A key obstacle for financing carbon neutrality is that the risk of holding on to high-carbon assets is not fully known. The quickly falling value of high-carbon assets is an increasing threat to the financial sector and must be understood as a financial risk that falls within the remit of financial institutions. Deeper efforts are needed to disentangle current financial policy frameworks and economic interests from high-carbon activities.

  • Assist Chinese financial institutions to develop carbon stress test models.  
  • Support Chinese banks’ efforts to establish a reporting framework on carbon neutrality/peaking alignment.
  • Help financial institutions establish an Environmental and Social Management system to increase their capacity to deal with climate risks and consolidate carbon-neutral decisions.

We look to drive impact in three ways:

  • Build a more sustainable and stable financial system: Transforming China’s financial system and enhancing capacity on climate risk management in order to lower investment risks, avoid stranded assets, and maintain financial stability.
  • Accelerate low-carbon transition: By systematically reallocating capital from high-carbon to low-carbon investments, financial institutions can accelerate the decarbonization of all sectors—especially the energy sector. Investing in the clean economy of tomorrow, rather than yesterday’s grey economy, will not only help China achieve carbon neutrality by 2060 but also help the world achieve the 1.5°C target.
  • Catalyze sustainable growth and a just transition: Financing carbon neutrality can create jobs in a low-carbon economy and ensure a just transition for communities that have historically depended on a fossil fuel-based economy. Such a transition can deliver far-reaching and sustained benefits by fostering sustainable growth, improving health, delivering greater equality, and protecting nature and biodiversity.