China State of Decarbonization & Sustainable Finance Overview

China’s energy transition and sustainable finance ecosystem is vast and multifaceted, with meaningful implications for both generalists and sustainability-focused investors. This report provides key indicators and investment insights to help track and interpret that evolution over time.

China’s commitment to the energy transition and ongoing reform related to sustainable finance has important implications for global investors. As the world’s second-largest economy, China accounts for 17% of global GDP¹ and approximately 30% of global carbon emissions², making its decarbonization progress critical to achieving worldwide climate goals related to the Paris agreement.

However, China’s representation in the MSCI ACWI Index³, a global investment benchmark, remains disproportionately low at around 3%. We believe this gap, coupled with a tendency of global investors to underweight China in recent years, highlights the importance of on-the-ground research in China.

At Neuberger, our local presence in China gives us insights into the rapidly evolving sustainable finance landscape in the country. In this whitepaper we will provide a comprehensive overview of the sustainable finance landscape in China, particularly related to climate transition.

This paper has three key sections:

• We introduce a set of key indicators to help investors monitor progress and assess the implications of China’s energy transition over time.
• We analyze climate-aligned investment opportunities in China through two related perspectives: 1) green revenue percentage as a proxy for climate solutions and 2) climate transition alignment through a transition finance lens. Both leverage global frameworks and our on-the-ground research.
• We provide an overview of China’s sustainable finance policies. Given China’s governance model, we believe it is important for investors to understand the multitude and evolution of China’s sustainability-related policies.

Overall, while China’s decarbonization pathway may not be aligned to a 1.5c degree world, its intention and actions to reduce economy-wide greenhouse gas emissions are clear in our opinion. A sustainable finance study tour hosted by Neuberger in June 2025 across multiple Chinese cities demonstrated clear alignment and coordination across a wide range of Chinese stakeholders (regulators, banks, listed companies and institutional investors), potentially allowing for meaningful real-world emissions reductions over time.