Hong Kong burnishes role as Asia’s green financial hub

[HONG KONG] Hong Kong is burnishing its credentials as Asia’s pre-eminent inexperienced monetary hub, having organized the issuance of over a 3rd of Asia’s inexperienced finance in bonds and loans, stated the top of the town’s de facto central financial institution.

Eddie Yue, chief govt of the Hong Kong Monetary Authority (HKMA), touted the expansion in its issuance of inexperienced and sustainable debt, which grew from simply US$4 billion in 2020 to greater than US$80 billion in 2022.

He was talking on the inaugural Climate Business Forum: Asia-Pacific on Tuesday (Feb 27), an occasion that’s a part of the continuing Hong Kong Green Week organised by the HKMA.

Speakers on the convention stated there was ample room for development on this space, the place the area has been lagging Europe and America.

Anna Ng, regional head of operations of the Washington-based International Finance Corporation, informed the viewers that “financing remains very critical and challenging, particularly for small and medium-sized enterprises that lack resources”.

Globally, the inexperienced transition is predicted to be again on monitor after a Covid-induced stoop, reaching 820 billion euros (S$1.2 trillion) in 2024.

This is regardless of it flattening in 2023, with slightly below 800 billion euros in sustainable bond issuance, based on knowledge from Credit Agricole CIB ESG Fixed Income Research.

Hong Kong’s inexperienced debt was largely within the type of inexperienced bonds and sustainability-linked loans, based on ANZ. 

Yue acknowledged each the vulnerability of the Asia-Pacific area to local weather impacts and its contribution to the worsening drawback.

He cited figures by the United Nations Development Programme, which confirmed that the area has suffered, on common, six pure disasters a yr during the last 30 years.

This is about twice the quantity in creating international locations of Latin America and the Caribbean, and about thrice as many as in Sub-Saharan Africa. At the identical time, he famous that the area is producing greater than half of the world’s carbon dioxide emissions.

“For the region as a whole, we need to reduce emissions, adapt to climate change, build resilience, and embrace innovation,” he stated.

“As an international financial centre, and also the gateway linking up mainland China and the rest of the world, and also being Asia’s sustainable finance hub, (Hong Kong) can do a lot more in climate finance.” 

In inexperienced finance, he highlighted these initiatives: a government-led inexperienced and sustainable finance cross-agency steering group arrange in 2020 to coordinate efforts throughout the monetary sector; a three-year inexperienced and sustainable finance grant scheme launched in 2021 to cowl bills for bond issuers and mortgage debtors in acquiring inexperienced financing; and a global voluntary carbon market, launched in 2022 by the Hong Kong Stock Exchange. 

Observers stated probably the most impactful was more likely to be the forthcoming inexperienced taxonomy, a voluntary inexperienced classification framework to assist corporations establish and classify what is taken into account inexperienced actions. 

The inexperienced classification framework might want to fulfill each the wants of Hong Kong and mainland-based corporations, stated Ma Jun, chair and president of the Hong Kong Green Finance Association.