B (7:29)

I was struck by your comment when you were talking about the pollution in Beijing and how much that's actually changed. As you know, I have a pleasure of visiting Beijing quite frequently and I'd heard a lot about air quality but one thing that struck me is just the use of electric vehicles, the amount of cars that are using electric vehicles and also how the psychology of every person I speak to, whether it's across academics or within firms or individuals, of the importance of sustainability. So it's great to see how that has sort of manifested itself into really the fabric of everyday life there. And I just wanted to touch a little bit deeper in terms of understanding your experience at a co chair of the G20 Sustainable Finance Working Group and what you feel that achieved at the time and how that sort of influenced your thinking on a look forward basis.

A (8:28)

Yeah, working on international platform such as G20 is very different compared with the domestic work. Domestically it was easier in the sense that we had a very strong will from a central government to support initiatives such as Green Finance. So we could easily coordinate different ministries and the financial industries in a way that can move things very fast. But internationally the G20 works on a consensus basis which means that for every piece of deliverable, whether it's a framework or it's policy guidelines or it's principle, it needs to be agreed by everybody as member of the G20. So you have to be considerate of the very diverse views and different development stage level priorities and capacity in different countries. That's why it's a more sort of a labor intensive process to reach consensus. But it's possible. In fact the G20 Susan Finance Working Group produced lots of useful global public goods such as the G20 Sumo Finance Roadmap 2021 and the G20 Transition Finance Framework 2022. It's just a test of how innovative you are in terms of organizing these discussions and willingness to compromise and eventually we'll be able to produce something that's usable to guide the global work on green Sumo finance. Let me just give you one example which the G20 I think did a good job. It's the endorsement of issbury to become the global baseline for disclosure. But internationally we know back a few years ago there's lots of, lots of disclosure principles, frameworks, requirements and so on. And the proliferation of that is leading to chaos and increase the cost of getting environmental climate data. And we need to consolidate and converge these principles to one. And the G20 became the perfect platform to do that, lifting one of these standards into the global stage and push them become the global standard. Now it's becoming the global standard.

B (10:47)

I mean there are some great observations on the different models, the consensus model, whereas the central policy driven model and also the point around ISSB which is truly becoming the global standard now in terms of adoption. And I wanted to move a little bit over to casi, which I think is an incredibly exciting Initiative launched in COP28 and had the pleasure of being there at launch and a founding member the CFA alongside a number of prestigious organizations and want to know what really inspired you to establish Cassie and why capacity building is so crucial for sustainable finance in emerging markets and developed economies.

A (11:39)

Yeah, as I said, I co chaired the G20 sustainable finance working Group for many years and during the process I observed rapid growth of green sustainable finance, but mainly in OECD countries. In China for example, In China currently our green loan ratio is 14% which means that the the outstanding green loans are about 14% total outstanding loans. But in many other emerging market economies it's about 3%. And these are the countries with statistics with taxonomies. For those without, I think the ratio is even lower and the funding gap in other emerging markets are huge. For example, in ASEAN countries some analysis was showing that the 80% of the demand for the renewable investment is not met. And that's why in 2023 the G20 Sumo Finance Working Group came up with a TAAP which is called Technical System Action Plan, calling for strengthened global efforts for capacity building on sustainable finance for emerging markets and developing economies. And they realized that a key bottleneck that's leading to the funding gap is the lack of capacity in setting up the green financial system in terms of taxonomy, disclosure products, policy incentives and so on. We need to help them instead of having them reinventing the wheel. Lots of global best practices can be transferred to them at a much lower Cost if we have a platform, you know, such as the kasi. That's why the KASI was launched in response to the G20 call at the end of 2013. At the COP28, the Institute of Finance Sustainability, which I chair, organized the launch of CASI with initially 42 members. And the CFA Institute is one of the founding members of the initial membership. And now we are a network of 67 institutional members. And last year we trained 5,000 people already from emerging markets, developing countries. And our aim is to train 100,000 green finance specialists by 2030.

B (13:49)

It's been an incredible year for Cassie in terms of attracting new members, in terms of delivering, in terms of training programs, both online and in person training programs. The objective of the 100,000 learners was cited as being ambitious by some, but now feels very realistic. How do you know that what you're doing and the quality of your trainings having the impact that you wanted have? What's going to be the measure of the sort of outputs from all of the activities that you're undertaking?

A (14:22)

Measurement success is a tricky thing. We can measure in terms of number of participants, which we had, right, 5,000 last year, attended our big forums and seminars and in the future we'll have more because we are launching the online program that can attract a lot more audience than otherwise. And the other thing is really how the participants responded, what they say and what they want to do after the events. Just give you a few examples. Recently after the Hong Kong event, which we hosted for 20 plus jurisdictions, mainly for Asia, one Malaysian expert attended the Hong Kong event, said to us that they want us to do it again in Malaysia in 2025 and now we are planning for that event, which means that they have a need of similar training. And in Doha, which we hosted, I think the third major event last year, the participants were telling us that they want to co develop contents with us for future use in Middle East. And in Azerbaijan, which is the fourth big event we organized last year, the university in Azerbaijan was telling us that they want to use online courses for students. And more recently a lot of banks which attended our events said to us that they wanted us to sort of tailor make training program using some of online contents for their staff members. So we're visibly seeing demand in the middle and right after these events.

B (15:51)

That's how we feel the impact as the initiatives evolving. What are you hearing consistently around the primary barriers that are preventing really that mobilization of sustainable finance in emerging markets? As you say, there's, there's a gap in knowledge There is a gap from supply and demand. But when you talk to the leaders, what is it that's really preventing that?

A (16:15)

Now for developing country emerging markets, there are two sets of issues that's considered by us as bottlenecks. One is certainly the lack of infrastructure for financial development. That's something is a longer term task and has to be addressed at the overall financial system level. And the other set of issues are related to green or sustainability factors. For example, in many emerging markets they don't have the basic policy frameworks, for example no taxonomy, which means that they don't have official definition of what green activities are. That's likely to lead to greenwashing if you begin to do green finance without taxonomy. And secondly don't have a disclosure requirements in terms of disclosing environmental benefits to demonstrate the projects are green and the lack of requirement for disclosing ESG information for the entities or fundraisers and so on. And again, these are sort of pitfalls that potentially lead to greenwashing. So we need to help them on setting up these basic elements of a policy framework. And the other feature is that they don't have many service providers in developed markets you have lots of, you know, service providers, second party opinion providers, verifiers and so on. It can help the issuers or the banks to verify or ensure that the greenness meeting standards. But in developing countries they don't have that. So they have to pick a more usable way of putting label, green label on the products, for example taxonomies. If designed properly, they can actually reduce the burden on service providers. And of course you have to have some service providers which need to be incubated in these economies. And the other thing that a lot of emerging markets economies are dominated by SMEs. They don't have many large companies and SMEs are quite sensitive to data related cost. You tell them that disclosure is very expensive, they refuse to do that. And you have to find ways to reduce the cost of organizing data collection, processing data and transmitting, you know, to the users, which are the banks and other investors. And another big issue is bankability. A lot of developing countries, they come up with projects which they believe are green and bankable, but in fact are not bankable. These projects are not making money. And that's why we have to help them to improve the bankability by advising on technology, on the execution team, on a power purchase agreement and on financing packages and so on. So it's not just one answer to your question, but a combination of many, many bottlenecks that need to be addressed. And KASI is aiming to provide comprehensive package of knowledge and best practice in all these areas.

B (19:19)

One of the areas which you talked a bit about is taxonomy. And I know it's an area of focus for you. The taxonomy that sort of was born out of the EU was very complex, very time consuming for people to adapt very long in terms of the rules. And how have you made that more accessible to countries that don't simply have that manpower or resource or finance to be able to apply it in the same way?

A (19:52)

Yeah, that's an interesting topic which I spent, you know, so many years on. I actually led the drafting of China's first green bond taxonomy in 2015 and that became the world's first official green bond taxonomy. EU had its first taxonomy, I think 2018, 19, it took them three years to develop a taxonomy for systemal finance. And so really about three, four years ago, China and EU were the two largest economies with taxonomies. And after that, many, many other jurisdictions came up with a taxonomy. The EU one, according to developing country standards are really too complex and too long. It's a 600 page document. The Chinese one has 60 page, so we are 1/10th in terms of length. And EU has many other regulations and rules incorporated into the green bond or green small finance taxonomy. So really I think we should think through how to use the taxonomies and it will help you to shape what kind of taxonomy you want. For us in China we had four usage of taxonomy number. One is preventing greenwashing, which could arise from the lack of taxonomy. Right. And secondly, it's used for label financial products. For example, we have green loan taxonomy, green bond taxonomy, then we can use a taxonomy, put a sticker on the loan and bond. If they are consistent with the taxonomy, we call them green loan green bonds. And thirdly, we use them as a measurement for performance. For example, the banks will have to report how much green loan you extended based on taxonomy. Then the central bank evaluated their performance. If you're doing well, means that you have a green loan ratio which is higher than peers, then you will be praised by the central bank. And also this measurement or reporting of green loan green bond numbers become a basis for allocating incentives. Some local governments will actually subsidize green loans and green bonds based on taxonomy. So based on these usage, we designed our taxonomy. And so far I think all these usages are practiced in China. But if you make it too complicated, then some of usage cannot be materializing because it's too complex and too Costly, taking too long to label a product. If you follow the, you know, the entire 600 page taxonomy, that's, that's one consideration. And the other thing is how do we make sure that many other countries don't have to reinvent the wheel? Because taxonomies are essentially in my view, global public goods. If a few large economies agree on the basic principles of what green sustainability should mean, then many other countries can basically use that as a reference. That's why four years ago between China Europe we came up with idea of producing a common ground taxonomy which I had the honor to co chair the working group that produces common ground taxonomy and more recently Singapore joined this common ground taxonomy emphasize and at COP 29 which is just two months ago we announced the multi jurisdiction Common ground taxonomy which is called mcgt. That's a version jointly produced or recognized by Europe, China and Singapore. I think this kind of MCGT can be used as a benchmark or reference for many other jurisdictions to develop or revise their taxonomy and by doing so it will enhance interoperability of taxonomies across jurisdictions and therefore helping facilitate growth, help facilitating green capital flows across jurisdictions and.

B (23:45)

In terms of As a UK citizen I was really pleased to see the resumption of the China UK Economic Financial Dialogue on 11 January this year and I think it provides a springboard for greater cooperation and collaboration across green finance between our respective sort of countries. And what do you see as the opportunity for the countries department or even more broadly than just that sort of UK China relationship, the opportunity for deeper bilateral engagement on these issues at a time when there is more divergent views in the world.

A (24:28)

UK China started collaboration on green finance a long time ago I think as early as 2015. I remember early 2015 I was visiting the bank of England to basically lobby them to become partner of the PBoC to co chair the G20 green finance study Group this is what we're called at that time. Later it became the working group and Mark Carney agreed and we kicked off the collaboration of co chairing the G20 work between 2016 and 2018. So it's three years of good collaboration between China UK on G20 and after 201718 we began a lot of bilateral initiatives under the China UK Green Finance Task Force which I co chaired initially with Sir Roger Gifford and later on Sir William Russell. And we've done a lot of things under the China UK Task Force on Green Investment Principles for Bell Do RO and dissemination of TCFD and setting up ESD leaders, foreign and now we're moving on to new topics such as transition finance and nature financing under the recent EFT agreement. In fact, I'm leading another Chinese delegation to London in the middle of this year 2025 to resume the dialogue. And indeed the CASI is a good demonstration of UK China collaboration because out of the 67 members of CASI, about 20 of them actually based in London or having offices in in London.

B (26:09)

What advice would you give to people who are interested in a career in terms of the intersection of finance and sustainability, both for people early in their careers, but perhaps people who are more mature in their careers who have recognized this sort of opportunity here, I think.

A (26:27)

For young people, students or you know, junior staff members in the banking financial industry, really green finance ESG related opportunities are huge. Just give you my estimate. Currently in many emerging market economies, green loans are about 3% of total loans and they should go to 30%. They should increase by 30 fold based on trajectory. I can observe already from China and other places. And to give you one example of China's Industrial bank, which is the first liquid bank In China, back 10 years ago they were telling me that they have 200 green finance specialists. And recently I asked them how many you want to train. They say they want to train 10,000 green finance specialists within the same bank. This is how massive the demand is for skills and talents in green finance and ESG and the company level. I think every middle large size company we have have a team to work on ESG because ESG disclosure will be mandatory, required and they need to be reported just like, you know, accounting. And that's why the number of jobs in this area is going to increase exponentially going forward.

B (27:45)

That's great and very uplifting. Any closing thoughts you'd like to leave the audience with in terms of sustainable finance, role of capacity building or anything else you want to add.

A (27:58)

Now, in terms of future trends of green sustainable finance, I think the following few areas are just starting but have a huge potential. One is transition finance. As I noted in many other occasions, green finance so far has been narrowly defined as addressing issues of environmental degradation and carbon emission and so on in the form of green taxonomy, meaning that only those meeting the green taxonomy, we consider them as green and financing, these activities are considered as green finance. So they are fairly narrow. They don't typically include a lot of transition activities which are in the carbon intensive sectors or hardware based sectors such as steel, cement, petrochemical, coal fired power generation and so on, so forth. And going forward, a transition finance framework will be set up in many places and transition finance instruments such as sustainably linked loans and bonds will be developing very rapidly. The second area is nature financing. We know that the nature financing has a funding gap of 90% which means that majority that we need to protect nature, preserve nature, biodiversity are not there yet and the demand for future private sector participation is massive. And finally, I think the carbon markets that you mentioned is just starting and potential is for carbon market to grow like 20 fold in the coming five to 10 years.

B (29:39)

Thank you Dr. Ma. It's always a real privilege to speak with you and I always learn new things each time. And a sort of final point for anybody who is interested and you've been inspired what Dr. Maher has been saying, I'd encourage you to reach out either as individuals or organizations to get involved with casi. CASI is always open to new members and more support to further his work and promote his activities more broadly. Thank you very much Dr. Ma. I appreciate your time.

A (30:10)

Thank you very much, Paul. Have a good day.