China is currently the world’s largest emitter of greenhouse gases, accounting for nearly 1/3 of the global total. Beijing is well aware of the effect its emissions have on climate change and has pledged to be carbon neutral by 2060, with emissions peaking in 2030.
As part of its emissions reduction plan, China is introducing more eco-friendly practices in the financial services sector, but there is a steep learning curve, as loans to high-carbon industries account for a fairly high proportion of financial institutions’ assets in the country. An accelerated withdrawal or delayed exit from high-carbon sectors may result in heightened financial risks.
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