China Unveils Green Finance Classification System
In a significant step towards sustainable development, China has announced the release of an updated Green Finance Endorsed Project Catalogue. The new catalogue, developed by the People's Bank of China (PBOC), the National Financial Regulatory Administration, and the China Securities Regulatory Commission, aims to guide capital flows towards more industrial decarbonization activities and localized production of green technologies.
The updated catalogue expands the range of categories relative to the current standards, covering projects including energy conservation and carbon reduction, environmental protection, resource recycling, green and low-carbon energy transition, ecological protection and restoration, green infrastructure upgrades, as well as green services, trade, and consumption. Notably, the "green trade" and "green consumption" categories have been added, indicating a focus on areas across the green value chain beyond production.
One of the key additions to the new catalogue is the introduction of a new category, "Green and low-carbon transition of key industrial sectors." This category is designed to finance projects helping decarbonize hard-to-abate industries not yet considered green.
While China's Catalogue has a broader industrial and economic focus with more flexible criteria, reflecting national green transition goals, it partially aligns with international standards such as the ICMA’s Green Enabling Project Guideline. However, the Chinese framework applies less stringent qualifications for "green-enabling" activities compared to ICMA, meaning projects allowed in China’s Catalogue might have more lenient conditions before being classified as green-enabling.
Sustainable Fitch, a global credit rating agency, suggests that the updated catalogue could help China solidify its key position in global supply chains, aligning with its ambitions. The agency also notes that the changes could potentially steer investments towards more localized production of green technologies.
It's worth mentioning that several countries, including Australia, the EU, Singapore, Hong Kong, Canada, and India, have instituted or are developing sustainable finance taxonomies for their own jurisdictions. The new catalogue will take effect on October 1, 2025, and will be uniformly applied to all types of green financial products.
The purpose of the catalogue is to enhance the liquidity of the green finance market, improve the efficiency of green financial asset management, and reduce the cost of project identification. By doing so, the catalogue aims to contribute to China's ambitious goals of green and low-carbon development.
[1] Sustainable Fitch, "China's Green Finance Endorsed Project Catalogue: Expanded Scope and Flexible Criteria," [report], 2023.
[4] ICMA, "Green Enabling Project Guideline," [guideline], 2021.
- The updated Green Finance Endorsed Project Catalogue in China, which comes into effect in October 2025, will help drive investments towards more localized production of green technologies, as suggested by Sustainable Fitch.
- Expanding the range of projects relative to the current standards, the new catalogue includes categories such as green and low-carbon transition of key industrial sectors, designed to finance projects helping decarbonize hard-to-abate industries not yet considered green.
- Although China's catalogue partially aligns with international standards like the ICMA’s Green Enabling Project Guideline, the Chinese framework applies less stringent qualifications for "green-enabling" activities compared to ICMA, making projects allowed in China’s Catalogue potentially more lenient in terms of conditions before being classified as green-enabling.
