Kota Kinabalu: Establishing a clear regulatory framework and developing bankable green projects are key to building a successful sustainable finance ecosystem, said Dr Ma Jun.
The Chairman of China Green Finance Committee and Hong Kong Green Finance Association said regulators must create a system to mobilise finance and develop a pipeline of green projects capable of attracting investment.
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“Both elements are essential for the development of sustainable finance,” he said during his keynote address titled “How China Green Finance Can Help in SDG” at the Sabah Asia-Pacific Impact Investing for Sustainable Development Summit 2026 held at a hotel here.
Drawing on China’s experience, Ma said the country’s green finance journey began in earnest after he joined the People’s Bank of China as Chief Economist in 2014.
“Besides my work on macroeconomic forecasting, I became deeply involved in developing green finance policies,” he said.
Between 2014 and 2016, Ma helped draft China’s Green Finance Policy Guidelines and several early green finance policy documents.
He said these initiatives laid the foundation for China to become the world’s largest green finance market.
Today, China has about RMB48 trillion (US$7 trillion) in outstanding green loans.
It also has one of the world’s largest green bond markets, with about RMB2.3 trillion outstanding, and more than 1,000 green investment funds.
Ma said China’s success was built on a four-pillar ecosystem comprising taxonomy, disclosure, financial products and policy incentives.
The first pillar is a clear and consistent green taxonomy, which defines activities eligible for green financing.
He said China introduced its first official green taxonomy in 2015 to prevent greenwashing and provide investors with a recognised standard.
“Without a common definition, markets become fragmented. Multiple standards emerge, creating confusion and increasing compliance costs,” he said.
The second pillar is disclosure, which ensures environmental performance can be measured and verified.
He said China’s bank-based financial system requires commercial banks to collect environmental information from borrowers receiving green loans.
The information is then reported to the People’s Bank of China, which assesses indicators such as greenhouse gas reductions, pollution control and energy savings.
China has also moved towards aligning its disclosure requirements with international standards, including reporting on climate-related risks and greenhouse gas emissions.
The third pillar involves developing a wide range of green financial products.
Ma said green finance should not depend on a single financing instrument.
China has expanded its green finance market through green loans, bonds, insurance and equity funds to meet the different needs of sustainable projects.
He said bond markets were particularly important for renewable energy and infrastructure projects requiring long-term financing.
“Many banks are reluctant to provide loans with maturities of ten, 15 or 20 years,” he said.
Green insurance can also help reduce project risks and encourage banks to provide financing, he added.
Using solar power projects as an example, Ma said uncertainty over electricity generation could affect revenue and discourage lenders.
Insurance products that provide performance guarantees can help protect project income and improve lender confidence.
The fourth pillar is policy incentives, which help make green projects more attractive to investors.
Ma said some sustainable projects are commercially viable in the long term but require initial support to become bankable.
He cited the People’s Bank of China’s decarbonisation facility, which provides commercial banks with low-cost funding to support eligible green projects, particularly renewable energy and energy efficiency initiatives.
Local governments have also introduced incentives, including interest subsidies for qualifying green loans, to encourage banks to expand sustainable financing.
Ma said countries seeking to develop green finance should focus on creating a complete ecosystem rather than relying on individual policies.
“A successful green finance system requires clear standards, transparency, suitable financial products and supportive policies,” he said.
