Financing the Ecological Civilization: China’s Green Bonds and the harmonization with international frameworks.

Abstract

In latest years Environmental Sustainability has emerged as the core principle in the pursuit of global development, guiding the agendas of many governments around the world, including China, which is well positioned to take the lead in the transition to a low-carbon, climate resilient economy. In the context of the general efforts required to drive this change, finance plays a major role. Mobilizing new resources and reallocating the existent ones on sustainable, low-carbon projects, shifting them away from carbon intensive investments, is critical. Therefore, many governments have started implementing strategies to promote the development of Green Finance, a new financial pattern that conciliates environmental sustainability and economic growth. Arguably, the most promising financial tools in this realm have proved to be Green Bonds, whose market, despite the constraint posed by the lack of a unified framework, has grown exponentially from their first issuance by the European Investment Bank in 2007. Meanwhile, Xi Jinping’s China, committed to the creation of an “Ecological Civilization” has become one of the major issuers of Green Bonds, and in short time has created a complete ecosystem for their development, notwithstanding the late entrance in the market. The aim of this thesis is to provide an overview of the evolution of Green Finance and Green Bonds, both in China and internationally; to describe the differences between the various regulatory frameworks; and to analyze the criticalities that make harmonization between them particularly challenging.