SHANGHAI - Chinese investment bank China International Capital Corp (CICC) has made green finance a "top priority", as Beijing steps up pressure on financial institutions to help fund its carbon neutrality pledge.
CICC has formed a "green agility team" of 20-plus investment bankers dedicated to channeling funding into low carbon and clean energy projects, Managing Director Cheng Daming told Reuters.
Special "green" task forces have also been set up covering business sectors including fixed income, private equity, wealth management and research, as CICC seeks to capitalise on China's green finance boom, said Cheng, who is coordinating the efforts.
Chinese regulators have been trying to create incentives for financial institutions to deliver the funds to meet President Xi Jinping's pledge to make China carbon neutral by 2060.
Such a commitment, Xi said at the Climate Leaders' Summit on Thursday, "requires hard efforts from China".
To achieve net zero emissions, the world's biggest producer of climate-warming greenhouse gas will need 140 trillion yuan ($21.5 trillion) worth of green investment over the next 40 years, 40% of which requires equity and bond financing, CICC estimates.
However, China's green investment is highly dependent on bank lending, which is more policy-driven and less transparent, and involves risks.
For green finance to be guided by market forces, technological breakthroughs must be made in clean energy to slash utilisation costs, which requires equity financing, Cheng said.
"For new energy start-ups, their demand for capital will be enormous," he said, adding that CICC will help them raise money via both private, and public equity markets.
In the fixed income market, CICC underwrote several of China's first batch of "carbon neutrality" bonds in February, and aims to channel foreign capital into China's green bond market.
This week, the People's Bank of China (PBOC) banned green bond proceeds from being invested in fossil fuel projects, and said it was working to harmonise bond standards with European counterparts - a move that would facilitate foreign investment.
CICC is also poised to benefit from carbon-related innovation, for example by acting as investor and market-maker in China's new carbon trading market set to be launched in June, Cheng said.
The Securities Association of China this week urged brokerages to "shoulder the responsibility" of supporting the country's carbon neutrality, and make concrete "action plans".
PBOC Governor Yi Gang also said China would need its financial institutions to transition towards green finance "as early as possible". ($1 = 6.4990 yuan)
(Reporting by Samuel Shen and David Stanway; Editing by Jacqueline Wong) ((firstname.lastname@example.org; +86 21 20830018; Reuters Messaging: email@example.com))