Green opportunities on the Belt and Road

The Belt and Road Initiative is a key part of China’s efforts to tackle climate change, according to Bryce Johns, Group Head of Insurance, HSBC.

The long-term plan to promote trade and economic integration between China and its trading partners envisages billions of dollars of investment in infrastructure such as roads, rail and ports. This new infrastructure will need to be built with the environment in mind, Mr Johns told an Asian Insurance Review conference in Singapore.

We need well-designed urban developments that use clean energy

He said: “We simply can’t afford to see large, sprawling cities, powered by coal and connected by roads full of cars driven by internal combustion engines. What we need are well-designed urban developments that use clean energy and with efficient mass transit systems.”

China was among the countries to sign the 2015 Paris Climate Change Agreement and commit to limit global temperature rises to within two degrees Celsius of pre-industrial levels. The country’s President, Xi Jinping, has also said that he expects Belt and Road projects to be low-carbon and sustainable.

Banks and insurance companies have a key supporting role to play, Mr Johns said. HSBC, for example, recently assisted Industrial and Commercial Bank of China in launching the first Belt and Road Green Climate Bond, which will channel more than USD2 billion towards projects covering renewable energy, low-carbon transport, energy efficiency, and water treatment and supply.

Insurance companies could enable greater investment in sustainable Belt and Road projects by helping investors manage political risk and credit risk, Mr Johns said. As infrastructure projects tend to offer predictable cash flows over long periods, they could also be suitable for investment by life insurance companies, he added.

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