HK, Mainland China collaborate on green financing for Greater Bay Area (只有英文版)

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Hong Kong, 7 September 2020

Hong Kong and mainland China have joined forces to establish the Greater Bay Area Green Finance Alliance, which aims to facilitate the growth of sustainable projects.

The Hong Kong Green Finance Association announced the launch of the alliance on Friday with Paul Chan Mo-po, financial secretary for the Hong Kong government. The alliance will be tasked with promoting green finance standards and certification across the Greater Bay Area, which includes Hong Kong, Macau and Guangzhou.

The alliance consists of the Hong Kong Green Finance Association, the Green Finance Committee of Guangdong Society for Finance and Banking, the Green Finance Committee of Financial Society of Shenzhen Special Economic Zone and the Macau Association of Banks.

Its role will be to foster research and nurture green investments for the Greater Bay Area to take advantage of the demand for such investments in Guangdong, as well as green financing opportunities in Hong Kong and Macau.

The alliance is currently supporting five green finance projects. These include the Green Building Project, the Blockchain Solar Project and Carbon Connect led by Hong Kong, the Research and Practical of Solid Waste Disposal project supported by Shenzhen and the Green Supply Chain Financing Action Guide led by Guangdong.

The Green Building Project is affiliated with Hong Kong 2050 is Now and seeks to decarbonise the Greater Bay Area.

The Blockchain Solar Project marries green energy policy and financial technology solutions to create green financing innovations that ramp up smaller-scale solar energy initiatives in densely populated urban centres.

The Carbon Connect Project, meanwhile, aims to make it easier for foreign investors to tap China’s carbon market through the Greater Bay Area, with Hong Kong serving as a trading centre for this market.

Ma Jun, chairman and president of the HKGFA, noted that the first five projects started by the alliance with Guangdong, Shenzhen, Hong Kong and Macau have “already seen preliminary success”.

“We hope that the alliance will continue to steer green innovation with the support of the governments across the border and fully leverage the professional knowledge and resources across all parties for better collaborations,” Jun adds.

The establishment of the Greater Bay Area Green Finance Alliance comes as regulators in the region have been stepping up their support for sustainable investment initiatives.

In November last year, Hong Kong Monetary Authority deputy CEO Howard Lee said the administration had been taking “concrete steps” in green financing, and would prioritise environmental, social and governance factors in its investment decision-making process.

At the time, Lee noted that, overall, Hong Kong’s green financing was improving. In the green bond space, for example, US$11 billion in green bonds was arranged and issued in Hong Kong, jumping from US$3 billion in 2018.

Hong Kong’s Securities and Futures Commission has this year also compiled a new list of 30 verified ESG funds in an attempt to combat the greenwashing and mislabelling of investment strategies in the territory. The regulator took this action after a steady rise in the number of fund applications proclaiming ESG credentials over the past few years.

Julia Leung, the SFC’s deputy CEO, also noted in May that the regulator plans to work with experts from Europe and mainland China on green taxonomies and disclosure standards.

Hong Kong’s government announced that its 2020-2021 budget included plans to issue green bonds worth HK$66 billion (US$8.52 billion) over the next five years.

In May, the HKMA and SFC kicked off the Green and Sustainable Finance Cross-Agency Steering Group to oversee the management of climate and environmental risks in the financial space. The group also seeks to speed up expansion of green and sustainable finance in the territory and to back the government’s climate strategies.

“Guangdong, Hong Kong and Macau are a closely connected region, where environmental qualities are interlinked and global climate change demands a co-ordinated response,” Wong Kam Sing, secretary for the environment for the Hong Kong Special Administrative Region, said.

SFC CEO Ashley Alder noted that the area that makes up the alliance represents 12% of China’s gross domestic product.

“Environmental and climate risks pose serious strategic challenges and opportunities for businesses everywhere,” Alder said. “To enable economies to mitigate and adapt to these long-term risks requires urgent, co-ordinated efforts from governments and financial regulators.”

The importance of green financing will only grow globally as world economies adjust to a post-Covid-19 reality, Laura May-Lung Cha, chairman of Hong Kong Exchanges and Clearing, said.

“HKEX is fully committed to promoting sustainability, particularly [ESG] stewardship among listed companies, and the development of financial products that underpin the global resiliency of financial markets,” she said. “We are delighted to join the alliance, which will act as an excellent platform for cross-agency collaboration in the pursuit of a better, more sustainable economy in the region.”

The People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange have released financial support guidelines focused on developing the Greater Bay Area.

“Policies such as establishing a refined green finance co-operation working mechanism and constructing a Guangzhou Futures Exchange in the near future aims to support Hong Kong to become a Greater Bay green finance hub,” the release notes.

Source: Ignites Asia Website

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