China tries to present the Belt and Road initiative as a sustainable project, that improves the quality of the environment in the countries that it operates. One common way that this is promoted is through the establishment of green and blue bonds. But firstly, what are green and blue bonds?
Green bonds: Green bonds act as financial instruments to fund projects that prevent climate change and improve sustainability, i.e. solar panels
Blue bonds: blue bonds are a subsection of green bonds and act as debt instruments designed to finance marine conservation and sustainable ocean-related projects, promoting sustainable fishing practices
Why do these matter in relation to the BRI?
Green bonds and Blue bonds help the environment by being used to only benefit things that are environmentally friendly. Therefore, the more money poured into green bonds, the more work is done to improve sustainability and environmental protections.
As the Chinese government wants to appear as environmentally friendly as possible, it will try to issue as many of these. We can see that whilst the US and EU lead in green bonds, dubbing them ‘green loans’, China is rapidly giving more green loans. According to the IMF, There have been nearly $2.2 trillion worth of outstanding green loans and $157 billion has been given out in green loans. During the first half of 2021 China development bank was the world’s seventh largest issuer with $3.1 billion, which was more than the spending done by the vast majority of other countries. This has often been presented by the CCP as showing that the CCP cares about environmental sustainability within the BRI
The same can be said for blue bonds, the Bank of China issued $942.5 million worth of blue bonds in September 2020 for BRI projects. This was Asia’s first blue bond issued by a commercial bank focusing on marine renewable energy and sewage treatment, which has been presented by China as showing that they care more about the environment than the US, which China has often criticized for leaving the Paris climate accords.
However, it is not only Chinese banks issuing these bonds, many foreign banks have also issued similar bonds for the BRI. Credit Agricole offered Chinese firms structuring advisory for both blue bonds and green bonds.
Through these bonds, investors can:
Reduce Environmental Impact: By providing funding for initiatives that boost environmental sustainability, encourage renewable energy sources, and cut carbon emissions, green bonds help to lessen the negative effects of infrastructure development on the environment.
Promote Collaboration: In order to achieve sustainability goals within the BRI framework, green and blue bonds promote collaboration between the public and private sectors as well as among international stakeholders.
Attract Investments: By providing green and blue bonds as investment options, BRI projects can draw money from investors who care about the environment and raise more money for projects aimed at sustainable development.
Assure Long-Term Viability: Purchasing green and blue bonds contributes to the preservation of natural resources and the construction of robust infrastructure, which guarantees the long-term sustainability and viability of BRI projects.
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