🟩 Research background

As we speak, global temperatures are rising at an unprecedented rate. In every corner of the world, climate change is causing devastating effects on ecosystems, human well-being and the economy.

Being a major greenhouse gas emitter, an economic superpower and a key unit in the global supply chain of clean technologies underscores the significant role of China in the global efforts to combat climate change. With a national target to become carbon-neutral by 2060, it is imperative that the country manages to finance the transition in its energy and industrial sectors.

The climate finance talks in China used to center around a few influential stakeholders and large-scale initiatives that were meant to make a difference. However, the lesser-known regional banks are striding to increase their reach in climate finance, as this subject means new opportunities, and regulatory scrutiny is expanding beyond the large national banks.

In this report, we aim to discover the status of regional banks engagement in climate finance, and how such engagement is shaped by their features and position in China’s banking sector. We found these banks have accumulated sound achievements in both quantitative and qualitative terms to stimulate climate finance development in China. The combined green finance assets of the city and rural commercial banks constitute a material part of the national total. The regional banks also make progress with innovations merging green finance and inclusive finance.

In the meantime, our study revealed the obstacles these banks encounter in growing climate finance business and the measures that can be taken by policymakers, regulators and regional banks themselves to fully unleash the potential of climate finance at the regional level. Solving these challenges will benefit individuals, SMEs and the banks, while accelerating China’s transition to a greener economy.

This is one of the first studies that focus on the role of China’s regional banks in financing climate actions, an area that requires greater attention as these banks are more vulnerable to catastrophes but are less involved in the opportunities from climate change. The research can be a reference for future work on establishing an inclusive banking system that contributes to the pathway to net zero in China and globally.