The HKGFA webinar on Energy Transition in the Global and Hong Kong Contexts was successfully held on 30th June 2021 (Wed) with audiences joining from various financial institutions, banks and asset management companies. The webinar was organized by the Hong Kong Green Finance Association (HKGFA) Green Bond and Products Innovation Working Group.
30th June 2021
Key takeaways from the webinar
- High emitting brown industries account for more than 60% global Co2e emissions and are heading towards a 3°C temperature increase by the end of the century. There is a delicate balance in transitioning brown industries; taxonomy, classification and financing that investors should consider and levers that companies can apply if they are to transform, shrink or shut down if we are to achieve the Paris Agreement climate target goals.
- Investment products that can help advertise strong ESG and climate related achievements is gaining increasing traction. The Hong Kong S.A.R. Government is echoing the market demand with programes such as the new Green and Sustainable Finance Grant Scheme and the Strategic Plan from the Green and Sustainable Finance Cross-Agency Steering Group.
- Transition finance is a key to achieving carbon neutrality targets globally. It is estimated that at least USD $90 trillion is needed in infrastructure investment within the next 9 – 10 years, which would help mobilise the transition of carbon-intensive activities to lower carbon practices.
- The climate transition trajectory as far as it relates to financing should be a material factor instead of an incidental aspect to the future success of the business model. Aspects such as science-based targets and transparency should be taken into account of when considering business model and framework.
Joseph Chan Ho-lim, Under Secretary for Financial Services and the Treasury, the Government of the Hong Kong S.A.R. reflected, “Last December, the Green and Sustainable Finance Cross-Agency Steering Group announced its Strategic Plan to Strengthen Hong Kong’s Financial Ecosystem to Support a Greener and More Sustainable Future, demonstrating our strong commitment and determination in boosting investments conducive to low-carbon transformation in Hong Kong.”
Chaoni Huang, Executive Director, Head of Sustainable Capital Markets, Global Markets Asia Pacific, BNP Paribas; Vice President and Secretary General, HKGFA highlighted, “With China and HK SAR committing to net zero by 2060 and 2050 respectively, while current green and climate finance tools are critical, we need new tools such as climate transition financing for industries that are historically high-emitting, or that face constraints to decarbonize. HKGFA’s paper Navigating Climate Transition Finance aims to create a framework that market authorities and participants can consider in defining an operational structure for climate transition finance, particularly in China and Hong Kong SAR.”
Cédric Merle, Head of the Centre of Expertise & Innovation – Green & Sustainable Hub, Natixis, suggested, “By transition, we mean the interim period and process by which a company transforms its business model and activities to adapt to a carbon-constrained world.”
Thomas Girard, Head of Green & Sustainable Syndicate, Natixis mentioned, “Asset Owners and Asset Managers that are members of the various Net-Zero alliances and initiatives struggle to define and standardize their low-carbon investment strategies and their pathways to Transition. Disclosure on their investments’ carbon footprint is a prerequisite to fulfil this task.”
Ricco Zhang, Senior Director of Asia Pacific, International Capital Market Association (ICMA); Green Bonds and Product Innovation Working Group Co-chair, HKGFA, remarked, “The Climate Transition Finance Handbook does not intend to create another asset class of ‘transition bond’ but to comprise disclosure recommendations to facilitate the necessary capital flow to issuers required to implement a transparent and science-based climate transition strategy.”