The Chinese government is considering policy reforms to green its financial system in order to transition to a green economy and promote sustainable development. This is in line with China’s vision of an “ecological civilization.” The China financial system policy work has several tracks and the PSI Initiative has been contributing through PSI Programme Leader, Butch Bacani.

The first policy track is the Green Finance Working Group convened by the Central Bank of China (i.e. the People’s Bank of China) and the UNEP Inquiry. The group is made up of government ministries, financial regulators, financial institutions, stock exchanges, and research institutes. It is estimated that China needs to direct RMB 2 trillion (3% of GDP) into green industry annually, with only 10-15% likely to be covered by government funds. The Working Group’s report will be completed by March 2015 and will be launched at a major event.

The second policy track involves the Development Research Centre of the State Council of China, the International Institute of Sustainable Development (IISD), the UNEP Inquiry and other partners. This will culminate with the summary report of international experience being launched in Beijing in March 2015 at the China Development Forum–the most prestigious annual gathering of China’s policy leaders and leaders of the global business community and international organisations.

The China financial system policy work entailed forming an international expert group that covered different areas and issues (e.g. monetary policy, green bonds, investment strategies, financial policymaking, insurance, stranded assets, environmental legal liability), with PSI Programme Leader, Butch Bacani, as the insurance lead. In this capacity, he has provided the insurance and sustainability perspective in meetings with the Chinese government on their green finance policy agenda. One of his key deliverables is to write a paper looking at the insurance industry and sustainability in the context of insurance policy and regulatory developments. The paper is entitled “A systemic view of the insurance industry, regulation and sustainable development: International developments and policy proposals for China.” While there are China-specific policy proposals, a substantial section of the paper looks at international developments. The paper, which would be completed by March 2015, could be used as a reference or as a starting point for policy engagement.