Nature Related Sustainable Finance in China 2025

sustainable finance taxonomies, green finance product labels and strategic financial planning (such as the EU Taxonomy and green finance development plans), with a focus on the Chinese market. The analysis examines the extent to which nature- related issues are covered in sustainable finance and ESG policies in China, Europe, Japan and the US. It focuses on whether relevant policies exist, and evaluates the completeness of policy frameworks. Further, using keyword frequency analysis, it measures the extent to which the five drivers of nature change identified by the Taskforce on Nature- related Financial Disclosures (TNFD) – namely climate change, pollution removal, resource use/ replenishment, land/freshwater/ocean use change, and invasive species13 – are mentioned. It provides insights into the gaps and opportunities in the development of policy for nature. (See details in Appendix A.) From this analysis, four key observations emerge: –Diverse approaches: Europe and China have adopted a “top-down” approach, which includes comprehensive policy frameworks that cover the entire finance ecosystem from funding sources to investee companies, complemented by strategic planning, taxonomies, product standards and other infrastructure. Meanwhile, the US and Japan emphasize industry self- regulation and market-driven “bottom-up” characteristics, which result in a more flexible policy landscape that evolves in response to private-sector initiatives rather than an overarching national framework. –Policy maturity: Climate change topics are fully covered in the relevant policies of various economies, demonstrating much greater maturity than other drivers (see Figure 2). –Other drivers of nature change: Within green or sustainable policies, the coverage of other drivers of nature change has been increasing, particularly regarding resource use/ replenishment and pollution/pollution removal. –Biodiversity: Biodiversity has emerged as another key theme in sustainability policies of certain economies, although the level of detail is still variable. Frequency analysis of nature-related topics in sustainable finance policies of four key economiesFIGURE 2 China United States Japan European Union0%10%20%30%40%50%60%70%80%90%100% Climate change Land/freshwater/ocean use changes Resource usage/supplement Pollution/pollution removal Introduction/eradication of alien invasives species62.72%8.40%16.45% 4.85%7.57% 96.06% 65.67%10%4% 4.67%15.67% 59.32%8.81%13.22%16.27% 2.37%2.36%1.57% Source: International Institute of Green Finance (IIGF) analysis. 6