Dialogue with Zhang Wei: Green financial product innovation cannot "see the trees but not the forests"

In the process of comprehensively promoting the construction of a beautiful China, green finance plays an important role. Since the beginning of this year, relevant departments have successively issued documents such as the "Guiding Opinions on Further Strengthening Financial Support for Green and Low-Carbon Development" and "Guiding Opinions on Promoting High-Quality Development of Green Insurance" to do a good job in green finance and actively support green and low-carbon development. At present, what achievements has my country achieved in the development of green finance? What else needs to be improved? In response, a reporter from Zhonghuan Daily interviewed Zhang Wei, head of the green finance research team at China University of Geosciences (Wuhan).

Zhang Wei is a leading academic talent at China University of Geosciences (Wuhan), professor (second-level), leader of the green finance research team of China University of Geosciences (Wuhan), and doctoral supervisor in applied economics. His research direction is sustainable economic development and financial innovation.

China Environment News: In your opinion, what results has domestic green finance achieved in promoting green and low-carbon transformation and development in recent years? What other problems need to be solved urgently?

Zhang Wei:my country's green finance industry has achieved rapid development in recent years. According to statistics, at the end of 2023, my country's domestic and foreign currency green loans reached 30.08 trillion yuan, a year-on-year increase of 36.5%, 26.4 percentage points higher than the growth rate of various loans. Among them, direct and indirect carbon emission reduction project loans together accounted for 67.3% of green loans, indicating that my country's green credit is led by addressing climate change. It not only focuses on domestic environmental governance, but also actively participates in international environmental governance, achieving green and low-carbon coordinated development. According to statistics, at the end of 2023, the cumulative issuance of green bonds in my country reached 3.62 trillion yuan, and the funds raised mainly supported the green development of energy, construction, minerals and other industries.

Overall, in recent years, the top-level design of my country's green finance has been further optimized, the market scale has continued to expand, product innovation has steadily advanced, environmental information disclosure has made progress, and international cooperation has gradually strengthened.

However, we must also note that there are still some problems that need to be solved in the development of green finance. First, green finance standards have not yet been unified. Differences in green standards for different financial instruments lead to market segmentation and are not conducive to the development of green finance by financial institutions. Second, the quality of environmental information disclosure needs to be improved. The environmental information disclosure of some enterprises and financial institutions is not accurate and complete, which affects the effectiveness of the green financial market. Third, there is a risk of "greenwashing" and "greenwashing". Some companies defraud financial institutions of funds through disguised green industry projects, and some financial institutions defraud financial rewards and subsidies through exaggerated green finance projects, affecting the reputation of green finance. Fourth, green credit is "one branch alone". For a long time, banks have occupied a dominant position in my country's financial system, resulting in my country's green finance being mainly reflected in green credit (accounting for about 90%). This is not conducive to the dispersion of risks in the banking system, nor does it match the high risks of green innovation. Fifth, there is corporate discrimination in green finance. For example, whether it is green credit, green bonds, green funds, etc., state-owned enterprises are preferred and private enterprises are less supported. Sixth, there is a shortage of green finance talents. The field of green finance requires professionals with knowledge of environment, economy, finance and other aspects. Currently, there are few relevant disciplines and majors in colleges and universities, and the talent supply is seriously insufficient.

China Environment News: You mentioned the issue of "green bleaching". How do you think should be prevented from similar problems? What suggestions do you have on improving the accuracy of green financial capital investment?

Zhang Wei:To prevent behaviors such as "greenwashing" and "fake transformation", we must first improve the supervision system and increase penalties. Strengthen the supervision of green finance business by regulatory authorities and formulate clear regulatory rules and penalty measures. At the same time, we will increase penalties for acts such as "greenwashing" and "fake transformation", strictly enforce the law, and form a severe deterrent.

Environmental information disclosure must also be strictly enforced. Through necessary institutional arrangements, enterprises and financial institutions are required to strictly disclose information related to green projects, including environmental performance, implementation of transformation plans, etc., increase mandatory environmental information disclosure and requirements for the integrity and regularity of environmental information disclosure, and improve the environment. Information transparency. Enterprises and financial institutions that should disclose but have not disclosed, or that have not disclosed fully, need to be dealt with seriously to reflect the seriousness of the environmental information disclosure system. At the same time, independent third-party organizations will be introduced to certify and audit green projects to enhance credibility.

In addition, the application of financial technology means must be strengthened. Financial technology means have a unique role in preventing behaviors such as "greenwashing" and "false transformation". For example, using technologies such as blockchain can solve the problem of fund penetration management and help financial institutions track the investment of green credit, green bonds and other funds; using big data and artificial intelligence technology, relevant environmental information can be analyzed and screened to verify the authenticity of the information, so that abnormalities can be discovered in a timely manner.

At the same time, strengthen industry self-discipline, social supervision and reporting. Promote financial institutions to form industry self-discipline organizations, formulate self-discipline rules, and supervise and restrain each other. Strengthen the construction of information sharing platforms, establish and improve channels for the public, media, etc. to participate in supervision and reporting, and form an extensive social supervision network.

To improve the accuracy of green financial capital investment, on the one hand, we must improve the ability to identify projects, and on the other hand, we must strengthen dynamic monitoring and adjustment. This not only requires cultivating and introducing high-level professional talents, but also establishing a scientific and rigorous green project evaluation system to comprehensively evaluate the environmental, social and economic benefits of the project. Through financial technology platforms such as big data and blockchain, we will continuously track and monitor projects in which funds have been invested, and adjust fund allocation in a timely manner based on actual conditions to ensure that funds are always invested in green projects that meet standards. Once an enterprise is found to have problems of "greenness" and "false transformation", the allocation of funds will be suspended at any time, and a fund recovery plan will be formulated to recover funds in a timely manner through negotiation with the enterprise.

China Environment News: In the process of promoting green finance, what are financial institutions worried about?

Zhang Wei: At present, the development of green finance occupies an increasingly important position in the development strategies of many domestic financial institutions. Many financial institutions regard green finance as an important direction of strategic transformation and business expansion, and actively deploy green credit, green bonds, etc. Business areas.

In this process, financial institutions also have their own concerns. For example, in terms of risk assessment, the risk assessment of green industry projects is relatively complex, involving many factors such as environmental risks and technological risks. In particular, some emerging green technology projects have many uncertainties, and accurate assessment is difficult. Insufficient information is also an important aspect. At present, corporate credit awareness needs to be strengthened, and information lacks interconnection. It is difficult for financial institutions to comprehensively and accurately grasp the environmental information of enterprises or projects, which will affect the accuracy of decision-making. Once a company conceals or falsify its own environmental problems, it will seriously affect the asset quality of financial institutions.

Financial institutions need more investment to carry out green finance business, such as professional talent training, system construction, technology research and development, etc., resulting in higher costs and a long time to realize benefits. Therefore, the issue of how to balance costs and benefits will also trouble financial institution operators. Without policy support, the sustainability of green finance will be affected.

China Environment News: How do you view the current green investment boom?

Zhang Wei:In the process of low-carbon economic transformation, green energy and environmental protection projects have become popular among investors, leading to the rapid expansion of asset prices in these areas and the formation of a bubble phenomenon that is out of touch with actual value. We call it a green bubble.

This phenomenon may be driven by the following factors: First, policy support. In order to promote a low-carbon economy, the government may provide incentives such as subsidies and tax incentives to attract capital to flow into green industries. The second is market expectations. Investors 'optimistic expectations for future low-carbon technologies may lead them to over-invest in related companies and projects. Third, risk assessment is insufficient. In the process of pursuing green investment, investors may ignore technical risks, market risks and policy risks, resulting in inflated asset prices. The fourth is information asymmetry. Market participants have insufficient understanding of the true value and potential risks of green projects, which may lead to investment decisions based on incomplete or misleading information. The fifth is group behavior. Investors may be influenced by market sentiment and follow others to invest in green projects, creating a herd effect and further pushing up prices.

Based on the above analysis, green investment is crucial to addressing climate change, but we must be vigilant about the risks of green bubbles.

China Environment News: What attempts have domestic local governments and financial institutions carried out in terms of innovation in green financial products? What else needs to be improved?

Zhang Wei:In this regard, some domestic localities and financial institutions have carried out many attempts. For example, Zhejiang Huzhou and other places have actively created green financial statistical systems and launched the "Green Loan Link" bank-enterprise docking service platform; some regions have carried out green financial standard innovation and formulated targeted standards based on local industrial characteristics; there are also some places, such as Hubei Wuhan and other places have launched green financial service platforms and carbon inclusive platforms based on financial technology and carbon markets. Some commercial banks have launched green credit and even explored compound loans such as "green property pledge + repurchase + insurance". Some insurance companies have developed green insurance products such as green credit enhancement insurance, photovoltaic power station operation insurance, and forestry carbon sink insurance. Some securities institutions have issued green bond products such as carbon-neutral bonds, sustainable development-linked bonds, and green asset-backed securities.

However, overall, my country's green financial product innovation is not enough. Not only are there few new products, but there is also a lack of promotion. It remains in the "sample" and "try" stage, resulting in "only seeing the trees but not seeing the forest." Therefore, I believe improvements are needed in these areas.

The first is to help guide financial institutions to continue to encourage and promote innovation in green financial products through international cooperation and independent research and development, such as conducting combination research and development such as "carbon options + insurance" and "green bonds + carbon footprint".

The second is to help guide financial institutions to strengthen the promotion and application of new green finance products. After the pilot is successful, it is necessary to promptly summarize replicable and introducable experiences and business models, actively promote new green finance products, expand markets, and increase sources of income. At the same time, establish and improve a risk sharing system to reduce the concerns of financial institutions in carrying out innovative business.

The third is to promote the integration of financial technology and green finance. It is necessary to build a green financial intelligent service system and use advanced technologies such as big data, blockchain, and artificial intelligence to provide financial institutions with support in terms of risk prevention, risk dispersion, and risk control to carry out green financial business.

The fourth is to expand the pilot zone for green finance reform and innovation and strengthen the exploration of green financial product innovation. The practice of the existing national-level green finance reform and innovation pilot zone shows that the pilot zone plays an important role in promoting the innovation of green financial products and is an important "base" for green financial product innovation. It is necessary to expand the national green finance reform and innovation pilot zone, and at the same time promote the establishment and improvement of provincial green finance reform and innovation pilot zones.

China Environment News: What policy coordination support is needed to promote green finance to serve the construction of a beautiful China?

Zhang Wei:I believe that the support of coordinated policies mainly includes fiscal, monetary, regulatory, scientific and technological aspects.

For example, in terms of fiscal policy, I believe that it is necessary to provide tax exemptions and exemptions for green financial benefits, provide interest discounts or special subsidies for green finance projects, establish green guarantee institutions and risk compensation funds, etc., and improve the development of financial institutions through benefit improvement and risk dispersion. enthusiasm for green finance. It is also necessary to initiate the establishment of a green development guidance fund, mobilize more social capital to participate in the establishment of sub-funds, and form a benign path of "fiscal guidance-capital agglomeration-green industry development-more green financial support". Some of these fiscal policies are only reflected in the green finance reform and innovation pilot zone, and many have not been truly implemented. There is an urgent need to change this situation.

In terms of laws and regulations, it is necessary to improve special green finance laws and regulations, and at the same time revise financial laws and regulations that ignore green finance or conflict with green finance to ensure the standardized and orderly operation of the green finance market. For example, I think it is necessary to introduce special regulations on green finance to transform government documents into regulations with stronger incentive and binding force; I suggest amending separate laws such as the Environmental Protection Law and the Commercial Bank Law to clarify the legal review obligations of financial institutions on the environmental impact of financial support projects, establish the environmental legal responsibilities of financial institutions due to financial support, and transform administrative promotion into market-driven with legal thinking.

In addition, I believe that financial institutions need to be encouraged to work with colleges and universities to jointly build green finance laboratories and high-end think tanks to vigorously promote innovation in green finance. At the same time, policies allow green finance owners to apply for invention patents, explore the use of patent protection methods to protect the ownership rights and interests of green finance, establish a trading market for the right to use green financial products, maximize support for inventions and creations in the field of green finance, and promote green finance to burst out innovative vitality.