by Selena Li
HONG KONG (Reuters) – China’s central bank warned on Saturday that climate change and the global transition to a low-carbon economy posed risks to domestic financial institutions and said tougher regulation was needed.
“Climate change and the transformation to a low-carbon economy will have a major impact on the wealth model and the asset management industry,” said Xuan Changneng, deputy governor of the People’s Bank of China, during a video intervention broadcast during the Shanghai Bund Summit.
Lending to carbon-intensive industries accounts for a relatively high proportion of assets of financial institutions in China, he said.
Xuan Changneng added that accelerated withdrawal or delayed exit from carbon-intensive sectors would lead to increased financial risks.
“Therefore, should strengthen financial regulations, conduct stress tests and other means to guide financial institutions to continuously improve their green financial capabilities in line with the peak carbon and carbon neutral timetable,” he said. he says.
China, the world’s largest emitter of greenhouse gases, aims to reduce its CO2 emissions per unit of gross domestic product, or ‘carbon intensity’, by more than 65% by by 2030 compared to 2005 levels.
Xuan Changneng said approaches ranged from voluntary participation to mandatory regulation globally, calling on regulators to gradually implement mandatory, comprehensive and quantitative climate information disclosure requirements.
He also warned of the reputational damage that financial institutions can suffer if they are suspected of overstating their green credentials, citing the example of German asset management firm DWS Group.
In October, a German consumer group sued DWS for allegedly misrepresenting a fund’s green credentials in marketing materials. DWS has repeatedly denied misleading investors and rejects those claims.
(French version Benjamin Mallet)