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HONG KONG/SHANGHAI, Dec 21 2011 (Reuters) – China plans to tighten rules on so-called environmentally friendly or green funds in an effort to curb ‘greenwashing’ in the world’s second-largest climate fund market. He spoke of direct knowledge of the matter.
In the year The new rules, which could take effect in the first half of 2023, mark a major shift in China’s fast-growing corner of the fund industry, where asset managers now have the opportunity to decide the scope of green investments on their own. .
The regulations could affect some or most of the green funds that currently hold the largest share of China’s 160 sustainable products, forcing them to back up their green claims or abandon their popular label, potentially curbing strong flows into the decade-old sector. Billions of dollars in the last few years.
Currently, China’s green funds are They only work within the broad investment guidelines that came into force in 2018 and do not have a mandatory labeling system. These funds had $34 billion in assets at the end of September, according to Morningstar data.
The country’s financial regulator, the Asset Management Association of China (AMAC), has set rules that require mutual funds or exchange-traded funds to hold at least 60% of their assets to qualify for green sales. products, sources said.
So-called ‘greenwashing’ funds make exaggerated or unsubstantiated claims of sustainability.
AMAC’s rules are subject to final approval by the China Securities Regulatory Commission (CSRC), said the sources, who spoke on condition of anonymity because they were not authorized to discuss the matter.
AMAC and CSRC did not respond to Reuters requests for comment.
China’s plans come as regulators in the European Union, the United States and Britain are stepping up scrutiny of asset managers that use funds based on environmental, social and governance (ESG) credentials to meet growing demand for funds.
Climate change has become a major concern for China, which has seen its Climate Fund assets increase from a small base in 2020 and 2021. They say they will reach “carbon neutrality” by 2060.
According to Morningstar, which compiles global ESG fund data, China replaced the US last year as the largest global climate fund market, ahead of Europe.
In the first nine months of this year, 43 climate-specific funds were launched in China, a 30% increase in the total number of products since the end of 2020.
More than a few global asset managers, such as BlackRock ( BLK.N ) and Fidelity International, whose funds abroad have complained about green standards, have entered China in the past two years.
AMAC’s draft rules borrow from the 2021 version of the China Green Bond Catalogue, a quasi plan of classification, to define green assets. Catalog currently only applies to debt financing.
According to the new proposals, investments in programs listed in the catalog, such as energy saving and sustainable infrastructure projects, will be considered as green investments.
Reporting by Selena Lee in Hong Kong and Samuel Shen in Shanghai; Edited by Anshuman Daga and Muralikumar Anatharaman
Our Standards: The Thomson Reuters Trust Principles.
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