Carbon markets are an important policy tool to provide incentives to reduce greenhouse gas emissions

During the United Nations Climate Conference 28 (COP28), the World Wide Fund for Nature (WWF) and the Bartlett School of Sustainable Architecture at University College London (UCL) held a side event on the theme of "Net-Zero Transition for Developing countries, Promoting innovative climate Financing".

Li Gao, member of the Environmental Protection Committee of the National People's Congress, Vice Chairman of the COP28 Presidium and director of the Climate Investment and Financing Committee of the Chinese Society of Environmental Sciences, said when attending the side meeting that it is a major issue for the global response to climate change to help developing countries achieve green and low-carbon transformation through more extensive and effective climate investment and financing. Developed countries should significantly increase public financial support to developing countries, and encourage and support international financial institutions and commercial financial institutions to strongly support climate-friendly projects in developing countries at favorable interest rates. Developing countries can achieve a just transition only if developed countries effectively increase their emission reduction efforts, significantly shorten the time to achieve carbon neutrality, and avoid "decoupling, chain cutting" and so-called "de-risk" policies and unilateral measures.

"The carbon market is an important policy tool to incentivise the reduction of greenhouse gas emissions and can provide clear carbon price guidance to society, businesses and financial institutions," Li said.

Manuel Pulga-Vidal, global head of climate and energy at WWF, said: "To ensure that investments actually contribute to meeting climate goals, we need to introduce innovative mechanisms, not just to generate more investment, but to build credibility and traceability."

Li Xiaowen, second Inspector of the Policy Research Department of the State Financial Regulatory Administration of China, stressed the importance of international cooperation in green finance in his speech on international cooperation in green finance and combating climate change. "National financial institutions should provide diversified services to suit the needs of different countries; It is necessary to deepen government cooperation and coordination and formulate appropriate climate change financial policies. To enhance climate disclosure, which is essential for sustainable development and investment decisions; It is necessary to strengthen capacity building to deal with climate change, train talents and promote the development of the climate industry."

At this side meeting, Du Hongxia, Senior Manager of Green Finance at WWF Beijing Representative Office, announced the release of the "Revised methodological Framework for Climate Transition Risk Stress Testing in Developing countries". The methodology framework aims to conduct climate risk stress testing for financial institutions in developing countries, propose how to address the limitations of the current climate risk stress testing, such as lack of historical data, lack of industry depth, long-cycle risk and short-cycle asset mismatch, and provide actionable environmental recommendations. With greater flexibility to adapt to changing climate scenarios and markets, the framework can more effectively assist developing country regulators and financial institutions in managing climate transition risks and ensuring the climate resilience of economic and financial systems.