Greater Bay Area to Become the World’s Most Dynamic Green Finance Market, according to Hong Kong Green Finance Association’s Annual Forum
HKGFA to Work with Greater Bay Area Cities to Establish Green Finance Alliance
Hong Kong, 23 September 2019 – Hong Kong, in joint effort with Shenzhen, Guangzhou and Macau, have the potential to create the world’s most dynamic green finance market in the Greater Bay Area in the coming years], according to distinguished participants at the Hong Kong Green Finance Association (HKGFA)’s Annual Forum. Over 300 delegates, including HKGFA members from the worlds of policy, business, non-profit organisations, academia and the media, attended the event, the second such event since the Association launched last year.
Entitled “Fast Tracking Green Finance for the Greater Bay Area”, the event heard the views and insights of professionals actively involved in the development of green finance about the opportunities and challenges for the asset class in the region. These included Hong Kong’s Financial Secretary Paul Chan Mo-po, who opened the Forum.
In his remarks, Mr Chan said, “On its first anniversary, we applaud the Hong Kong Green Finance Association’s considerable efforts this past year in promoting Hong Kong as an international hub for green finance. Thanks to the Association and the active participation of Hong Kong’s green finance community, we have made significant strides in sustainable finance over the past year.”
He added, “The Outline Development Plan for the Greater Bay Area promulgated earlier this year further supports Hong Kong’s development as the Greater Bay Area’s driver in the financial services sector, and green finance is definitely included. We will count on the Association to continue to create opportunities for Hong Kong’s financial institutions to expand participation in green finance locally, in the Greater Bay Area, throughout mainland China and other markets.”
Dr Ma Jun, Chairman and President of the HKGFA, remarked, “As a rapidly growing green finance market, Hong Kong will play a key role in the development of the Greater Bay Area as a leading centre for green finance in Asia, with great potential to grow the city’s bond and project finance markets. The government’s blueprint for the Greater Bay Area provides a golden opportunity for the green finance sector in the region, stimulating further knock-on growth for Hong Kong’s banking, investment management, insurance and private equity industries. The Forum heard an interesting range of views on what the priorities should be for the sector and policymakers in this exciting green transformation.”
HKGFA also announced the plan to establish the Green Finance Alliance at the event to facilitate the greening of the Greater Bay Area. In collaboration with Guangzhou Green Finance Committee, Shenzhen Green Finance Committee and Macau Association of Banks, this platform will host research projects and incubate some green investment projects in four key areas, namely greening the supply chain in Guangzhou, major waste treatment facilities in Shenzhen, standardised water risk analysis and green building initiatives, that will benefit the Greater Bay Area, leveraging the vast green investment demand in Guangdong and green finance capacities in Hong Kong and Macau.
As the growing demand for financing a global transition into green economies gathers pace, green bonds have become a source of significant growth within the global bond market and their gross issuance continues to rise. In support of the promotion of green finance and green bonds, the HKGFA published the guidelines at the event today on green bonds and how to prepare impact assessments for them. The Green Bonds Guide, supported by and Hong Kong Exchanges and Clearing Limited (HKEX), sets out the core principles for green bonds, how to facilitate the Hong Kong green bond market and guidance on listing green bonds in the city. HKGFA also issued the Environmental Impact Assessment Guidance, which was written by the Hong Kong Quality Assurance Agency (HKQAA), to provide guidance to bond issuers or parties involved in bond issuances on how to conduct impact assessments for green bonds.
The event also unveiled the findings of the HKGFA and CECEP Environmental Consulting Group Limited (CECEPEC) public research report “ESG New Era: Corporate Insights and Facts in China Market”, which surveyed and interviewed 50 companies on their views on and understanding of ESG issues. It revealed that 70% of respondents believe that companies that attach importance to ESG have greater comparative advantages and are more competitive in the marketplace as compared with their peers. In addition, more than 90% of respondents expressed that they had already incorporated ESG into their corporate governance or considered to incorporate ESG into their corporate governance practices over the next three years.
In its first year, the HKGFA is proud to have hit the ground running with significant progress already made towards developing Hong Kong’s green finance market. The membership has grown from 90 to 113 institutions, which now include all major banks in Hong Kong, as well as many asset managers, insurance companies, green companies and third-party service providers.
Furthermore, the Association is pleased to have promoted the development of green finance and sustainable investments in Hong Kong and beyond through a wide range of forums and meetings throughout the year. These events have mobilised both the public and private sectors to develop policy research, including a joint briefing paper by the Climate Bonds Initiative and the Hong Kong Monetary Authority on Hong Kong’s green bond market. It has also overseen the drafting of green finance principles, facilitated product innovation and matchmaking, including matchmaking 60 green project owners from mainland China at 12th Asian Financial Forum and 150 green projects to investors at the Kubuqi International Desert Forum, educated professionals from across different sectors, and enhanced international cooperation.
The Hong Kong government and its regulators have taken many great strides in the past year in developing Hong Kong into one of the most dynamic and transparent green finance markets in the world. Hong Kong government issued the first US$1 billion inaugural green bond in May this year under the HK$100 billion Government Green Bond Programme, the proceeds for which will be used to finance or refinance public works projects that provide environmental benefits and support the sustainable development of Hong Kong. The government also provides subsidies to incentivise issues via the Green Bond Grant Scheme and Pilot Grant Scheme. In support of the mission to reduce climate change risks and achieve sustainable finance, the Hong Kong Monetary Authority (HKMA) launched three sets of measures in areas including green and sustainable banking; responsible investment; and establishing the Centre for Green Finance (CGF) as a platform for technical support and experience sharing for the green development of the banking and finance industry in Hong Kong. HKEX has issued consultation paper on review of the ESG reporting guide and related listing rules to fund managers and listed companies, and HKEX will revise its ESG reporting requirement in 2020.
Looking ahead, Dr. Ma said, “HKGFA will continue to work with the government and regulators to promote Hong Kong’s green bond market, especially for green projects in China and the Belt & Road region. Hong Kong should look to clarify its green framework, adopt green principles, implement risk analysis and incubate green asset managers. As such, the Association will work with HKMA in developing the green banking principles, and work with SFC and HKEX to promote ESG disclosure. We will also leverage the Green Investment Principles to launch a green project database for the Belt and Road initiative. We will continue to organise new events that will create opportunities for members of our Association to collaborate with each other. With our collective efforts, I am confident that we can make Hong Kong one of the most attractive green finance centres regionally and globally.”