China's Green Financial Revolution: E Fund Leading the Charge

China is accelerating its green transition across economic and social sectors, emphasizing green financial instruments like green equity financing and green financial leasing. E Fund Management Co., Ltd., a leading mutual fund manager in China, is at the forefront, promoting ESG investments and sustainable funds, aligned with newly issued guidelines.

China has intensified its efforts to promote green transition in economic and social development, as highlighted by recent guidelines from the Communist Party of China Central Committee and the State Council, according to Xinhua News Agency. Various financial tools, including green equity financing and green financial leasing, are being prioritized.

The People's Bank of China revealed that the balance of China's green loans reached US$4.1 trillion by the end of 2023, showing a 36.5% year-on-year increase, outpacing all other loan forms. Furthermore, domestic green bonds issuance neared US$498 billion, primarily supporting the energy, construction, and mining industries' green transitions, according to a study from the International Institute of Green Finance.

Financial institutions have launched numerous sustainable investment funds, with 296 mutual funds focusing on sustainability and ESG managing assets over US$55.5 billion as of the end of 2022, reported the Asset Management Association of China. E Fund Management Co., Ltd. is a notable player, having joined PRI and launched several ESG-related products, including the E Fund Environmental Theme Flexible Allocation Hybrid Fund and E Fund Carbon Neutral 100 ETF.

The new guidelines also advocate optimizing investment mechanisms and involving social capital in green and low-carbon projects. Leading institutions are developing ESG-integrated research databases and methodologies, with E Fund enhancing its ESG rating framework to better suit the A-shares market. The framework employs both quantitative and qualitative methods to evaluate ESG performance in environmental impact, management, and opportunities.

E Fund has also introduced a climate risk management framework to effectively monitor and manage climate change impacts on investments. Established in 2001, E Fund is one of China's leading mutual fund managers, with nearly RMB 3.3 trillion under management, offering comprehensive investment solutions for various clients, including central banks, sovereign wealth funds, and corporate entities.

(With inputs from agencies.)