1、UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report 2 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report Participants Pilot Coordinators 3 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report To achiev

2、e the goals of the Paris Agreement and our wider environmental ambitions, financial institutions worldwide need to be proactive in channelling global funds to support the green economy by monitoring and evaluating the risks and opportunities brought by climate and environmental factors. There is inc

3、reasing international recognition of the importance to integrate climate and environmental factors into mainstream financial decision-making. Established in December 2015, the Task Force on Climate-Related Financial Disclosures (TCFD) is supported by Mark Carney (Chair of the Financial Stability Boa

4、rd) and chaired by Michael Bloomberg. The TCFD framework has gained increasing influence, being endorsed by institutions representing $120 trillion of assets globally. Developing green finance and promoting the green economy is of major strategic significance for China. In 2016, seven ministries and

5、 commissions including the PBoC jointly issued the first national green finance policy in the world, Guidelines for Establishing Chinas Green Financial System, which explicitly requires gradually establishing and improving an information disclosure system. The China Securities Regulatory Commission

6、(CSRC) also set forth uniform standards for climate and environmental information disclosure by listed companies. The countrys financial authorities began working on a unified system of green finance standards and statistics and introduced a series of regulations and standards, including: the Green

7、Credit Statistics System, issued by the China Banking and Insurance Regulatory Commission (CBIRC) in 2013 which also organised major banks to carry out green finance self-evaluation; in 2015, the Green Bond Endorsed Project Catalogue and the Green Corporate Bond Endorsed Project Catalogue issued by

8、the Peoples Bank of China (PBoC) and the National Development and Reform Commission (NDRC); and the Green Industry Guiding Catalogue issued in 2019 by seven ministries and commissions including the NDRC and the PBoC. These green finance standards have laid the foundation for climate and environmenta

9、l information disclosure. In this context, the Chinese and UK governments, at the 9th UKChina Economic and Financial Dialogue held on 15 December 2017, agreed to strengthen green finance cooperation and encouraged financial institutions of the two countries to jointly pilot climate and environmental

10、 information disclosure. After that, the Green Finance Committee, China Society for Finance and Banking (“the China Green Finance Committee”) and City of Londons Green Finance Initiative jointly launched the UK-China Climate and Environmental Information Disclosure Pilot. Ten Chinese and UK financia

11、l institutions joined the pilot and received comprehensive guidance from the PBoC and Bank of England. Industrial and Commercial Bank of China (ICBC) and Principles for Responsible Investment (PRI), represent each side respectively, serve as co-chairs of the pilot steering committee. The pilot is a

12、four-year initiative, including one year of preparation and three years of action. 2019 was the second year of the pilot. In 2019, the pilot made important breakthroughs. Firstly, the pilot was expanded to include all financial sectors. The number of pilot participants increased from 10 to 13 with t

13、he joining of PICC Property and Casualty Company Limited, Ping An Insurance (Group) Company of China and AVIC Trust Co., Ltd., in addition to Huzhou National Green Finance Reform Leading Group as an observer. With this, the pilot covered all financial sectors including banking, asset management and

14、insurance. On the UK side, the governments Forward 4 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report Green Finance Initiative made an announcement requiring all listed companies and major asset management companies in the UK to disclose under the TCFD framework b

15、efore 2022. Secondly, the Chinese and UK participants disclosed climate and environmental information in accordance with TCFD recommendations and the Climate and Environmental Information Disclosure Framework formulated by the Chinese side in light of Chinas actual conditions. 2019 was the first pha

16、se of the Action Plan, and most of the Chinese participating institutions disclosed environmental information by individual disclosure reports. Thirdly, the pilot has been expanding influence gradually. Huzhou National Green Finance Reform Pilot Zone made overall disclosures with reference to the UK

17、-China pilot framework; financial institutions including ICBC, Industrial Bank, and China Emissions Exchange (CEEX), in accordance with the requirements of the PBoC, formed a task force of standards formulation that published the Guidelines for Financial Institution Environmental Information Disclos

18、ure on the basis of the pilot practices and results; the pilot participants started to take part in international standard-setting and discussion. This report summarises the progress of the pilot in its second year, describes the current status of the participating institutions and provides an outlo

19、ok for the work in the next year. 5 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report (I) Main goals and measures of the pilot Raise awareness and build capacity. Meetings and seminars were held, among other efforts, to raise the awareness of the participating inst

20、itutions and other financial institutions worldwide about the importance of climate and environmental information disclosure. Progress reports, disclosure framework and quantitative tools were developed to enhance the disclosure ability of the participating institutions and provide cases studies for

21、 other financial institutions around the world. Advance the disclosure plan and framework. Efforts were continued to implement the pilots three-year action plan and, in the light of Chinas national conditions and with reference to the TCDF framework, further improve the disclosure framework for the

22、Chinese side. Implement information disclosure of pilot participants. In accordance with the action plan and the TCFD framework and in light of their actual conditions, most of the participating institutions published individual environmental disclosures reports with plans to achieve higher disclosu

23、re targets year by year. (II) UK-China action plan and progress In the autumn of 2018, the Chinese and UK sides jointly released the UK-China Climate and Environmental Information Disclosure Pilot Programme Working Group Action Plan, encouraging the participating institutions to make climate and env

24、ironmental information disclosures. Environmental information Disclosure Principles: (1) Comparable indicators. The participating institutions are required to make disclosures in a comparable way in terms of the disclosure framework, calculation methods and tools. (2) Local appropriateness. The part

25、icipating institutions should formulate their disclosure frameworks and contents in line with the TCDF recommendations and in light of local regulatory requirements and actual business conditions. (3) Progressive advancement. As information disclosure is final presentation of a series of work done,

26、the disclosure framework is not required to be implemented immediately, but usually years. In view of this, the three-years pilot period allows participants to achieve targets progressively year by year. The participating institutions may start with qualitative indicators and gradually switch to qua

27、ntitative indicators. Progress of the Pilot in 2019 1 6 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report (III) UK Update Summary The action plan for UK participants is a multi-year roadmap for implementing the TCFD recommendations, represented in the image below.

28、Key developments in 2019 have included: Year one Assessing the business case Defining the governance process, initiating risk management and risk identification Disclose the governance process and initial steps taken Year two Incorporate into risk management Identify useful metrics Consider how clim

29、ate-related scenarios may affect the organisation Disclosure update, early recommendations, sectoral work Year three Define targets Incorporate into risk management Integrate scenario planning Disclose update, recommendations, finding of scenario analysis, metrics, sectoral work Figure 1: UK Side Ac

30、tion Plan 1. More quantitative disclosure to measure and identify where exposure to climate-related issues is likely to be concentrated. Specific examples of this include: carbon footprinting (Aviva, Brunel), percentage of revenues in high carbon sectors (HSBC), global warming potential of equity so

31、me banking financial institutions made related disclosures as part of their CSR reports; based on case studies of domestic and overseas financial institutions, financial institutions in sectors including asset management and insurance explored appropriate ways to disclose environmental information i

32、n light of their business characteristics and regulatory compliance requirements. Thirdly, the participating institutions made relatively comprehensive disclosures. Their disclosures included not only qualitative information such as strategies and goals, credit policy, risk control, green products,

33、and research, but also quantitative information including the environmental impact from operating activities and investment and financing activities, which align with the TCFD framework. In the case of ICBC, the contents of the report and the TCFD framework are indexed in the appendix. Fourthly, mos

34、t of the participating institutions have committed to making climate and environmental information disclosures on an annual basis. In advancing the pilot, the Chinese participating institutions will focus on the following areas: 1) To research quantitative tools including scenario analysis and stres

35、s testing to measure the impact of climate and environmental factors on financial institutions and the impact of financial institutions operating activities and investment and financing activities on the environment; 2) To explore jointly in data accumulation, system construction, model development,

36、 quantitative methods, and result applications; 3) To join hands with the UK side to establish a more inclusive framework with sound methods and procedures, which reflect the disclosure targets and roadmaps of financial institutions in different sectors. 8 UK-China Climate and Environmental Informat

37、ion Disclosure Pilot 2019 Progress Report Figure 2: Disclosure target framework of the Chinese participating institutions of the pilot Environmental qualitative information and indicators Overview; strategy and target; governance framework; policy and system; impact of environmental risks and opport

38、unities; green finance innovation and cases; research results; future outlook. Environmental quantative information and indicators 1) Quantitative information: impact of institutions business activities on the environment; impact of institutions invetsment and financing activities on the environment

39、. Impact of climate and environmental risks on institutions opportunities and risks 2) Scenario analysis: activities or plans of scenario analysis or stress testing; models and tool; conclusions; actual applications and result, etc. Forms of environmental information disclosure 1) An independent sus

40、tainability report or environmental information report 2) An environment section in CSR report 3) Incorporated into annual report and CSR report Target framework 9 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report The implementation of the pilot has faced several c

41、hallenges, mainly including the following: I. start measuring climate and environmental risks and opportunities particularly in markets where there is an absence of corporate disclosure. II. Identifying useful indicators, methodologies and tools III. building internal capacity to understand the purp

42、ose and business rationale for implementing climate and environmental disclosures. Over the past 12 months, participating financial institutions in the pilot have held four workshops in London, Shanghai and Beijing. These have sought to address such challenges and included contributions from knowled

43、ge partners such as the TCFD Secretariat, Carbon Tracker, CDP, the Transition Pathway Initiative, Tsinghua University, SynTao, China Beijing Environmental Exchange. Main Problems and Challenges 2 10 UK-China Climate and Environmental Information Disclosure Pilot 2019 Progress Report Areas of Agreeme

44、nt Through over two years of implementation, the Chinese and UK participating institutions have reached the following consensuses based on in- depth research and exploration as well as adequate discussions and communication: (1) The participating institutions make disclosures in light of their actua

45、l conditions without complying a uniform set of requirements. Financial institutions in different sectors differ in their climate-related disclosure targets and contents, and even financial institutions in the same sector are in different phases of the plan. As such, the participating institutions a

46、re allowed to advance their disclosure work in light of their actual conditions. For example, ICBC issued its Green Finance Thematic Report which, in line with Chinas regulatory disclosure requirements and with reference to the TCFD recommendations, gave a comprehensive introduction to its green fin

47、ance activities and results in 2018. The report includes strategy and governance, policy and procedures, green finance products, green operations, green finance research, and awards and recognitions. Ping An Insurance (Group) Company of China issued its sustainability report titled To Be an Active G

48、lobal Influencer, which described its endeavours and achievements of climate-related disclosure from five aspects; and Bank of Huzhou, as a representative of local commercial banks, disclosed its 2018 environmental-related information for the first time on its official website. (2) Sharing experienc

49、e among peers is of great necessity. The pilot provides an experience- sharing platform for the participating institutions on how to make disclosures in alignment with TCFD and other frameworks. The participating institutions highly value the opportunity to work with financial institutions in other markets and sectors and jointly advance environmental disclosure work. For example, China AMC has engaged with different listed companies on ESG topics, encouraging and helping them to improve their climate-related disclosures. (3) Clima