China leads world on green bonds but the benefits are hazy

“This is one of many measures the central government has approved to shift the supertanker to green,” says Sean Kidney, chief executive of the Climate Bonds Initiative, which works closely with the People’s Bank of China to develop green bonds.
A planned opening of the domestic bond market to foreign investors via Hong Kong this year will increase the flow of money into Chinese green financing instruments.
There is less transparency, however, on how the money raised through green bonds is being used.
Two Chinese banks topped the list for issuing green bonds last year.
Much of the money raised through green bond issuance appears destined to refinance existing work, although some banks are targeting new projects.
Most green bonds in China have a three- or five-year tenure.
Regulators want a more sustainable way to develop,” says Ricco Zhang, Asia-Pacific director for the International Capital Markets Association.
“There is an appetite for more information about how the proceeds are used,” the foreign expert says.
Some of that missing detail could come this year as banks begin to publish reports on the application of their bonds, including which projects are funded.
Kanika Chawla, senior programme lead at the Council on Energy, Environment and Water, says: “In India we have an over-reliance on bank debt, and a lot of developers are now looking at alternative sources such as the bond market.” For developers, issuing green debt reduces their reliance on banks.

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