Two ministries and commissions: support the issuance of green bonds by central enterprises

The report of the 20th National Congress of the Communist Party of China pointed out that green and low-carbon development is a prominent feature of Chinese modernization, and promoting green and low-carbon economic and social development is the key link to achieve high-quality development. In order to implement the strategic deployment of the Central Financial Work Conference on doing a good job in green finance and other five major articles, give full play to the important function of the capital market in optimizing resource allocation and the leading and exemplary role of green investment of central enterprises, the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission of the State Council jointly issued the "Notice on Supporting the Issuance of Green Bonds by Central Enterprises" (hereinafter referred to as the "Notice").

In recent years, the China Securities Regulatory Commission (CSRC) has conscientiously implemented the new development concept and actively promoted the green development of capital market services. In 2016, we launched a pilot project for green bonds, improved the relevant institutional arrangements for green bond issuers, investment of raised funds, information disclosure, etc., vigorously supported the development of eligible enterprises through green bond financing, and steadily expanded the scale of green bonds. The State-owned Assets Supervision and Administration Commission of the State Council promotes the active participation of central enterprises in the green bond market, and takes advantage of the opportunities of the reform and development of the bond market to accelerate the green and low-carbon transformation and high-quality development. Up to now, the exchange market has issued more than 700 billion yuan of green bonds, and the raised funds have been invested in resource conservation and recycling, pollution prevention, clean energy, ecological protection and other fields, effectively guiding more factor resources to be allocated to the green field.

State-owned enterprises are the key subjects in China to achieve the goal of carbon peak and carbon neutrality, and they are also the main force in the issuance of green bonds. The issuance of the "Notice" will further enhance the ability of the capital market to serve the green and low-carbon development of central enterprises, support the optimization and upgrading of the industrial structure and energy structure of central enterprises, strengthen the scientific and technological research and application layout of green and low-carbon technologies of central enterprises, form a demonstration effect, better drive and support the green and low-carbon development of the private economy, and promote the comprehensive green transformation of economic and social development.

The main contents of the "Notice" include: First, improve the green bond financing support mechanism, and develop various industries such as energy conservation and carbon reduction, environmental protection, resource recycling, and clean energy. The second is to help the green and low-carbon transformation and high-quality development of central enterprises, reasonably arrange bond financing, accelerate the formation of green and low-carbon production methods, strengthen green technology innovation, and give full play to the demonstration role of central enterprises in green and low-carbon development. The third is to give full play to the leading role of central enterprises in green investment, lead the supply of funds in key areas of green development, and support central enterprises to carry out pilot infrastructure REITs. Fourth, the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission of the State Council will work together to promote the better use of green bond financing by central enterprises and optimize the financing of green fields in capital market services.

In the next step, the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission of the State Council will thoroughly implement the spirit of the Central Financial Work Conference, work with relevant parties to implement various measures, strengthen the capacity building of capital market services for green development, promote the synergy of pollution reduction and carbon reduction, and actively contribute to further promoting high-quality financial development and achieving the goal of carbon peak and carbon neutrality.

Annex:

China Securities Regulatory Commission, State-owned Assets Supervision and Administration Commission of the State Council

Notice on Supporting the Issuance of Green Bonds by Central Enterprises

Zheng Jian Fa [2023] No. 80

Dispatched agencies of the China Securities Regulatory Commission, Shanghai Stock Exchange, Shenzhen Stock Exchange, Beijing Stock Exchange, China Securities Depository and Clearing Corporation, Securities Association of China, Asset Management Association of China, and central enterprises:

Central enterprises are related to national security and the lifeline of the national economy, and are the key subjects for China to achieve the goal of carbon peak and carbon neutrality. In order to implement the strategic deployment of the Central Financial Work Conference on doing a good job in green finance and other five major articles, further enhance the capital market's ability to serve green and low-carbon development, support the financing of green bonds (including green asset-backed securities, the same below) issued by central enterprises, and coordinate the promotion of carbon reduction, pollution reduction, green expansion and growth, drive and support the green and low-carbon development of the private economy, and promote the comprehensive green transformation of the economy and society, the relevant matters are hereby notified as follows:

1. Improve the financing support mechanism for green bonds

(1) Strengthen targeted support for green and low-carbon fields. Support central enterprises to issue green bonds, and develop industries such as energy conservation and carbon reduction, environmental protection, resource recycling, clean energy, ecological protection, restoration and utilization, and green infrastructure upgrading. Encourage central enterprises to issue medium and long-term bonds according to the expected payback cycle of green projects.

(B) to provide financing facilities for the issuance of green bonds by central enterprises. Optimize the bond financing service mechanism, optimize the review arrangements for the issuance of green bonds by high-quality central enterprises, simplify the requirements for document signing and information disclosure with reference to the standards of well-known mature issuers, and appropriately extend the validity period of financial reports, so as to improve financing efficiency. Explore the exclusion of green bonds by a certain proportion when controlling the proportion of central enterprise bonds in interest-bearing liabilities.

(3) Facilitate the bond repurchase financing support mechanism. In the general pledged repurchase business, the highest discount coefficient for credit bonds issued by high-quality central enterprises and subsidiaries is given to green bonds; In the tripartite repurchase business, we will study the establishment of a separate basket of pledged bonds for the green bonds of central enterprises and their subsidiaries, and implement differentiated management in terms of issuers' credit qualifications and discount coefficients.

(4) Optimize the supervision, evaluation, and assessment of intermediary institutions. New special rankings and awards have been added to encourage securities companies to actively provide green bond intermediary services and establish a long-term cooperation mechanism with central enterprises in the green industry. Credit rating agencies are encouraged to integrate the issuer's environmental, social and governance (ESG) (ESG) factors are included in their credit risk considerations and are specifically disclosed in the credit rating report.

(5) Promote the concept of green investment. Encourage central enterprises to take the initiative to disclose green environmental information with reference to mature experience, and attract commercial banks, insurance companies, social security funds, pension funds, securities funds, etc. to increase investment in green bonds. Promote the inclusion of high-quality green bonds of central enterprises and subsidiaries in benchmark market-making varieties, encourage market makers to actively carry out market-making quotation services for green bonds, and improve the liquidity of green bond transactions. Strengthen communication and exchanges between central enterprise issuers, competent authorities and investment institutions, encourage market investment institutions to develop green financial products such as public funds on the basis of green indexes, and guide the reduction of financing costs.

2. Assist the green and low-carbon transformation and high-quality development of central enterprises

(6) Promote the green and low-carbon transformation of central enterprises. In accordance with the relevant requirements of the Administrative Measures for the Issuance of Bonds by Central Enterprises, and in combination with the actual needs of green and low-carbon development, the central enterprises shall reasonably arrange bond financing, promote the green transformation and upgrading of the industrial structure and energy structure, implement energy-saving and carbon-reduction transformation, process innovation and digital transformation, further promote strategic restructuring and professional integration, and accelerate the formation of green and low-carbon production methods.

(7) Give play to the main role of central enterprises in green technology innovation. Encourage central enterprises to issue bonds for the construction of scientific and technological innovation projects in the green field, strengthen green technology innovation, support breakthroughs and promotion and application of green and low-carbon key core technologies, and improve the supply capacity of high-quality green products and services.

(8) Give play to the demonstration role of green and low-carbon development of central enterprises. Support central enterprises to issue green bonds to raise funds, and lead local state-owned enterprises and various market operators to green through project cooperation, industrial co-construction, and alliance buildingcarbon发展，共同构建低carbon供应链体系，推动节能低carbon和环境服务等新业态发展和模式创新，全面提高能源资源利用效率。

3. Give full play to the leading role of green investment in central enterprises

(九)引导绿色发展重点领域资金供给。鼓励符合条件的中央企业设立绿色发展基金或低carbon基金发行绿色债券，通过投资支持符合条件的绿色项目建设、运营，吸引、撬动、聚合社会资本投向绿色产业。支持中央企业子公司探索利用carbon排放权、排污权等资源环境权益进行质押担保，或由中央企业集团提供外部增信等方式发行绿色债券，推动细分领域节能减污降carbon。

(10) Support central enterprises to carry out pilot projects of infrastructure REITs in the green field. Support the issuance of REITs for infrastructure projects in the fields of new energy, clean energy, and ecological and environmental protection, broaden the sources of incremental funds, and improve green financing support.

Fourth, strengthen the organization and implementation of safeguards

(11) The China Securities Regulatory Commission and dispatched agencies will strengthen the service support for the issuance of green bonds by central enterprises, and further promote the financing of green bonds by state-owned enterprises and private enterprises. In conjunction with the State-owned Assets Supervision and Administration Commission of the State Council, an information sharing mechanism will be established to strengthen the supervision and management of green bond financing and the use of funds by central enterprises, and ensure that the funds raised by green bonds are managed and used in accordance with the requirements.

(12) The State-owned Assets Supervision and Administration Commission of the State Council continuously optimizes the green development assessment mechanism of central enterprises, and integrates energy consumption intensity,carbon排放强度等指标纳入经营业绩考核体系，遴选绿色低carbon示范项目，总结提炼成功经验、典型模式并加以推广。与证监会加强协调配合，加大对中央企业发行绿色债券融资的政策引导力度，支持利用资本市场形成绿色低carbon核心竞争优势。

(13) The stock exchange strives to improve the efficiency of green bond financing services, actively play the role of market organization, stimulate the vitality of market operators, strengthen the docking of investment and financing, and attract more funds to invest in the green field. The Securities Industry Association and the Asset Management Association fully perform their self-discipline and regulatory duties, create a good investment and financing environment, and guide securities and fund operating institutions to increase investment in green bonds.