Chinese President Xi Jinping has set a target for China to reach “peak” emissions by 2030 and to become carbon neutral by 2060. Meeting that goal is ambitious—and expensive. Investment bank China International Capital Corporation estimates China needs a staggering $21 trillion of debt financing over the next 40 years to meet its climate goals.

One way to chip away at that sum is cooperation between China and the European Union to establish a common green investment framework.

“In China, the green finance market is already large," but to achieve that market's full potential, China must "invite all [global] investors, not only Chinese investors,” said Toshiyasu Iiyama, senior managing director and head of China operations at Japan's Nomura Holdings.

China’s Central Bank announced in March that China and the EU are targeting a jointly recognized classification system for green investments by year-end. “We have been working on…creating a common ground for a standard working taxonomy for one year. Phase one will complete by the end of 2021,” said Ma Jun, president of the Institute of Finance and Sustainability.

Iiyama and Ma made their remarks Friday during the Fortune Global Centennial Enterprise Forum, a series of virtual conversations held in conjunction with the Qingdao Multinationals Summit, which convened executives from hundreds of global businesses with operations in China.

China's green bond market—the world’s second-largest with a value of $113 billion—is already quite open, with around 20% funded by foreign investors, says Ma. But common China-EU standards would boost its bilateral capital flows. European issuers could issue green bonds in China, and vice versa.

In addition to green bonds, China is developing another market that's intended to cut emissions. On Friday, China launched its carbon trading market, the largest in the world, where companies can buy and sell carbon credits. It took a decade to get the carbon market off the ground, but critics say it's already in need of reform, arguing that its penalties are too skimpy to incentivize lower emissions.

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Ma noted that China's green finance system is now in the somewhat early stage of generating investor awareness and appetite for green investment products. "We need to incentivize all low-carbon [economic] activities," Ma said. "Currently there aren't enough incentives for private sector participation."

But, Iiyama says, research shows that green products can yield good returns, which indicates the industry has improved in recent years.

“Green finance is [now] an inevitable trend that no single company can ignore,” Iiyama said.

This story was originally featured on Fortune.com