate risks • Reduce costs capital • Other risks • Broaden impact Additional funding is needed for climate and green investments: - Mobilizing local savings through financial institutions - Refinancing development banks - Develop market infrastructure, support emitting sustainable bonds, such as “Green Bonds” - Integrating sustainability values into thematic funds (impact investing) 10.11.17 Green Finance at GIZ Slide 31
7. Allocate Subsidies where Needed Governmental intervention External effects or market failure Subsidies for market entry distort perception or profitability (“sunk costs”) Identifying and documenting Project-/pipeline impacts development Initial investments for new Financing knowledge financial products and Piloting projects to management and studies illustrate demonstration those without business (information as a public good) effect and replicability case (adaptation) - Principle of subsidiarity à only act where markets cannot perform - Acceptable when there is no business case or where market barriers can be addressed - Subsidy always to crowd in , not crowd out. Should provide ADDITIONAL private finance - Smart incentives: overcoming small obstacles in order to make investments profitable - Harness leverage factor of public capital 10.11.17 Green Finance at GIZ Slide 32
8. Provide Liquidity for Green Investments Refinancing Financial institutions are unable to cover their capital requirements on local financial markets Provides selected Source: Adequate Forms: financial institutions credit terms - government money - credit with long-term - long-term - KfW capital market - equity refinancing credit lines - mixed - low cost - mixed GIZ Contribution: - Provide consultancy services to introduce new credit products related to green finance 10.11.17 Green Finance at GIZ Slide 33
9. Enhance Sustainability in the Financial Sector Transformation The vast majority of global investments are not aligned with sustainability principles Climate proofing / Sustainability Standards green orientation • BMZ requirements for Environment and Climate Assessment, of investment • UN PRI for ESG criteria decisions • ISO 14000, Equator Principles for Banks, Ecological Fiscal Reforms • Green Bond Principles GIZ contribution: - Support development and assessment of climate and environmental criteria - Better coordination of financial and environmental instruments (e.g. best available technology) - Prevent green washing 10.11.17 Green Finance at GIZ Slide 34
10. Advance Impact Measurement Tracking No standard definition and no standardized Consider measuring methods for green finance measurability of revolving public funds and further Clarify differentiation double-counting between private and public capital Define Define starting point to Establish causality between measure for measure mobilization investment and environmental “additionality” of private capital or climate effect GIZ contribution: - Internal project tracking and evaluation - Commission and publish research in relevant areas - Facilitate dialogue between different actors (industries, governments, local organizations) 10.11.17 Green Finance at GIZ Slide 35
Green Bond Market Development in China Emerging Market Sustainability Dialogues – Sustainable Finance Hanoi, Vietnam, 10 November 2017, Conference on Green Capital Market Qi Lan, Senior Project Manager, Emerging Market Sustainability Dialogues - Finance
Agenda A Snapshot of GIZ Sustainable Finance Project in China GIZ & SEB Strategic Alliance on Green Bond Market Development in G20 Emerging Economies Green Bond Market Development in China
About • GIZ is a public-benefit federal enterprise that supports the German Government as well as many public and private sector clients in the field of international cooperation for sustainable development. • GIZ works with its partners in a wide variety of areas, including economic development and employment, energy and the environment. • GIZ has offices in 130 countries with 18,000 employees. Headquarters are located in Eschborn/Germany. Business volume of EUR 2.1 billion . GIZ China priority areas in : • environment, climate, natural resources and agriculture • sustainable urban development, energy and transport • rule of law, sustainable finance, and quality infrastructure • economic and social development (including vocational training) 3
EMSD – Vision EMSD is a global network of change agents and decision makers from think tanks, multinational corporations, and the financial sector. Our members jointly develop and implement solutions for sustainable economic development in emerging economies through consultation, dialogue, and research. We bring these solutions into national and international fora, contributing to the global sustainability transition and the protection of global public goods. 10.11.17 4
Sustainable Business Sustainable Sustainable Economic Solutions Finance Policy 5
Emerging Markets Dialogue on Finance Objective redirect capital flows away from assets that deplete natural capital towards climate- and eco-friendly investments. Approach Work with financial institutions from G20 economies to integrate environmental indicators in lending and investment decisions, product development and risk management. Market Development for Joint Development of Research and Capacity Green Bonds: Tools and Methodologies Building Strategic Alliance 6
The Strategic Alliance (STA) on Green Bonds: Partners Support the development of efficient, prosperous and sustainable Objective green bond markets in G20 emerging economies Strategic O Awareness raising symposia Partners U R Academic Partner Capacity building A P P O Tailored Technical R Regional Assistance A Implementation C Partners H Structural Advisory Support 7
Stakeholders & Services Stake- Policymakers Public & Private Domestic Investors holders and Regulators Sector Issuers Verifiers Enable the Provide in-depth Support the Transfer delivery of knowledge on adaptation and knowledge on second opinions the risks and enhancement of green bonds as based on the opportunities a conducive (re)financing highest offered by green regulatory tool; Offer Services environmental, bonds framework tailored technical transparency assistance and and market structural standards advisory services 8
The STA’s Support to Green Bonds Market Development in China • Green Finance & Green Bond Conference in April 2016 • First workshops for regulators/banks and local second opinion providers in September 2016 • Second workshops for regulators, issuers, investors, underwriters and local external reviewers in March 2017 • Third workshop with special focus on domestic external reviewers and domestic investors as well as Chinese investment banks • Contribution to Green Finance & Green Bond publication by PBC/GFC and CUFE 6
Green Bonds Market Development in China Top-Down Policy Promotion “Integrated Reform Plan for Promoting Ecological Progress” —— The CPC Central Committee, the State Council 2015.09.21 • "Research on banks and enterprises’ issuance of green bonds, and encourage securitization of green credit assets" 2015.12.22 “Green Bond Endorsed Project Catalogue”——the People's Bank of China • Issuing green financial bonds in Interbank Bond Market • For the financial bonds, it stipulated provisions and requirements for being a green bond, and classified 6 primary classifications, 31 secondary classifications and 38 tertiary classifications; “Guidelines on Green Bond Issuance”——the National Development and Reform Commission 2015.12.31 (NDRC) - In regards to Enterprise bonds, it stipulated the support priorities and related policies “Notice on Launching the Pilot of Green Corporate Bonds”—— Shanghai Stock Exchange • Mainly referring to the central bank "Green Bond Endorsed Project Catalogue”, stipulated the relevant 2016.03.16 provisions on listing the green bonds on the exchange “Guidance on Construction of Green Financial System ”, by Seven ministries and commissions 2016.08.31 “ Guiding Opinions on Supporting the Development of Green Bonds”—— China Securities Regulatory Commission (CSRC) 2017.03.03 • Stipulated the provisions and requirements on issuers of green corporate bonds, funds allocation, information disclosure, and related management regulations and supporting measures
31 subclasses in 6 classes of the Green Projects Catalogue compiled by Green Finance Committee, China Society for Finance and Banking Pollution control: pollution Resource conservation and recycling: Energy conservation: Industrial control (water, air, solid water conservation, redevelopment and energy conservation, green waste), environmental buildings, energy management, etc. recycling of tailings and associated ores, remediation, utilization of utilization of solid waste and renewables, clean coal, etc. etc. Ecological protection and adaptation Clean transportation: railway, urban Clean energy: solar energy, wind to climate change: ecological rail transit, public transportation, clean energy, hydroenergy, natural gas, protection, afforestation, ecological fuel oil, new energy vehicles, etc. Geothermal energy, Ocean energy, agriculture, livestock, and fishery, distributed energy resources, smart emergency protection of disasters, etc. power grids, etc. 11
On March 16, 2016, Shanghai Stock Exchange (SSE) issued the “Notice on Implementing the Pilot of Green Corporate Bonds” Use of the proceeds to fund the construction, operation, and acquisition of green projects, or reimbursement of green project loans and managed through special account; For the scope of Green projects , please refer to the “ Green Bond Endorsed Project Catalogue ” developed by the Green Finance Committee of China Society For Finance And Banking; Encourage greenness verification by an independent third party and annual greenness certification in the life of a green bond ; Disclose the use of proceeds, the progress of green projects, and the environmental benefits of corporate green bonds in their regular reports. 12
On March 2, 2017, China Securities Regulatory Commission (CSRC) Issued “Guiding Opinions of CSRC on Supporting the Development of Green Bonds” Green corporate bonds refer to corporate bonds that raise capital for green industry projects in accordance with the Securities Law , the Company Law , the Administrative Measures for the Issuance and Trading of Corporate Bonds , and other applicable laws; To fund projects specified in the “ Green Bond Endorsed Project Catalogue ”; NO high pollution, high energy consumption or other industries against China's industrial policies; “A single-interface and special-review basis” & “green passage” mechanism for easy issuance; Issuers shall timely disclose: the category of the green industry project to be invested, the basis or standards for project determination, the environmental performance objectives, the intended use and management of raised capital, etc. Use of proceeds: the capital raised by the issuance of a green corporate bond may be used for the construction, operation, and acquisition of a green industry project or the repayment of bank 13 loans…The issuer shall open a special funding account as specified or as agreed
Chinese Green Bond Market in 2016 Issuance amount In 2016, USD 81 billion (about RMB Category (RMB 100 million) Number of bonds 559 billion) of green bonds were Financial bonds 21 1,550.0 issued around the globe. In 2016, a Enterprise bonds 140.9 5 total of 53 labeled green bonds were Corporate bonds 182.4 14 issued domestically by 33 issuers, Medium-term 82.0 8 notes (MTN) raising RMB 205.23 billion. The green Bonds of international 30.0 1 bonds issued in China accounted for institutions 39% of the total green bonds globally Asset-backed 67.0 4 securities (ABS) within the same period. Summation 2,052.3 53 Source: Green Finance Committee 6
Chinese Green Bond Market in 2016 Prominent financial bonds Analysis of the percentage of the major issuer of Analysis of the percentage of the major issuer of green bonds in 2016 green bonds in 2016 1.46% 3.27% 3.27% 1.46% 4.00% In 2016, financial 4.00% Financial Bond Institutions were the major issuer Financial Bond 8.89% 8.89% Enterprise Bond Enterprise Bond in the Chinese green bond market, Coporate Bond Coporate Bond 6.87% 6.87% with financial bonds representing Medium Term Note Medium-term Note 75.52% of the total bonds in the Bond of International Bond of International 75.52% Institutions Institutions 75.51% Asset-Backed Security Asset-Backed Security entire green bond market. (ABS) (ABS) Source: Green Finance Committee 6
China's Green-labelled Bonds Market - 2017 Ø The green bonds issued in China accounts for 27.0% of the total green bonds issued worldwide since this year From the beginning of 2017 to September 15, RMB 131.9 billion of green bonds were issued in China, accounting for 27.0% of the total green bonds issued worldwide. (Source: China Chengxin International Credit Rating Co., Ltd.) Ø Diversified issuers of green bonds Unlike the situation of last year in which most issuers were commercial banks, during the first six months of this year, 38% of Chinese green bonds were issued by non-financial enterprises and 24% were issued by policy banks; commercial banks issued 38% of the total issued green bonds, plummeting from 87% over the same period last year. Ø Both main rating and debt rating were higher than the overall level of bond market The overall weighted average maturity of green bonds was four years, down from the weighted average maturity of 5 years in 2016. 37.5% of the issuers of green bonds were rated AAA; both main rating and debt rating were higher than the the overall level of in the bond market. 6
Next Step for China's Green-labelled Bonds Green Accumulated issuance volume Bond In 2016, the overall size of the newly issued bonds was RMB B36.3 trillion, in which the scale of green bonds issued only took a small proportion of 0.55%, showing a great room for its development in the future. 6
Nest Step: Issues to be Addressed • Harmonization of domestic standards for green bonds: PBoC vs. NDRC definition • How to normalize third-party verification & certification Diversified external reviewers profile vs. inconsistency in internal certification and evaluation standards and expression approach; Quantification and comparison of environmental performance Capacity-building remains to be honed: Some institutions lack environmental professional • Further improve the disclosure of environmental information concerning green bonds • Promote the green investment concept and green investor group in China 6
Thank you for your kind attention. www.emergingmarketsdialogue.org Contact: Lan Qi (lan.qi@giz.de)
Drought Stress Testing Goal: Develop and test an analytical framework and model that allows banks to assess the potential impact of environmental shocks on the performance of their corporate loan portfolio – Successful Global Launch in March/April Risk Modelling: 9 banks in 4 countries (Mexico, Brazil, China, US), 5 drought scenarios per focus country. The model simulates the impact of drought on water availability, translating hazard footprints to the financial implications for enterprises and banks. Model to estimate the effects of drought on up to 8-12 industries in country reflecting direct and indirect impacts as well as macro-economic feedbacks/political decisions. Model that links drought impacts to drivers of corporate credit quality (such as profitability, leverage) and can be plugged into or inform banks’ internal stress testing models. - Support the ERA working group activities (publication& Workshop) initiated by GFC - Support the initiative and publication on Greening Chinese Overseas Investment 10.11.17 20
Sustainable Securities Market Speaker: Ms. Nguyen Thi Viet Ha- Hochiminh Stock Exchange 10/11/2017 www.hsx.vn
CONTENT 1. Sustainable securities market and the role of Hochiminh Stock Exchange (HOSE) 2. Sustainable development in Vietnam and Sustainability Index - VNSI For more information, please visit: www.hsx.vn
1. Sustainable securities market and the role of HOSE Vietnam Green GIZ Growth Strategy (VGGS) MOF Green capital market development SSC, SEs, - Green indices VSD Support in development of green financial products - Green bonds For more information, please visit: www.hsx.vn
1. Sustainable securities market and the role of HOSE For more information, please visit: www.hsx.vn
1. Sustainable securities market and the role of HOSE For more information, please visit: www.hsx.vn
2. Sustainable development in Vietnam by international comparison Chart: 10 countries with lowest ESG scores– RobecoSAM Chart: Corporate governance scorecard of Vietnam – ACMF 2012-2013 For more information, please visit: www.hsx.vn
2. Sustainability Index- VNSI REGULATORS - Provide information supporting: - Policy development - Investment decisions - Operational improvement - Risk sharing - Regulate the green capital flow LISTING SUSTAINABILITY INVESTORS COMPANIES INDEX For more information, please visit: www.hsx.vn
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