Governance and Accountability Policy Innovations: Advancing China's green finance

Numerous urgent environmental and social challenges in the world are hungry for investment.

Financial institutions, sovereign wealth funds and pension funds could play a crucial role in green growth, and yet these investors face numerous barriers to adding green projects to their investment portfolios as an asset class.

Adjustment of public policy could successfully help unlock private investment for green projects. Nevertheless, the current framework of the international financial markets is not achieving an efficient capital allocation for solving environmental problems at scale. Policy-makers have focused on creating sounder and more stable financial markets and have left the sustainability agenda to other players, without apprehending that sustainability and long-term resilience go hand-in-hand. Without this unification, market failures will continue to arise. This report analyzes the policy failures in governance, accountability and transparency for financial market actors, and the impact of these on green finance flows. It presents the best policy innovations for governance and accountability relevant to green finance. Finally, it evaluates how policy-makers in China can use these policy innovations and impose specific guidelines for their financial market actors for greening their financial markets.