尊敬的马骏院长 (Chairman Ma Jun),
尊敬的 刘坚东先生 (Mr. Liu Jiandong),
尊敬的 彭文生先生 (Mr. Péng wénshēng),
Hugues De-la Marnierre, CEO of Societe Generale in China

尊敬的各位嘉宾, 大家下午好 (Esteemed guests, ladies and gentlemen, good afternoon)
很荣幸参加中国金融学会的年会。(I'm honored to join the Annual Conference of the China Society for Finance & Banking)

Ladies and gentlemen, Good afternoon!

I’m delighted to join you in exploring how finance can help transform our economy – not simply for profits, but for people and the planet – a mission that is more urgent than ever.

The path we have travelled until now cannot continue. Even if all pledges, from the Climate COP 26, are met, we end up with a 2.4℃ temperature rise.[1] Without far greater action, major cities, including much of China’s financial hub, Shanghai, could be underwater by 2050. One million species could also vanish by then, due to damage done by humans including accelerating climate change. In turn, losing nature also further worsens the effects of climate change, given the vital role it plays not only in absorbing CO2 from the air but also in maintaining our water, and food.

As President Xi Jinping said, “Climate change is Nature’s alarm bell”.

And, if we listen, the warning is clear: we are destroying the very thing keeping us alive – our planet. So we too, face extinction – unless we change course, in time.

Indeed, if we pivot now, we can still forge a new path – to a lasting future, for us and our planet.

And one of the most critical foundations for that path, is finance.

$4.4 trillion is needed, every year, in clean energy and energy efficiency, to reach net-zero globally, by 2050.

Yet, COVID-19 shows it is possible to mobilise the finance necessary for fighting existential threats: central banks have so far pumped $9 trillion into the global economy, in response.

So, the issue is not a lack of capital; but what we prioritize. It’s time to put nature and our climate first in investments, across public and private sectors. Because without a habitable planet, we will not have an economy left.

According to the Bank for International Settlements, climate change poses so-called “green swan” risks: disruptive events, that could trigger a systemic financial crisis.

To avoid this, we must redesign our financial system for environmentally sustainable human development. Three key challenges are:

1.    Incompatible green finance standards;

2.    Severe lack of resources beyond climate mitigation, adaptation and pollution controls, along with;  

3.    Insufficient policy support to drive a just transition, for people and planet.

To overcome these, and shift finance towards sustainable investments, we must pursue action in three areas:

1.    First, set a common language in sustainable finance and harmonize standards.

The proliferation of new, sustainable finance standards creates confusion. Setting coherent, inter-operable standards is key for boosting certainty and sustainable investments, as well as closing green-washing loopholes. The PBoC, and other financial regulators, have made strong efforts towards consistency, including adjusting the Green Bond Endorsed Project Catalogue to exclude fossil fuels, and include international best practices, such as ‘do no significant harm’ principles.

The recent EU-China Common Ground Taxonomy sets a ground-breaking milestone, by making standards for climate mitigation investments in two of the world’s biggest economies more compatible with one other – a major step towards harmonizing green investing, globally. 

To broaden the definition of sustainable finance in line with the Sustainable Development Goals – to end poverty and protect our planet by 2030 – UNDP has developed SDG Impact Standards for:

1) Identifying and serving vulnerable groups; and

 2) Balancing all 17 SDGs and how they affect each other.

To localize these standards in China, we also developed the SDG Finance Taxonomy –classifying investments that can contribute significantly to at least one SDG, while avoiding substantial harm to others. This is built on existing best practices, including from China and the EU. The New Development Bank piloted that Taxonomy, applying it to the issuance of a 5 billion RMB green COVID recovery bond on China’s inter-bank market earlier this year.

COVID-19 woke the financial industry up to the vulnerability and inequality of our society. Last year, according to Refinitiv, the sustainability bond market jumped eightfold. We must seize this opportunity to mainstream SDG-aligned returns.

We would suggest to further explore with you how the Common Ground Taxonomy and UNDP SDG Finance Taxonomy can complement each other, to create opportunities for possible cooperation for harmonized and widely applicable standards aligned with the SDGs.  

2.    Secondly, increase the focus on biodiversity finance. 

To tackle climate change and preserve biodiversity, we must improve the way we value and finance nature.  

$44 trillion in global economic output depends on nature. Yet only less than $150 billion are being spent annually on financing it – that is less than 0.1% of the world’s GDP.

To address this, UNDP launched our flagship Biodiversity Finance Initiative 10 years ago. It now works with 40 countries – including China – developing and implementing biodiversity financial plans, including pilots in Shanghai and Shandong. This helps to mobilize much-needed finance for investments that are nature-positive, rather than nature-negative.

UNDP greatly values your expertise in these crucial areas. We invite you to join us in helping to standardize biodiversity finance disclosure, risk management and explore more sustainable finance solutions. Among these, the Kunming Biodiversity Fund announced by President Xi at COP15 could play a key role.

3.    Thirdly, policy-makers should consider how to accelerate the low carbon transition, while leaving no one behind.

Policy incentives are crucial. As Governor Yi Gang pointed out, hundreds of trillions of RMB are needed, to achieve carbon neutrality. To mobilize this, the PBoC’s new Carbon Emission Reduction Facility offers low interest loans to finance emission reductions, while requiring mandatory disclosure. This policy innovation helps to standardize disclosure practices and boost transparency – a vital step to accelerate sustainable investment and avoid green-washing.

Another layer for low carbon transitions is ensuring they are just. By 2050, green energy jobs could quadruple to 42 million globally.[2] But opportunities must be shared with all, particularly those most at risk of being left behind in this transformation – coal miners, traditional industry workers, communities relying on heavy-polluting sectors, and others. Companies, investors, governments and civil society are all responsible for protecting them.

We must ask: how can we turn around fossil fuel-reliant firms and communities fairly? Retraining those who can be, for example; offering insurance schemes to those who cannot. Additionally, how can investors fund hard-to-abate sectors in a way that allows them to restructure?

UNDP can add insight to these debates. We hope to work with all involved in tackling these issues, including supporting a series of policy papers on this subject. Together, we can turn finance into a tool that protects nature and our climate, rather than undermining both. And support regulators in making informed decisions. Let’s join forces in research, piloting, and building capacities, to finance decarbonization – and protect those it affects most.

Enabling a just and people-centered transition is where we believe UNDP has a role to play, in complementing your sustainable finance initiatives. With our data and methods to identify vulnerable groups including through the SDG finance standards and taxonomies that we developed, as well as our convening power across governments, industries, businesses and communities, we believe, we are uniquely placed to support low-carbon transitions that include everyone.

On behalf of UNDP, I’d like to thank the hosts of this annual event – the China Society for Finance & Banking - for supporting sustainable investments and for inviting me to speak.

The clock is ticking to finance a better future. But together, we have the technology, tools and money to decarbonize our economy, and sustain generations to come.

All we need is the will. Thank you!

 

[1] IPCC (2021) Sixth Assessment Report, https://www.ipcc.ch/report/ar6/wg1/

[2] https://irena.org/newsroom/pressreleases/2020/Apr/Renewable-energy-can-support-resilient-and-equitable-recovery (see full report from IRENA here: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Apr/IRENA_Global_Renewables_Outlook_2020.pdf)

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