Guan Rui, secretary-general of China Responsible Investment Forum and Executive Vice President of Shangdao Ronglv, hosted a discussion on "Let a Hundred Flowers Bloom: At the "Financial Innovation for Transformation" roundtable, representatives from public funds, wealth management companies, sovereign funds, dealers associations and industry funds discussed the implications of transformational finance and the opportunities and challenges of developing transformational finance.
Participants first shared their understanding of "transformational finance" and "the relationship between transformational finance and green finance".
Dr. Yu Hua, former chairman of Morgan Stanley Huaxin Fund Management Co., Ltd. included all financial activities related to the transformation and transformation of high-carbon-intensive industries into the scope of transformation finance. To achieve the net zero goal, on the one hand, we should develop new and clean energy, on the other hand, we should transform and update the original energy system. That is to say, green finance and transformational finance should coordinate with each other. In the process of achieving sustainable development under climate change, transformational finance and green finance are mutually complementary arms. The challenge of transformational finance is to realize reasonable value revaluation through investment practice in the process of transformation, effectively control investment risks, so as to make both financial and social contributions.
Ji Bing, general manager of BlackRock CCB Wealth Management Co., Ltd. believes that, different from green finance, transformation finance has broader connotation and more macro guiding significance. It is committed to making brown green, ensuring the orderly transformation of high-carbon intensive industries, maintaining price stability, and promoting steady and healthy economic development. As carbon emissions taper off, the economic landscape will reshape. The net zero transformation will cause large-scale resource reallocation, the supply and demand situation will change, and the enterprises that can grasp the transformation opportunities will stand out. Han Ning, head of the market innovation department of the China Interbank Market Traders Association, pointed out that the transformation finance includes the sustainable development transformation of environment, social responsibility and other aspects of the economy, and currently focuses on the low-carbon and climate transition. Transformation finance and green finance complement each other. Green finance provides financial support for the development of green industries or projects. Transformation finance is an important financial tool to support the transition of high-carbon industries to green and low-carbon, and plays a crucial role in achieving green, resilient and inclusive economic development.
Luo Pengcheng, head of the enterprise and assets research Institute of Shougang Foundation, believes that transformational finance and green finance are mutually complementary. Green finance focuses more on long-term benefits and reducing long-term risks; By supporting the transition from high-carbon industries to low-carbon and zero-carbon industries, transformation finance pursues long-term and short-term benefits, as well as the balance between long-term risks and short-term risks.
Moderator Rui Guan said that one of the main features of transition finance is to provide financial support for those high-emission economic activities that are not covered by the green catalogue to transition to low carbon. From this point of view, transformational finance can be regarded as a capital market financing tool with specific attributes.
Afterwards, the participants introduced the development status, future direction and challenges of transformation finance from their respective fields.
Hanning said that the Dealers Association had launched sustainable Development linked bonds in April 2021 to meet the financing needs of a wide range of businesses committed to achieving the Sustainable Development Goals. In May this year, under the guidance of the People's Bank of China, the Dealers Association launched an innovative transformation bond, which is mainly aimed at eight domestic high-carbon industries, such as power, steel and chemical industry, to support the low-carbon transformation of traditional industries. On June 22, Huaneng International, Datang International, Chinalco and other five bonds were successfully issued, which were widely recognized by the market and given positive comments by many industry experts. As an important supplement to China's green finance, transition bonds can effectively connect financial resources with the transformation of the real economy, provide precise open market direct financing for low-carbon transformation projects in traditional high carbon industries, and effectively meet the financing needs of the development of low-carbon transformation economy.
Ji Bing believes that although most transformation financial products are bonds at present, the future transformation financial products will have a very broad prospect, which may be bonds or equity in form; It could be the asset side, it could be the liability side; It may be issued by a non-listed company or by a listed company; It can be an open market, public or private offering. With the launch of the national "dual carbon" policy and the popularity of sustainable concept, it is believed that more and more funds will turn to transformation financial products in the future. Blackrock considers the factors of sustainable development and the risk of transformation as one of the very important model frameworks when measuring assets. In the future, it will apply more and better financial products and concepts in the transition toward the goal of "dual carbon" to the investment practice in China.
Luo Pengcheng shared some investment opportunities that may exist in transformation finance from the perspective of industrial funds. Ms. Luo Pengcheng mentioned that compared with hot tracks like green finance, transformational finance has relatively less financial supply and more reasonable pricing. In the context of transformational finance, in addition to debt financing, we will also focus on equity opportunities through funds, Reits and asset securitization to invest in new technology smes and infrastructure that can support economic transformation and increase carbon efficiency. For example, in 2021, Shougang Fund led the issuance of China's first public Reits Green Energy project based on solid waste treatment assets. In the future, new projects can be invested in the form of expanded financing to support green and sustainable development. Meanwhile, the Institute of Everything also released the Reits index on Everything of Shougang Fund. In the future, infrastructure can be supported by passive investment.
Dr Yu Hua listed "investment sustainability" as another challenge in developing transformational finance. How to balance the financial return on investment with the Sustainable Development Goals, maintain the enthusiasm and confidence of the market, and get more investors to invest in the transition economy? Mr. Yu Hua took active management ETF as an example to point out how the transformation financial products should effectively control risks, so as to reflect the sustainability of the investment and the rationality of the performance. Mr. Yu also mentioned that CFA has plans to introduce its ESG certificate examination to China, which will further promote the mining and training of domestic transformational financial talents.
< /p>Moderator Rui Guan, while thanking the guests for sharing, called on all market participants and policy makers to work together to achieve orderly transformation, minimize the impact on the economy and society in the process of transformation, so as to achieve a more sustainable future.
