China's leadership in taking forward the global green finance agenda is well supported by its political will and the large commercial market for infrastructure projects, says Sir Roger Gifford, chairman of the City of London Green Finance Initiative.

"China is emerging as a global force in many areas, including geo-political, and as climate change is such a global concern it is an excellent area for China to exercise leadership in, and an area that is almost uncontroversial," says Gifford, who was Lord Mayor for the City of London, in 2013.

Gifford, who is working extensively with green finance through his role as champion for the City of London's Green Finance Initiative and as UK head of the Nordic bank SEB, made green finance a big theme in his year as Lord Mayor.

So when Gifford visited Beijing in September 2013, he proposed to the Beijing government that they should issue a green bond to finance clean energy projects in Beijing. "I believe I was the first person to make the suggestion to the Beijing mayor, that the city should issue a green bond to help clean up parts of the city and provide cleaner energy."

"At the time he thought it was an interesting concept but didn't perhaps know much about it. Since then, the amount of initiatives taken by the Chinese government to understand green finance has greatly grown," he says.

Although Chinese local governments have yet to issue green bonds, the idea nowadays is much more understood, helped by regulatory changes in China which now allow local governments to fund infrastructure projects through bond issuance. "Chinese municipal governments should be encouraged to look at this closely, as they have tight budgets but need money to finance clean energy projects."

The City of London Corporation is the local authority that governs London's Square Mile, the financial center with a great deal of history and global influence. London's diverse and vast investor base made it an attractive city for the People's Bank of China to issue its first offshore renminbi bond.

Seeing green finance as an area requiring close participation by financial sector players, the City of London Green Finance Initiative was set up in 2016. PBoC showed its support as its chief economist Ma Jun gave a speech at the initiative's launch via a webcast.

Gifford says that he expects the PBoC will work closely with the initiative, and together they can facilitate the long term discussions of many green finance agenda items raised as a part of the G20 dialogue, for which China has presidency this year. Importantly, China has led the establishment of a G20 green finance study group, chaired by the PBoC and Bank of England, which will work to present findings during the G20 meeting in September.

"China has been extremely active in developing its domestic green finance market, and it's really positive that China is giving the subject a boost through its G20 leadership," Gifford says, adding that the he considers the Chinese government to be already an authority on this subject.

He says the Chinese government's strong leadership to augment the green finance agenda from a top down approach is useful, in the same way that an agreement to limit temperature increases this century to below two degrees Celsius at the Paris conference is greatly helped by strong political leadership.

On a global level, the Paris conference agreement was significant in creating a consensus. "Even two years ago we've had many scientists who weren't convinced that climate change is manmade, but now we have a consensus that, whatever the reasons, something must be done. I believe China is well up on the curve on understanding how this needs to be translated into action."

Efforts to reform China's green finance industry are also significant for China's structural shift from high growth powered by manufacturing industry towards long term sustainable growth built on a knowledge economy, Gifford says.

He calls China's strong emphasis on green finance as part practicality and part belief. "China knows it has huge infrastructure requirements, needing to be financed. It knows that the country needs more power and needs to reduce pollution in cities, which gives it an imperative to grow green finance. But there's also a growing belief that green finance really works."

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