China

Country Progress Report

DECEMBER 2021

SUPPLEMENT TO THE 2021 GLOBAL PROGRESS REPORT OF

THE SUSTAINABLE BANKING AND FINANCE NETWORK
 Acknowledgements

This Country Progress Report was developed by the SBFN Secretariat under the leadership of the SBFN
Measurement Working Group and with guidance from the SBFN Asia Regional Coordinator Wei Yuan. Data are
provided by the China Banking and Insurance Regulatory Commission (CBIRC) and verified by SBFN. The team is
grateful for the support and guidance of CBIRC representatives who provided data, participated in interviews, and
reviewed and provided comments to this report, in particular Mr. Yanfei Ye, Senior Advisor of the Policy Research
Bureau, and Ms. Xi Lan, Policy Research Bureau.

About SBFN About IFC

Established in 2012, SBFN is a voluntary community of
financial sector regulators and industry associations from
emerging markets committed to collectively advancing
sustainable finance in line with international good
practice and national priorities. As of October 2021, SBFN
members represented 63 institutions, 43 countries, and
$43 trillion (86 percent) of the total banking assets in
emerging markets. Members are committed to i) improving
the management of environmental, social, governance,
and climate change risks in financial sector activities,
and ii) increasing capital flows to activities with positive
environmental and social impacts, including climate
change mitigation and adaptation. For more information,
visit www.sbfnetwork.org.
IFC—a member of the World Bank Group—is the largest
global development institution focused on the private
sector in emerging markets. IFC works in more than 100
countries, using its capital, expertise, and influence to
create markets and opportunities in developing countries.
In fiscal year 2021, IFC committed a record $31.5 billion to
private companies and financial institutions in developing
countries, leveraging the power of the private sector to
end extreme poverty and boost shared prosperity as
economies grapple with the impacts of the COVID-19
pandemic. For more information, visit www.ifc.org.

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Contents

1 2
Overall country progress
– China
1. SBFN member institutions
2. Other key institutions and
national initiatives promoting
sustainable finance
3. Overall progress
Progress by three pillars
Pillar 1: ESG Integration
Pillar 2: Climate Risk Management
Pillar 3: Financing Sustainability
page 6

4. Country sustainable finance

journey
5. COVID response
6. Ambitions for the next phase
7. SBFN and IFC role

page 2

3 4
Progress by three sub-pillars
and 11 indicators
Sub-pillar 1: Strategic Alignment
Sub-pillar 2: Regulatory and Industry
Association Actions
Sub-pillar 3: Expectations of Financial
Institution Actions
page 12
Library of national
sustainable finance
framework documents
National strategies, roadmaps,
policies, voluntary principles,
regulations, guidelines, research,
templates, and tools that provide
an enabling framework for
sustainable finance

page 13

5
SBFN measurement
framework
and methodology
Summary of the SBFN measurement
framework, a systematic approach
to benchmark country progress in
developing national enabling frameworks
for sustainable finance

page 15

1
1. Overall country progress – China
1.1 SBFN member institutions:

China Banking and Insurance

Regulatory Commission (CBIRC) Member Since: 2012 Working Groups:
Measurement
Data and Disclosure (Co-Chair)

China Banking Association Member Since: 2014 Working Group:

Sustainable Finance Instruments

Ministry of Environment and Ecology Member Since: 2012

(MEE, formerly the Ministry of Environmental Protection)

1.2 Other key institutions and national initiatives promoting sustainable finance

People’s Bank of China (PBoC) National Association of Financial Market Institutional

Ministry of Finance (MOF) of the People’s Republic Investors (NAFMII)
of China Green Finance Committee of China Society of
National Development Reform Commission (NDRC) Finance and Banking
China Securities Regulatory Commission (CSRC) Asset Management Association of China (AMAC)

1.3 Overall progress

China has continued to make progress in the “Consolidating” sub-stage of the ”Maturing” stage. China’s national
sustainable finance framework started with banking and has expanded to cover the whole financial sector ecosystem, including
insurance, capital markets, and asset management. The framework features clear supervisory expectations for financial
institutions (FIs) to integrate environmental, social, and governance (ESG) risk management and increase green finance flows.
This is supplemented by detailed implementation guidelines and tools, as well as robust monitoring mechanisms. Consistent
and authoritative data on ESG risk management and sustainable finance flows are reported and assessed annually within
the banking sector, resulting in insights into the financial performance and environmental benefits of sustainable banking
activities. With China’s announcement in September 2020 to peak carbon emission by 2030 and achieve carbon neutrality by
2060, climate risks are becoming a focus for market-wide capacity building and potential regulatory action.

2
Figure 1: SBFN Progression Matrix - Overall Country Progress
Overall Results (without movements)
Maturing
Implementation
Mainstreaming
Preparation Consolidating
Behavioral Changes
Developing Advancing
Commitment Formulating China
Argentina Bangladesh
Colombia
Cambodia Brazil
Kazakhstan Indonesia
Chile
Costa Rica Georgia
Lao PDR Fiji
Dominican Kenya
Maldives Jordan Republic
Mexico
Samoa Kyrgyz Ecuador
Republlic Mongolia
Serbia Egypt
Morocco
Tunisia Ghana
Nigeria
Honduras
South
India Africa

Iraq Turkey

Nepal Vietnam

Pakistan

Panama

Paraguay

Peru

Philippines

Sri Lanka

Thailand

Ukraine
* Countries within each sub-stage are listed in alphabetical order

1.4 Country sustainable finance journey

Figure 2: China’s sustainable finance journey

Policies, principles, regulations, Examples of market

Research and engagement
and guidance actions and impacts

2012 2013-
2016

CBIRC issues Green Credit Multi-agency collaboration (PBoC, CBIRC, MOF, NDRC, MEE, and CSRS) results in
Guidelines Guidelines for Establishing the Green Financial System (2016)

CBIRC & MEP join SBFN as CBIRC issues Green Credit Statistics Reporting Template; Guidance on Calculating
founding members Environmental Benefits, and Key Performance Indicators for the Implementation
5
of Green Credit

PBoC issues Notice on Green Bond for Inter-bank Market; and the Green Bond
Endorsed Project Catalogue

During China’s G20 Presidency in 2016, the G20 Green Finance Study Group was
launched and co-chaired by China and UK

3
2018- 2017
2019
CBIRC issues Guiding Opinions of the China Banking CSRC publishes Guiding Opinions
and Insurance Regulatory Commission on Promoting the on Supporting the Development
High-quality Development of the Banking and Insurance of Green Bonds
Industry
CBA issues China Banking
PBoC releases Green Credit Performance Evaluation Plan Industry Green Bank Evaluation
for Deposit-Type Financial Institutions in the Banking Implementation Plan
Industry

2020 2021

Multi-agency collaboration consisting of MEE, NDRC,
PBoC, CBIRC, and CSRC publishes guidance on
Promoting Investment and Financing to Address
Climate Change
CBIRC issues Notice on Work Related to the Statistical
System for Green Financing and publishes Corporate
Governance Guidelines for Banking and Insurance
Institutions (Draft for Comment)
PBoC publishes the updated Catalogue of Green Bond-
Supported Projects and issues the Banking Sector
Financial Institution Green Finance Assessment Plan
China becomes Co-Chair of the G20 Sustainable
Finance Working Group
70% of banking assets (valued at $32 billion)
covered by ESG integration requirements and
banks report their ESG activities and performance
regularly to CBIRC and PBoC
Initiative launched to develop a national carbon
market, starting with the power industry (to begin
trading in 2022)

As of the end of 2020, 21 major Chinese banks’ green

loans stood at RMB11 trillion ($1.8 trillion)

Cumulative Green bond issuance to the value of $124.4

billion as of 31 December 2020

4
1.5 COVID response

CBIRC has extended specific financial instruments to support small and medium-sized banks as these institutions tend
to support small businesses. In 2020, Bank of China Macau Branch issued China’s first social bond in the offshore market
to support SMEs in Macau to access financial resources and reduce financing costs in response to COVID-19. The
transaction comprised a 4 billion Hong Kong dollar ($514 million) 1.95 percent bond due 2022 and a 1 billion Macanese
pataca ($125 million) 1.90 percent bond due 2022. Both notes are aligned with the International Capital Market Association
Social Bond Principles.

1.6 Ambitions for the next phase

CBIRC is updating its green credit guidelines to cover both the banking sector and insurance sectors. Built on the existing
green loan categorization introduced in 2013 and updated in 2019, CBIRC plans to develop a statistical classification system
for green insurance activities. This will combat the lack of clear definition of green insurance in China. China has committed
to achieving peak carbon emissions by 2030 and carbon neutrality by 2060. Supported by CBIRC, CBA launched an
industry initiative to develop collective understanding and capacity for the role of banks in meeting those targets. The
initiative will focus on climate disclosure, stress testing, climate finance product innovation, and assets allocation.

1.7 SBFN and IFC role

IFC has been a technical partner to CBIRC, CBA, and MEE since 2007 for their sustainable finance initiatives and capacity
building. Through SBFN, CBIRC and CBA have actively shared their experiences with other SBFN members and benefited
from the collective SBFN knowledge base.

SBFN Global and Country Reports enable countries to

share good experiences and best practice, promoting
mutual exchanges between member countries. This
framework can be transformed into some very detailed
formats and tables. Regulatory authorities or financial
institutions can use this instrument to monitor their own
progress. This is very important, and I believe SBFN’s
impact will be larger and larger in the future.

Mr. Yanfei Ye
Senior Advisor

China Banking and Insurance Regulatory Commission

5
2. Progress by three pillars
Figure 3: Mapping of overall country progress and individual pillar progress

Overall mapping

Maturing
Implementation
Preparation Consolidating Mainstreaming
behavioral changes
Developing Advancing
Commitment Formulating

Pillar-level mapping

Pillar 2: Pillar 1: Pillar 3:

Climate Risk ESG Financing
Management Integration Sustainability

1. Progress by 3 Pillars
Pillar 1: ESG Integration
Pillar Progress: Consolidating
Pillar 1: ESG Integration
China is mapped under the “Consolidating” sub-stage of the “Maturing” stage for the ESG Integration Pillar. Its national
framework extends beyond the banking sector and promotes ESG integration across the financial sector ecosystem. In
addition to ongoing activities to raise awareness and build capacity, implementation tools and initiatives are in place, and
consistent and comparable data are available about the ESG implementation practices of banks. Extensive collaboration
among agencies has resulted in frameworks that are well aligned with national strategies and international good practice.

Strategic Alignment

China

East Asia and the Pacific

SBFN Average

Expectations of Financial Regulatory and Industry

Institution (FI) Actions Association Actions

Sub-pillar 1: Strategic Alignment • China’s approach to ESG integration in the financial

• China’s national sustainable finance framework for the
banking sector and non-banking sector, including its
Green Credit Guidelines (2012) and Guiding Opinions on
Supporting the Development of Green Bonds (2017), sets
out expectations for integrating the consideration of ESG
risks and performance in the operations and activities of FIs.
sector is aligned with international good practices
and standards. For instance, the Key Performance
Indicators for the Implementation of Green Credit (2014)
make reference to the Equator Principles, UN Global
Compact, and UNEP Finance Initiative. The framework
has been developed and implemented in close

6
 consultation with the financial sector. CBIRC issued
the Green Credit Key Performance Indicators and
instructed China Banking Association (CBA) to establish
a professional committee for green credit business.
CBA issued the China Banking Industry Green Bank
Evaluation Implementation Plan in 2017.
Sub-pillar 2: Regulatory and Banking Association Actions
• China’s sustainable finance framework is supported
by implementation guidance and technical tools, such
as i) the Green Credit Statistics System for banking
institutions when categorizing green credit portfolios, and
ii) Green Credit Key Performance Indicators for banking
institutions when carrying out self-assessment of green
credit implementation.
• Implementation is regularly monitored by CBIRC,
supported by data collection through the Green Credit
Statistics System. Twenty-one major banks in China,
covering 70 percent of national banking assets, have
established internal ESG governance structures and
policies, and report regularly to CBIRC on their ESG
performance and activities.
• In 2020, CBIRC updated its Green Credit Statistics
System, adding indicators on financing for climate
change mitigation and adaptation.
• In 2021, CBIRC invited public comments on a draft
7
Corporate Governance Code for Banking and Insurance
Institutions, which, among other things, encourages
banks and insurers to pay attention to ESG factors such
as environmental protection and social responsibility.
Sub-pillar 3: Expectations for FI Actions
• The Green Credit Key Performance Indicators require
FIs to develop policies and procedures to manage ESG
risks and performance, undertake regular review and
monitoring of ESG risks, and report publicly on their ESG
performance.
• In 2020, CBIRC unveiled Guiding Opinions on Promoting
the High-quality Development of the Banking and
Insurance Industry. Among other things, the Guidance
calls for China-based banks and non-banking financial
institutions to i) establish and improve environmental
and social risk management systems, ii) incorporate
ESG requirements into their entire credit granting
process, and iii) strengthen ESG-related information
disclosure, reporting, and interaction with stakeholders.
It also encourages the establishment of green finance
franchised institutions, and development and innovation
in green financial products. ESG management is taken as
a universal principle for the high-quality development of
the banking industry.
Pillar 2: Climate Risk Management
Pillar Progress: Developing

Pillar
China is in 2:
theClimate Risk
“Developing” Management
sub-stage of the “Implementation” stage of the Climate Risk Management Pillar.
Climate change is one of the environmental factors to be considered under national ESG frameworks, and there are
significant research and capacity building efforts underway by regulators, industry associations, and FIs to develop deeper
understanding of climate risks and strengthen climate risk management approaches. There is ongoing regulator-industry
collaboration, including a joint initiative on carbon neutrality by CBIRC and CBA to raise awareness and build capacity of FIs
regarding new expectations for climate risk management.

Strategic Alignment

China

East Asia and the Pacific

SBFN Average

Expectations of Financial Regulatory and Industry

Institution (FI) Actions Association Actions

Sub-pillar 1: Strategic Alignment
• Addressing climate change risks is a national priority as
indicated in China’s Nationally Determined Contribution
(NDC) to the Paris Agreement and national climate
policies, including China’s commitment to carbon
neutrality before 2060.
• In the financial sector, PBoC and CBIRC, in conjunction
with other regulatory agencies, have undertaken
research and issued regulatory guidelines, including
the Green Credit Guidelines (2012), the Guidelines for
Establishing the Green Financial System (2016), and
Guidance on Promoting Investment and Financing to
Address Climate Change (2020), that include elements of
climate risk. They are also contemplating more specific
guidelines for the management of climate risk in the
financial sector.
Sub-pillar 2: Regulatory and Banking Association Actions
• The Green Credit Guidelines (2012), issued by CBIRC,
include climate change in the list of environmental issues
to be managed by banks. The Guidelines require banks
to establish governance, policies, and procedures to
manage these risks at transaction and portfolio levels,
and they establish CBIRC reporting and supervision
requirements.
• The Guidance on Establishing the Green Financial
System (2016) calls for regulators to support FIs to treat
environmental risks as drivers in stress tests for credit
risks; evaluate exposure to loans, assets, and sectors
in areas of high environmental risk, and quantify the
potential credit and market risks to FIs under different
scenarios. The 2016 guidance also calls for enhanced
analytical capacity among institutional investors on
environmental risks and carbon intensity of their
investments, and for conducting stress tests of the impact
of environmental and climate factors on institutional
investor portfolios.
• China’s multi-agency Guidance on Promoting Investment
and Financing to Address Climate Change (2020)
encourages climate mitigation and adaptation efforts,
including controlling greenhouse gas emissions,
enhancing carbon sinks, adaptation across sectors, and
disaster relief as priorities to achieve China’s NDC and
to prevent and resolve climate investment and financing
risks.
• Although supervisory expectations on climate risk
management are yet to be specified, industry initiatives
are in place for FIs to expand climate risk disclosure,
conduct climate risk scenario analysis, and apply
international good practices.
• In 2021, CBIRC and CBA announced a joint initiative on
carbon neutrality representing approximately 80 percent
of the Chinese banking sector. It will include development
of a climate risk management framework to be integrated

2
 into existing regulatory systems for the financial sector.
• PBoC is a founding member of the Network for Greening
the Financial System and a number of institutions in the
Chinese financial sector are supporters of the Taskforce
for Climate-related Financial Disclosures (TCFD).
Sub-pillar 3: Expectations for FI Actions
• CBIRC requires banks to evaluate and manage risk
exposure of sectors with high environmental and social
risks at portfolio level and supports FIs to integrate
environmental and climate risks as key drivers in
stress tests for credit risks. For example, Industrial
and Commercial Bank of China (ICBC) and China 1
Construction Bank (CCB) have undertaken stress tests on
1 Industrial and Commercial Bank of China (ICBC), Impact of Environmental Factors on Credit Risk of Commercial Banks
9
the credit quality of thermal power and chemical sector
loans in response to transition risk as reflected in carbon
price factors and environmental protection policies.
• The 2021 CBIRC-CBA carbon neutrality initiative will
provide a basis for future progress on regulatory
elements, such as climate risk metrics, climate
stress testing methodologies, and carbon disclosure
approaches that reflect international practices, such as
TCFD.
• As part of the 2020 Notice on Relevant Work of Green
Financing Statistical System, 21 major domestic banks
submitted green credit risk and environmental benefit
data, including greenhouse gas emissions, to regulatory
authorities every six months.
Pillar 3: Financing Sustainability
Pillar Progress: Consolidating

China is in the “Consolidating” sub-stage of the “Maturing” stage for the Financing Sustainability Pillar. The national
framework is well aligned with international good practice in innovation in green, social, and sustainability-focused loans,

Pillar 3: Financing
bonds, and other investmentSustainability
strategies. A comprehensive national initiative is in place, aimed at promoting sustainability-
focused finance across the financial system. The framework extends beyond banking to include capital markets. Consistent
and comparable data is being collected by regulators about implementation of sustainable finance practices by banks
and other FIs, including measurement of benefits. In 2021, PBoC, China’s Development and Reform Commission, and
CSRC jointly issued the 2021 Green Bond Catalogue after expert and public consultation. The updated Catalogue aims at
expanding and harmonizing China’s green bond market and helping achieve carbon neutrality.

Strategic Alignment

China

East Asia and the Pacific

SBFN Average

Expectations of Financial Regulatory and Industry

Institution (FI) Actions Association Actions

Sub-pillar 1: Strategic Alignment Sub-pillar 2: Regulatory and Banking Association Actions

• China’s national framework for financing sustainability
covers the banking sector (Green Credit Policy by
CBIRC), capital markets (Green Bond Guidelines by
PBoC), and asset management (Green Investment
Guidelines by AMAC).
• The financial sector’s approach to promoting financial
flows into green and sustainability-focused projects and
sectors is aligned with international good practices and
standards, such as the UN Sustainable Development
Goals, the International Capital Market Association’s
Green and Social Bond Principles and Sustainability Bond
Guidelines, and the EU Green Bond Standard.
• The financial sector’s approach to financing sustainability
is also aligned with China’s national goals and strategies,
such as the Nationally Determined Contributions to
the Paris Agreement and the five-year development
plans. It also identifies key stakeholders and promotes
engagement. In 2021, CBIRC and CBA jointly launched
the Chinese Banks Carbon Peak & Net Zero Initiative,
the first market-wide carbon neutrality initiative for banks
supported by regulators.
• Based on the Notice of Green Credit Performance
Evaluation, PBoC, China Development Bank, and other
policy banks have an inter-agency data sharing system to
stimulate and monitor sustainable finance flows.
• China recently updated its national Green Bond
Catalogue (previously the PBoC Green Bond
Endorsed Catalogue) after public consultation. PBoC
updates this list regularly to ensure it reflects the
latest regulations and technology. The latest version
removes clean coal and adopts the EU Taxonomy’s
“Do No Significant Harm” (DNSH) principle, which
requires that activities with specific environmental
objectives don’t also result in harm to other
environmental objectives.
• PBoC issued the Notification of Green Credit
Performance Evaluation of Deposit-taking Financial
Institutions in 2018 with detailed evaluation indicators
and methods. The evaluation results are incorporated
into banks’ overall performance evaluations.
• Based on its Notice on the Submission of Green
Credit Statistics (2013), CBIRC has been conducting
biennial data consolidation and aggregated disclosure
on green credit statistics based on submissions from
FIs, which includes data on green lending activities.
Consistent and continuous data have become
available, showing evidence of links between green
lending and lower credit risk, among other things.
• China’s regulators are committed to aligning national
sustainable finance frameworks with international good
practices. This is reflected in China’s co-chairing with

10

For details for each pillar, sub-pillar, indicator, datapoint, and referring policy document, please visit the SBN Online Analytical Tool at [URL TBD].
 the EU of an international taskforce to develop a global
‘Common Ground’ taxonomy for green finance.
Sub-pillar 3: Expectations for FI Actions
• The China Green Credit Guidelines, together with the
Key Performance Indicators, require FIs to establish a
strategy, governance, and procedures for ESG integration
and promoting green credit growth, and to develop and
maintain internal staff capacity on green banking through
regular training.
• Banks and FIs are required by PBoC and CBIRC to
report their green loans and investments quarterly and
biennially, with detailed reporting templates including
11
both qualitative and quantitative data. PBoC has indicated
an intention to include banks’ green banking performance
in Macroprudential Assessment (MPA).
• PBoC’s Green Bond Guidelines require FI issuers to arrange
external reviews of the green credentials of bonds.
• In June 2021, PBoC issued the Banking Sector Financial
Institution Green Finance Assessment Plan, which
includes green bonds in the annual assessment of major
financial institutions, in addition to green loans. PBoC will
grade financial institutions according to their green bond
holdings and how they implement national and local
green financing policies.
2. Progress by 3 Sub-Pillars and 11 Indicators
3. Progress by three sub-pillars and 11 indicators
Figure
Figure 4:
1: Overview
Overview of
of China’s
China’s sustainable
sustainable finance
finance coverage
coverage in
in three
three framework
framework areas
areas

Pillar 1: Pillar 2: Pillar 3:

ESG Integration Climate Risk Management Financing Sustainability
Sub-pillar 1: Strategic Alignment

National Framework Coverage

Alignment with International

Goals & Standards

Alignment with National Goals

& Strategies

Sub-pillar 2: Regulatory and Industry Association Actions

Overall Approach & Strategy

Technical Guidance

Supervisory Activities &

Incentives

Tracking & Aggregated

Disclosure

Sub-pillar 3: Expectations of Financial Institution (FI) Actions

Strategy & Governance

Organizational Structure &

Capacity Building

Policies & Procedures

Tracking, Reporting & Disclosure

All data in the report are pending member confirmation. 4

12
4. Library of national sustainable finance
framework documents
National strategies, roadmaps, policies, voluntary principles, regulations, guidelines,
research, templates, and tools that provide an enabling framework for sustainable finance

Guidelines on Environmental Banking Sector Financial Updated Green Bond

Information Disclosure for Institution Green Finance Project Catalogue
Financial Institutions Assessment Plan (PBoC, NDRC, and
(PBoC, 2021) (PBoC, 2021) CSRC; 2021)

Notice on Evaluating Green Credit Guiding Opinions of the China Banking

Performance of Banking Deposit- and Insurance Regulatory Commission on
Type Financial Institutions Promoting the High-Quality Development of
External Circular 028 of 2020 the Banking and Insurance Industry: No. 52
(PBoC, 2020) (CSRC, 2019)

Policies and Actions Green Industry Green Investment Guidelines

for Addressing Climate Guiding (Asset Management Association of
Change Catalogue China, 2018)
(MEE, 2019) (NDRC, 2019)

Compulsory Environmental The Green Investment Notice on Evaluating

Pollution Liability Insurance
Regulation
(Ministry of Environmental
Protection and CBIRC, 2018)
Principles (GIP) for the Green Credit
Belt and Road Initiative Performance of
Banking Deposit-Type
(Green Finance Committee,
Financial Institutions
2018)
(PBoC, 2018)

Green Banking Guidelines for Green Bond Institutional

Assessment Plan (Pilot) Issuance for listed companies Investors Guidelines
(CBA, 2017) (CSRC, 2017) for Green Bond
(NAFMII, 2017)

Impact of Environmental Factors on Credit Risk Notice on Green Bond for Inter-bank
of Commercial Banks Market & Green Bond Endorsed
(Industrial and Commercial Bank of China, 2016) Project Catalogue
(PBoC, 2016)

13
 Guidelines on the Guidelines for Notice on Green Bond
Issuance of Green Bonds Establishing the for Inter-bank Market &
Green Financial Green Bond Endorsed
(NDRC, 2016)
System Project Catalogue
(CBIRC, 2016) (PBoC, 2015)

Green Credit Key Green Credit Statistics Green Credit Guidelines

Performance Indicators & Reporting Template (CBIRC, 2012)
(CBIRC, 2014) (CBIRC, 2013)

Green Credit Policy

(CBIRC, 2007)

Download framework documents and check for updates

at www.sbfnetwork.org/library

14
5. SBFN measurement framework
and methodology
About SBFN
Established in 2012, the Sustainable Banking and Finance
Network (SBFN) is a unique, voluntary community
of financial sector regulatory agencies and industry
associations from emerging markets committed to
advancing sustainable finance in line with international
best practice. SBFN is facilitated by IFC as secretariat, and
supported by the World Bank Group.
As of October 2021, SBFN comprised 43 member countries
representing over US$43 trillion and 86 percent of total
banking assets in emerging markets. Members are
committed to collectively driving measurable change.
Why a measurement framework?
In 2016, members requested a systematic comparison of
country approaches to developing national sustainable
finance frameworks. The SBFN Measurement Working
Group was established to convene member inputs on the
design of a common framework to benchmark country
progress and accelerate peer-to-peer knowledge exchange.
The Framework is designed to inform the biennial SBFN
Global Progress Report.
The Framework can be used as:
a mapping tool to capture the dynamic
interaction of collective insights, market-
based actions, and policy leadership
demonstrated by SBFN members as they
move their financial markets
toward sustainability;
a benchmarking tool for SBFN
members to learn from and compare
peer approaches, track and review
progress against global benchmarks,
develop common concepts and
definitions, and leverage innovations
and strengths; and
a forward planning and capacity
building tool to identify future policy
pathways and capacity building needs.
15
1
An evolving framework
The SBFN Measurement Framework reflects the activities,
strategies, and tools that members use to promote
sustainable finance in their countries. It evolves to match
advances in country initiatives. It also incorporates the latest
international standards and best practices identified by
members as important to their efforts.
A member-led approach
The Framework was designed with extensive member input
under the leadership of the Measurement Working Group
and Co-Chairs. Updates to the Framework are guided by
the Measurement Working Group and agreed by all SBFN
Members.
Data collection in partnership with members
As of 2021, data collection for the SBFN Global Progress
Report relies on member country reporting in line with the
updated Measurement Framework. Information is supported
by evidence, which is verified by the SBFN secretariat in
collaboration with third-party service providers. Evaluation
and milestones are objective and transparent. Members
approve the final Global and Country Progress Reports.
The Measurement Framework is based on three
intersecting themes in sustainable finance. For each
theme, it assesses regulatory guidance, supervision
strategies, disclosure requirements, and voluntary
industry approaches.
ESG Integration refers to the management of
environmental, social, and governance (ESG) risks in
the governance, operations, lending, and investment
activities of financial institutions.
Climate Risk Management refers to new governance,
risk management, and disclosure practices that financial
institutions can use to mitigate and adapt to climate change.
Financing Sustainability refers to initiatives by
regulators and financial institutions to unlock capital flows
for activities that support climate, green economy, and
social goals. This includes new products like green bonds
and sustainability-linked loans. Initiatives include definitions,
guidance, taxonomies, monitoring, and incentives.
The Measurement Framework consists of three complementary
components:

1. Progression matrices
Drawing on SBFN members’ common development paths
and milestones, the SBFN Progression Matrix provides
an overview of market-wide progress for all SBFN countries
across three typical stages of development. It allows each
SBFN member to review its own progress and identify the
strengths and weaknesses of its approach.
The stage mapping is based on qualitative milestones and
quantitative analysis related to (i) progress in developing
and implementing national policies and principles, and (ii)
industry uptake and practices. In the 2021 report, in addition
to the Overall Progression Matrix, three pillar-level matrices
are added to reflect a country’s development process in
each of the pillar areas.

Overall Mapping Country

Maturing
Implementation
Preparation Consolidating
Mainstreaming
Behavioral Changes
Developing Advancing
Commitment Formulating

Pillar-Level Mapping

Pillar 2: Pillar 3: Pillar 1:

Climate Risk Financing ESG
Management Sustainability Integration

2. Pillar benchmarking

A dynamic assessment is conducted Pillar 1: Pillar 2: Pillar 3:

Climate Risk Financing
across several priority pillars of sustainable ESG Integration Management Sustainability
finance, using qualitative and quantitative
• National framework
datapoints to assess progress and allow Sub-pillar 1:
• Alignment with international goals and standards
comparison across countries. Three pillars, Strategic Alignment • Alignment with national goals and strategies

three cross-cutting sub-pillars, 11 cross-

cutting indicators, and 75 underlying
datapoints are used to objectively assess a
country’s sustainable finance framework(s),
according to clarity, depth, and alignment
to international good practice.
Sub-pillar 2: Regulatory
and Industry Association
Actions
Sub-pillar 3:
Expectations of Financial
Institution (FI) Actions
• Overall approach and strategy
• Technical guidance
• Supervisory activities and incentives
• Tracking and aggregated disclosure
• Strategy and governance
• Organizational structure and capacity
• Policies and procedures
• Tracking, reporting, and disclosure

3. Sector data and case studies

In 2021, data collection included an exploratory request for quantitative data points — where available — for the number and
percentage of financial institutions that are implementing ESG integration as well as climate risk management and disclosure;
and the total value of green, social, and sustainability bond issuance. Detailed case studies were also collected of innovative
approaches by regulators and industry. Case studies will be published in a new on-line case study catalogue.

SBFN on-line case study catalogue

Coming soon

16
SBFN Measurement Framework pillars, sub-pillars, indicators, and underlying datapoints
Pillar 1: ESG Integration
Sub-
Indicator No. Underlying datapoint
pillar
National framework1 1 Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for
(e.g. policies, roadmaps, integrating the consideration of environmental, social, and governance (ESG) risks and performance?
guidance, regulations, 2 Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance or other non-lending FIs
voluntary principles, that sets out expectations for integrating the consideration of ESG risks and performance?
Strategic Alignment

templates, or tools)
Alignment with 3 Does the Framework make reference to international sustainable development frameworks or goals?
international goals and
standards
4 Does the Framework make reference to established international ESG risk management standards and principles for FIs?

Alignment with national 5 Does the Framework make reference to specific national development objectives, plans, policies, goals, or targets?
goals and strategies 6 Does any cooperation exist between agencies or between the regulator and industry association with respect to policy design and/or
implementation related to ESG integration?
7 Does any inter-agency data sharing currently exist related to ESG integration by FIs?
Overall approach and 8 Does the Framework provide guidance on the role of the regulator or industry association with regard to assessing and managing ESG risk
Regulatory and Industry Association Actions

strategy and performance in the financial sector?

9 Has the regulator or industry association undertaken market assessment to identify systemic ESG risks through analysis of the portfolios of
supervised entities/members and published the results?
Technical guidance 10 Does the Framework provide technical guidance or tools to support implementation of ESG risk and performance management by the
financial sector?
Supervision activities 11 Is the implementation of the Framework regularly monitored and/or information regularly collected from FIs by the regulator and/or industry
and incentives association?
12 Does the regulator or industry association provide any financial or non-financial incentives for FIs to manage ESG performance as part of the
Framework?
13 Does the regulator or industry association apply any disincentives/penalties for non-compliance by FIs in terms of expectations from the
regulator and/or industry association related to ESG risk management as part of the Framework?
Tracking and 14 Has the regulator or industry association established a data collection approach and database to track or regularly publish data related to
aggregated disclosure ESG integration by FIs as part of the Framework?
Strategy and 15 Does the Framework require/ask the FI’s board of directors (or highest governing body) to approve an ESRM and/or ESG integration strategy,
governance and to supervise its implementation?
Organizational structure 16 Does the Framework require/ask FIs to allocate resources/budget commensurate with portfolio ESG risks and define roles and
and capacity responsibilities for ESG integration within the organization?
17 Does the Framework require/ask FIs to develop and maintain the ESG expertise and capacity of staff commensurate with portfolio ESG risks
Expectations of FI Actions

through regular training and learning?

18 Does the Framework require/ask FIs to create incentives for managers to reduce the ESG risk-level of the portfolio over a specified
timeframe?
Policies and procedures 19 Does the Framework require/ask FIs to develop policies and procedures to identify, classify, measure, monitor, and manage ESG risks and
performance throughout the financing cycle at the client level and/or the transaction/project level?
20 Does the Framework require/ask FIs to undertake a regular review and monitoring of ESG risk exposure at aggregate portfolio level?
21 Does the Framework require/ask FIs to establish and maintain an external inquiry/complaints/grievance mechanism for interested and
affected stakeholders in relation to ESG practices?
Tracking, reporting, and 22 Does the Framework require/ask FIs to report ESG risks and performance to the regulator or industry association?
disclosure 23 Does the Framework require/ask FIs to report on ESG integration publicly?
24 Does the Framework require/ask FIs to track credit risk (e.g. loan defaults) and/or financial returns in relation to ESG risk level?

Pillar 2: Climate Risk Management

National framework 25 Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for
integrating the consideration and management of climate risks and their impact in the national economy?
26 Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance, or other non-lending FIs
that sets out expectations for integrating the consideration and management of climate risks and their impact in the national economy?
Strategic Alignment

Alignment with 27 Does the Framework make reference to international agreements or frameworks to address climate?
international goals and
28 Does the Framework recognize or align with established regional or international good practice for climate risk management and disclosure
standards
by FIs?
Alignment with national 29 Has the regulator or industry association aligned the Framework with national goals to address climate change in line with the country’s
goals and strategies Nationally Determined Contributions (NDCs) to the Paris Agreement?
30 Does any cooperation exist between agencies, or between government and industry association, with respect to policy design or
implementation related to climate risk management?
31 Does any inter-agency data sharing currently exist related to climate risk management by FIs?

1 National framework refers to the collective set of policies, roadmaps, guidance, regulations, and/or voluntary principles issued by national regulators or industry associations in
relation to each pillar of sustainable finance. SBFN recognizes that national frameworks for sustainable finance vary from country to country and are influenced by national priorities
and characteristics. They are also often interdependent with other national roadmaps, policies, and regulations. Countries vary in their starting points and the types of documents
to kickstart the enabling framework. For instance, initial frameworks could choose to focus on ESG risk management and/or sustainable finance opportunities such as green bonds.
They could also focus on banking, capital markets, or institutional investors. The variety of SBFN frameworks provides a rich source of inspiration for peer learning and collaboration.

17
3
 Overall approach and 32 Has the regulator or industry association undertaken research on historical impacts to the economy and financial sector from climate
strategy change, and/or future expected impacts resulting from physical and transition climate risks?
Regulatory and Industry
Association Actions

33 Does the Framework identify key sources of GHG emissions – such as in particular sectors – as priorities in the proactive management of
climate risks by the financial sector?
34 Does the Framework incorporate the conservation/restoration of natural carbon sinks (such as oceans, forests, mangroves, grasslands, and
soils) as an important part of reducing climate change risks (e.g., through guidelines, scenario analysis, targets, or incentives for FIs)?
35 Has the regulator or industry association developed an internal strategy to address climate risk, and/or embedded climate risk management
into its governance, organizational structures, and budget as part of the Framework?
36 Has the regulator or industry association undertaken any activities to expand and deepen analytical understanding of national and/or cross-
border physical and transition climate risks, and to raise awareness as to how these risks may transmit to, and impact, the financial sector?
Technical guidance 37 Has the regulator or industry association developed risk assessment approaches, methodologies, or tools to understand and assess the
financial sector’s exposure to climate risk as part of the Framework?
Regulatory and Industry

Supervisory activities 38 As part of the Framework, has the regulator clarified supervisory expectations with regard to climate risk management by FIs, including
Association Actions

and incentives consideration of international good practices?

39 Has the regulator started to explicitly embed climate-related risk in supervisory activities and review processes as part of the Framework?
40 Is the implementation of the Framework regularly monitored and/or information regularly collected from FIs by the regulator and/or industry
association?
41 Are there any financial or non-financial incentives to encourage FIs to establish climate risk management systems?
Tracking and aggregated 42 Does the regulator or industry association regularly collect and/or report market-level and/or FI-level data on climate-related financial sector
disclosure risks as part of the Framework?
Strategy and governance 43 Does the Framework require/ask FIs to establish a strategy for climate risk management with responsibility at the board of director level (or
highest governing body)?
Organizational structure 44 Does the Framework require/ask FIs to define the roles and responsibilities and related capacities of the FI’s senior management and
and capacity operational staff in identifying, assessing, and managing climate-related financial risks and opportunities?
Expectations of FI Actions

Policies and procedures 45 Does the Framework require/ask FIs to expand existing risk management processes to identify, measure, monitor, and manage/mitigate
financial risks from climate change?
Tracking, reporting, and 46 Does the Framework require/ask FIs to report on their overall approaches to climate risk management in line with international good
disclosure practices (e.g. TCFD), or establish a timeline by which FIs should begin to align their reporting with such practices?
47 Does the Framework require/ask FIs to identify, measure, and report on exposure to sectors which are vulnerable to transition risk and
physical risk?
48 Does the Framework require/ask FIs to adopt and report on performance targets to reduce portfolio greenhouse gas (GHG) emissions on a
regular basis?
49 Does the Framework require/ask FIs to adopt and report on performance targets to reduce exposure to climate change risks at the portfolio
level on a regular basis?

Pillar 3: Financing Sustainability

National framework 50 Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for
integrating the consideration of instruments, goals, and standards for financing sustainability, including requirements for ensuring credibility
and managing and measuring resulting impacts in the national economy?
51 Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance, or other non-lending
FIs that sets out expectations for integrating the consideration of instruments, goals, and standards for financing sustainability, including
requirements for ensuring credibility and managing and measuring resulting impacts in the national economy?
Strategic Alignment

Alignment with 52 Has the regulator or industry association developed a strategy, regulations, or set of frameworks for stimulating the allocation of capital to
international goals and sustainable assets, projects, and related sectors in line with global goals, such as the Sustainable Development Goals (SDGs)?
standards 53 Does the Framework recognize and/or align with existing standards, voluntary principles, or market good practices related to sustainable
finance instruments?
Alignment with national 54 Does the Framework enable the achievement of stated national objectives by guiding capital to sectors, assets, and projects that have
goals and strategies environmental and social benefits in line with national sustainable development priorities, strategies, targets, and the size of sustainable
investment needs, and taking into account the local barriers to scaling-up sustainable finance?
55 Does any cooperation exist between agencies or between the regulator and industry association with respect to policy design or
implementation related to sustainable finance flows?
56 Does any inter-agency data sharing currently exist related to stimulating and monitoring sustainable finance flows?
Overall approach and 57 Does the Framework require/ask the regulator or industry association to establish mechanisms to identify and encourage the allocation of
Regulatory and Industry Association

strategy capital to sustainable sectors, assets, and projects?

Technical guidance 58 Does the Framework provide definitions, examples, and/or a taxonomy (catalogue and guidelines) of sustainable finance assets?
59 Does the Framework provide guidelines for extending green, social, or sustainability-focused loans (excluding bonds)?
60 Does the Framework provide guidelines for issuance of green, social, or sustainability bonds?
Actions

61 Does the Framework require/ask for external party verification to ensure the credibility of sustainability instruments?
Supervisory activities 62 Does the regulator or industry association monitor information reported by FIs related to green/social/sustainability investment, lending, and
and incentives other instruments to prevent greenwashing and social-washing?
63 Are there any financial or non-financial incentives for FIs to develop and grow green, social, or sustainability finance instruments?
Tracking and aggregated 64 Does the regulator or industry association collect and/or publish data from FIs or other sources about allocation of capital to green/social/
disclosure sustainability assets, projects, or sectors?

18
4
 Strategy and governance 65
Organizational structure 66
and capacity building
67
Policies and procedures 68
Expectations of FI Actions
Does the Framework require/ask FIs to establish a strategy, governance, or high-level targets, including at the Board of Directors level, for
capital allocation to sustainable assets, projects, or sectors?
Does the Framework require/ask FIs to define internal staff roles and responsibilities to encourage finance flows to green, social, and/or
sustainability-focused investments?
Does the Framework require/ask FIs to develop and maintain internal staff capacity on green, social, or sustainability products through
regular training and learning?
Does the Framework require/ask FIs to put in place policies and procedures for defining, issuing, managing proceeds, tracking performance,

and reporting on green, social or sustainability-focused products?

69 Does the Framework require/ask FIs to appoint an independent external reviewer to confirm that the FI’s internal framework meets the
requirements of the recognized national framework and regulations, or aligns to international standards?
70 Does the Framework require/ask that FIs create incentives for managers to increase sustainable loans or investments in the portfolio?
Tracking, reporting, and 71 Does the Framework require/ask FIs to publish annual updates on the performance and impacts of the sustainability instruments in
disclosure compliance with relevant national and/or international standards?
72 Does the Framework require/ask FIs to obtain and disclose independent review of metrics reported annually in relation to the social and
environmental outcomes and impacts achieved through the sustainability instruments?
73 Does the Framework require/ask FIs to report to the regulator(s) or industry association(s) on allocation and/or outcomes of green, social,
and/or sustainability loans?
74 Does the Framework require/ask FIs to report to the regulator(s) or industry association(s) on green, social, and/or sustainability bonds or
other positive impact investments?
75 Does the Framework require/ask FIs to report publicly on their green, social, and sustainability-focused finance activities and positive
outcomes or impacts (i.e. not only to the regulator or shareholders)?

19
Figure 1: Overall Progression Matrix Milestones

Figure 1: Overall Progression Matrix Milestones Maturing

Figure 5: Overall Progression Matrix Milestones
Implementation
Preparation Consolidating Maturing
Mainstreaming
Behavioral Changes
DevelopingImplementation
Advancing
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Figure 2: Progression Matrix Milestones – Pillar 1: ESG Integration

Figure 6: Progression Matrix Milestones – Pillar 1: ESG Integration
Figure 2: Progression Matrix Milestones – Pillar 1: ESG Integration
Maturing
Implementation
Preparation Consolidating Maturing
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Figure 3: Progression Matrix Milestones – Pillar 2: Climate Risk Management
Figure 3: Progression Matrix Milestones – Pillar 2: Climate Risk Management
Figure 7: Progression Matrix Milestones – Pillar 2: Climate Risk Management
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financial institutions practices. in relation to Climate
financial institutions
managing climate-related on Risk Management and
managing climate-related Risk Management
the resulting and
benefits.
physical and transition the resulting benefits.
physical andwith
risks in line transition
the
risks in line with the
new expectations in the
new expectations
national framework. in the
national framework.

Figure 4: Progression Matrix Milestones – Pillar 3: Financing Sustainability

Figure 8: Progression
4: Progression Matrix
Matrix Milestones
Milestones – Pillar
– Pillar 3: Financing
3: Financing Sustainability
Sustainability

Maturing
Maturing
Implementation
Implementation Mainstreaming
Preparation Consolidating Mainstreaming
Preparation Consolidating Behavioral Changes
Developing Advancing Behavioral Changes
Developing Advancing
Commitment Formulating
Commitment Formulating A comprehensive The national frameworks
A comprehensive
national initiative or The national frameworks
for Financing
A national framework Implementation tools national initiative or for Financing are aligned
The financial sector A formal initiative A national set of frameworks Sustainability
The financial sector A formal initiative is in place framework
that Implementation
and initiatives are tools
set of frameworks Sustainability are aligned
regulator or industry is in progress is in placeregulations
that and initiatives are are in place aimed at with international good
regulator or has
industry is includes in place, such as
association made to in progress
develop a includes regulations in place, such as
are in placeall
supporting aimed
partsatof with international
practice expectationsgood
association has made to develop a or guidance for the guidance,guidelines, supporting
a public commitment policy, regulation, or guidance for to
the guidance,guidelines, the financialallsystem
parts of practice expectations
and national sustainable
atopublic commitment policy, regulation, financial sector taxonomies, the financialfinancial
system and national sustainable
develop a policy, guidelines, or financial sector to taxonomies, to promote development plans; and
to develop guidelines,
a policy, guidelines,principles
or promote financial reporting templates, to promote financial development
regulation, voluntary promote financial reporting templates, flows to green, social, or are consistentplans;
acrossand
regulation, flows to green, social, training, online tools,
or voluntaryguidelines,
principles voluntary
to promoteprinciples
financial flows to green, social, training, online tools,
flows to green, social, or
sustainability-focused are consistent
different parts ofacross
the
or voluntaryfinancial
principles to promote financial or sustainability- and supervisory sustainability-focused different
to promote flows to green, social, or sustainability- and supervisory projects and sectors. financial parts
sector.of the
to promote financial flows to green, social, focused projects and instructions to help projects and sectors. financial sector.
flows to green or or sustainability- focused projects and instructions
flows to green or or sustainability- sectors. the financialto help
sector The national Local financial institutions
sustainability-focused focused projects and sectors. the financial sectorflows The nationalcover all Local financial institutions
sustainability-focused focused promote financial
projects and sectors. sectors. projects and A taskforce, working promote
frameworks demonstrate that
projects and sectors. sectors. A taskforce, working to green, financial
social, orflows frameworks cover all
three cross-cutting demonstrate that
they have embedded
group, or institution to green, social, or
sustainability-focused three cross-cutting theyrequirements
have embedded
Initial awareness Preparations include group, or with
institution areas of Financing the for
Initial is tasked sustainability-focused
raisingawareness
and knowledge Preparations include
research, surveys, is tasked with projects and sectors. areas of Financing
Sustainability: the requirements
Financing for
Sustainability
raising implementation projects and sectors.
sharingand knowledge
is being research, surveys,
multi-stakeholder implementation
Sustainability:
1. strategic alignment, Financing Sustainability
in their operations,
sharing is being multi-stakeholder and/or supervision Financial institutions 1.2. strategic
organized by the engagement and/or and/or supervision Financial regulatoryalignment,
and in their operations,
portfolio, products,
organizedorbyindustry
the engagement and/or and is supported report on institutions
their 2. industry
regulatory and portfolio, products,
regulator awareness raising for and is supported report on their association and services and
regulator or industry awareness by regulators and approach to Financing
association. the financialraising
sector.for by regulators and approach to Financing
industry
actions, andassociation and services and
are reporting their
association. the financial sector. industry. Sustainability in
industry. Sustainability in 3. actions, and of FI
expectations are reporting publicly.
performance their
line with consistent 3. expectations of FI performance publicly.
Activities include line with consistent actions.
Activities reporting instructions actions. Extensive data are
awarenessinclude
raising reporting instructions Extensive
awareness raising or templates provided Consistent and becoming data are on
available
and capacity or
by templates provided Consistent
and capacity the financial sector comparableand data are becoming
trends among available on
financial
building for financial by the
regulatorfinancial
or sector
industry comparable data are trends among financial
building for financial becoming available institutions regarding
institutions on the regulator or industry
association. becoming available institutions regarding
institutions on the on trends in the Financing Sustainability
new expectations association. on trends ofin financial
the Financing Sustainability
new expectations practices and the resulting benefits.
for Financing practices of financial and the resulting benefits.
for Financing institutions in Financing
Sustainability. institutions in Financing
Sustainability. 21
Sustainability and the
Sustainability
resulting benefits. and the
resulting benefits.
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