The Second Tianjin Green Finance Forum
Green Finance to Boost the Real Economy
UN Resident Coordinator/UNDP Resident Representative, China
Ladies and Gentleman,
On behalf of the United Nations in China, it is my great pleasure to participate in the Second Tianjin Green Finance Forum.
First and foremost, please allow me to express my gratitude to the Organizers – China Finance 40 Forum and the Northern Finance Institute (NFI) – for the warm invitation and efforts in organizing such an important event.
Today we are here to discuss green finance and its role to promote the real economy. The transition to low-carbon and innovative development is hugely important, not just in terms of preventing the worst impact of climate change. It also makes sense economically. According to the report Pursuing the 1.5oC Limit released by UNDP and a group of 43 developing countries that are highly vulnerable to climate change, pursuing efforts to limit warming to 1.5°C could result in the world’s economy being at least 10% bigger by 2050 than it would be if no action is taken to reduce greenhouse gases.
The world understands the urgency to initiate needed changes. The global community has demonstrated its clear commitment to creating a better future for people and the planet through international processes, including the Paris Agreement and the 2030 Agenda for Sustainable Development. At the core of successfully delivering these two agendas is the call for wider and better partnerships, including both the public and private sector, as well as the civil society. Realizing multi-dimensional sustainability; that is economic, social as well as environmental sustainability, would not be possible without cross-sectoral collaboration and multi-stakeholder participation.
In particular, we will not be able to reshape economies without a supportive financial system and greener and more effective ways of doing business.
Here we are talking about investment of $5-$7 trillion per year needed globally to deliver the Sustainable Development Goals (SDGs) – a more comprehensive set of development objectives looking beyond low-carbon and green growth. Developing countries alone require $3.3-$4.5 trillion annually, mainly for basic infrastructure, food security, climate change mitigation and adaptation, as well as health and education.
As such, finance, both public and private, sourced internationally or domestically, plays a critical role to catalyze changes. On the global public finance, some progress has been made. For instance, $1.7 billion multilateral climate funds were approved in 2016, with the largest share coming from the Green Climate Fund (GCF). Importantly, a more diversified spectrum of financial instruments is being applied by climate funds.
Besides traditional grants and concessional loans, guarantees and equity investment are increasingly utilized to crowd in private investment. To give an example, the GCF is the first to include $56 million of equity across three projects in their portfolio.
Private finance is critical when it comes to financing for sustainable development. To assume its part properly, private investors large and small need to take the opportunities brought about by low-carbon transitions, such as investment in low-carbon technologies, products and processes, among many others. Green investment in return will help create more jobs. In the US, for example, the World Bank estimates that three times more jobs can be created for every US$ 1 million spent on clean energy as opposed to maintaining dependence on fossil fuel.
In this regard, the momentum in green finance is extremely encouraging. For instance, total green bond issuance reached US$ 80 billion in 2016; a double from 2015. Membership of the Principles for Responsible Investment (PRI) has increased to over 185 members from 30 countries since June 2016, accounting for over 50% of global assets under management (AUM).
The remarkable progress witnessed can be seen as a result of three inter-dependent and mutually reinforcing trends; that is increasing efforts to systematize national actions, promote greater international cooperation and to encourage more market-based instruments. This in part helps explain why green finance development has leapt in China. The top leadership has attached significant importance to the establishment of a green financial system, which was first proposed in the 13th Five-Year-Plan (FYP). Most remarkably, China became the largest green bond market in 2016, with the total of green bond issuance amounting to US$ 34 billion.
Additionally, it is hard to miss the pioneering role of China in advocating green finance globally. This includes the integration of green finance work in G20’s financial track in 2016 during China’s presidency. It also includes the ambitious Belt and Road Initiative (BRI), which presents another unprecedented opportunity to boost sustainable development, including green growth.
The BRI and the SDGs are closely aligned. Both need substantial increases in resources as well as changes in existing ways resources are used, prioritized and integrated to achieve development dividends.
In particular, the BRI is an opportunity to contribute to green development, even beyond constructing low-carbon infrastructure. Green technology transfer, green value chain development as well as green cultural practices etc. are all areas which countries can work together to green the Belt and Road.
More importantly, making green investment in the context of the BRI holds a lot of potential to make smarter investments. For instance, greening the small farms through sustainable farming practices could be one effective means to increase food availability, reduce poverty, increase carbon sequestration and water efficiency, while connecting marginalized farmers with international supply chains. Greening the tourism industry could generate alternative income sources for natural resource dependent communities.
The UN is continuously to work with China to achieve sustainable development.
UNDP, for instance, has provided technical support to help Chinese investments to be more impactful and generate sustainable returns. One case in point is the Report on the Sustainable Development of Chinese Enterprises Overseas, which UNDP jointly launched at the Belt and Road Forum (BRF) with the Chinese Academy of International Trade and Economic Cooperation (CAITEC) of Ministry of Commerce, and the Research Center of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council.
The report has provided some insights on the sustainability of Chinese business practices abroad. For instance, more than half of the surveyed companies have conducted Social Impact Assessment (SIA) before project implementation, and nearly 67% of them have carried out Environmental Impact Assessment (EIA) for their overseas projects. The results can serve as a base scenario based on which businesses could further improve how environmental, social and governance (ESG) factors can play a more central role in financial performance analyses and decision-making processes.
The International Coalition for Green Development on Belt and Road, led by UNEP and China’s Ministry of Environmental Protection (MEP) and launched at the BRF, is another case in point where the UN could add value in promoting green finance, particularly through expanding its global knowledge sharing and capacity-building networks.
While it is still work in progress, the Coalition, as the starting point, could take a proactive and integrated approach to further sustainability along the Belt and Road through constructive engagement with partners and stakeholders, including the private sector, for efficient experience and information exchange.
While the UN supports China’s increasing role in global economic governance, we also maintain our support to China’s domestic development. UNDP, for example, has conducted in China a climate-spending review of selected central and provincial level budgets to help identify the scale and scope of climate-related public expenditure. The outcome has helped set up the baseline against which green financing needs, gaps, and barriers are identified for future efforts to delve in. This is also one of the initial steps towards establishing an integrated national financing framework, which attempts to better link varied types of finance with different national development priorities to maximize development effectiveness.
Once again, please allow me to thank the organizers for such a wonderful event and I look forward to a stimulating discussion with all of you.
Thank you very much!
 Nakhooda S., Watson, C., and Schalatek, L., 2016. 10 things to know about climate finance in 2016. Overseas Development Institute. https://www.odi.org/sites/odi.org.uk/files/resource-documents/11058.pdf
 Green finance progress report, 2017. UN Environment. There is a slight different figure in the article published by the Economist (https://www.economist.com/news/finance-and-economics/21723138-questions-persist-about-proliferation-green-standards-green-bonds) stating a total of $97billion green bond issuance globally. Of this, public sector issuers together accounted for about 30%. The largest portion, over 35%, was issued by financial institutions and about 20% came from other companies.