Shenzhen plans to establish a mandatory green financial management system

Shenzhen plans to establish a mandatory green financial management system covering major financial institutions, which requires asset managers to inform green investments.

Shenzhen plans to establish a mandatory green financial management system covering major financial institutions, which requires asset managers to inform green investments.

The Standing Committee of the Shenzhen Municipal People’s Congress proposed the green investment notification system for asset managers for the first time in the Green Finance Development Regulations (Draft) under consideration recently, requiring some financial institutions and enterprises to disclose environmental information.

According to reports, the Shenzhen government has introduced measures to provide incentives to promote the continuous development and expansion of the scale of green finance.

The city is actively applying for the National Green Finance Reform and Innovation Pilot Zone.

However, the development of Shenzhen’s green finance has problems such as inconsistency of relevant standards, insufficient disclosure of environmental information, and insufficient risk management.

The bill will establish a mandatory green financial management system covering major financial institutions.

It draws on the EU’s solution to the problem of inconsistent investment preferences between institutional investors and asset managers, and for the first time proposes a green investment notification system for asset managers.

It requires asset managers to proactively inform investors and investees of their green investment practices to ensure that green investment information flows better among investors, asset managers, and investees.

Compared with many green branches and sub-branches and other specialized institutions in other domestic green finance reform and innovation test areas, Shenzhen has fewer green finance specialized institutions and fewer types, making it difficult to support the development of green finance business.

The draft regulation encourages financial institutions to set up branches, business departments, business departments and other institutions that specialize in green financial business, and requires the establishment of a sound organizational structure, performance evaluation, incentives and constraints, and internal control systems.

Mandatory requirements for some financial institutions and companies to disclose environmental information

The draft regulation establishes a complete standard system framework that includes local green financial standards, national green financial standards, international and domestic green financial standards, and Shenzhen’s important green financial standards.

At present, China’s environmental information disclosure is still in a lagging state and cannot meet the development needs of its green finance.

The draft regulation draws on the frontier research results of green finance, in particular strengthens the information disclosure system, and regulates the content and methods of disclosure by obligors.

It includes groundbreaking mandatory requirements for some financial institutions and companies to disclose environmental information.

The draft regulation requires financial institutions and entities that meet certain conditions to make mandatory environmental information disclosures. It also regulates the basic requirements for environmental information disclosure, and proposes step-by-step implementation requirements based on the reality of information disclosure.

Disclaimer: This is an article created by Michael Liang for Chinasdg.org. You can find the original article here: https://chinasdg.org/2020/07/14/shenzhen-plans-to-establish-a-mandatory-green-financial-management-system/.

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