Stronger Together: An Interview with Cary Krosinsky

“It’s important to just step back and understand that we have things to teach each other.”

—Cary Krosinsky

In this interview, Cary shared his vision for promoting sustainable finance collaborations between China and the U.S. He highlighted China’s commitment to sustainable development in recent years, identified lessons that each country can learn from one another, and emphasized the importance to clear misunderstandings and build trust between global leaders.

Cary Krosinsky is a widely respected educator, leading author, and advisor on sustainable finance whose ongoing teaching includes popular courses at Yale, NYU, and Brown (ENVS 1545: The Theory and Practice of Sustainable Investing). He is the author of Modern China: Financial Cooperation for Solving Sustainability Challenges and an advisor for UCBRC.

What are some of the successes and failures that China has experienced when trying to balance between environmental impact and economic development?

It's really interesting to see that China has become a global leader when it comes to green finance policy—in particular, issuing green bonds, being very creative on developing policies and incentivizing banks to deal with more green instruments. There is also talk about requiring 20% of finance in China to be green. You don't see things like that anywhere in the world, as far as I can tell, and these are just some examples. We have a foreword in our book (Modern China) from Dr. Ma Jun, the head of green finance in China, [where] he talks about the steps that he has taken to develop a top-down approach and a political consensus on green finance. The government really wants to deliver the results that it is promising to its people, which is a great thing for the country and the world.

What was China’s biggest leap in promoting green finance?

Probably the biggest moment was almost five years ago, when China was preparing to host the G20. China wanted to show the world that it was committed to the idea of green. We had the Paris Agreement at the end of 2015, and the world in general was going to move more towards climate change commitments. China wanted to show that it was doing its part, and that was probably the moment that really leapfrogged the country into wanting to be seen globally as a leader.

But there have been other things as well. Everyone in China has apps on their phone that tell you the PM2.5 level in the air. Step outside in Beijing in the winter, and you would notice that the air quality is pretty poor for the most part. There are definitely concerns about freshwater and challenges about whether to trust food as well. I think as China has risen up and become the world's largest middle class, people who have this ability to use the voice of their consumption, in dollar or RMB, are now able to be seen and are demanding results.

The good news for those of us who care about climate change is that, in effect, the government is on the hook to deliver a result that its people demand. It's a really interesting dynamic when you think just about political structures and what it takes to get things done. 40 years ago, coming out of a very different time, China went through an enormous transformation, and China learns from mistakes, as we saw with the pandemic. China's willingness to transform is unlike any country in the world as far as I can tell.

Why did you decide to write Modern China right now as opposed to five years ago? And what would have been different if the book was written five years ago?

I've been watching for the right moment, and things have accelerated in Asia more generally, not just in China. Also, other countries are starting to feel pressured to do more on the subject, such as Indonesia when it comes to deforestation, and so on. We've been seeing that Asia is ready for this. 

This is my seventh book, and I had the opportunity to work with some wonderful Brown students. My own involvement in China has also accelerated in the last few years. We first hosted an event in Shenzhen, last January, as the Sustainable Finance Institute.

You mentioned that there are a lot of incentives on the demand side. Could you give some specific examples in terms of the government support that China provides for enterprises who take on green initiatives, and how this government support varies from the US system?

I think it's a critically important question. It will vary by industry and by sector. We've had students in our classes at Brown whose family business was involved with making boilers, and they went out of business. The [Chinese] government just decided to mandate a change. Whether it's the electrification of buses or creating incentives for people to buy green cars so they can drive them more frequently in cities, China's been very creative with supportive policy. This supportive policy encourages demand shifts because otherwise, people who are in the middle class will want the same things. Unless people are incentivized, they won't tend to act.

These incentives are what’s lacking in the West, whether it's in the US or anywhere else. It's really all about individual choice and collaboration. But to a larger extent, there's less supportive policy coming out of even Europe. You hear a lot about European green policies, but they don't really manifest in change in many cases. In China, this top-down approach has been quite beneficial. You definitely need the consensus of people [because] any government cannot go ahead with a policy unless the people consent, whether in China or in the West. And that's what's lacking here in the U.S. We don't have that consensus on climate change. We have a growing consensus on other issues like gay marriage or the legalization of marijuana. Once those things became things most people wanted, then you started to get the law and the policies that followed. Interestingly, there's a greater recognition that climate change is a serious issue to act on in China than there is in the U.S. For whatever reason, that's kind of where we are.

What are some effective forms of bringing people together in terms of international collaboration to achieve the common goal of sustainable development?

Thank you for that question. Very important to me. It's why we hosted an event at Yale in September of 2017. The premise was these environmental social governance (ESG) issues are real issues requiring societal challenges. To solve them, we need to have case studies of what's working, and we need people to work together. One thing that we can do is this type of event, but another is that we can bring people together globally, who think the same and who can see that we need to solve these problems, and that will drive a better economy, better opportunities, and better jobs. We can build that consensus, globally. That's a really big emphasis in my own work and thinking, and it's the whole idea behind UCBRC. It's also very much something I think we need to do in the industry—to get individuals together and show what we all believe in collectively.

What do you see as the main hurdles for these collaborations in the future? And how can we overcome these hurdles?

One word: misunderstandings. The US largely does not understand China and where China is today. Very few people have been to China, but once you visit, you will see it. One of the main reasons for our book was to try to help explain what's really happening in China. Similarly, it will be helpful for China to better understand the U.S.

The same goes for the world of sustainable finance: people have this notion that, for whatever reason, you're asking me to give something up with sustainable finance—if I'm going to take the environmental issues into consideration, that means I'm giving something up. That's just not true. These myths, these mantras, they actually rise up out of fact in some ways. There are a lot of people who have tried to do good work, and there are people who have not tried to do good work. How do you know what to trust? If we can actually get together and understand each other globally, we're much stronger together as global people who are all seeking the same positive outcomes. And what does that look like? How do we achieve those goals together? How can we develop that trust or “guanxi” (relationships) and learn from each other about what's working? After all, China has five thousand years of history. It’s important to just step back and understand that we have things to teach each other. Certainly, here in the US, we have a lot to learn.

Interviewer: Jane Yang

Editor: Emily Zhang, Jackson Barkstrom