BEIJING - The Climate Group said in a report issued on Monday that China should set up an effective institutional governance mechanism for its climate financing sector.

China should upgrade climate financing and improve related policies, said the report, titled "China's Climate Financing Management Mechanism."

The report is the result of research conducted by the non-profit organization as part of its "Shaping China's Climate Finance Policy" project.

"Society has raised high expectations for climate financing and sees it as a breakthrough in fighting climate change," said Wu Changhua, greater China director of the Climate Group.

Since capital is a key factor in climate financing, China will benefit if it moves more quickly to improve related policies, said Wu.

The report said China should set up a measurable and appreciable climate financing mechanism, as well as establish specified funds and a public financing platform for both public and private capital.

Sponsored by the British Foreign and Commonwealth Office, the project is being jointly conducted by the Climate Group and the Research Center for Climate and Energy Finance at China's Central University of Finance and Economics.

The project is exploring key issues in financing the low-carbon sector, including capital requirements, sourcing, fund management and how to attract social capital, said Wu.

The Climate Group works internationally with government and business leaders to come up with policies and technology to cut global greenhouse gas emissions.