Hong Kong Green Finance Association (“HKGFA”) held its Third Annual Forum titled “Financing Carbon Neutrality in Asia” in Hong Kong on 30 November. The forum highlighted the importance of global, regional, and local cooperation required to mobilise the trillions of dollars to achieve the region’s carbon neutrality goals.
The hybrid event held in Hong Kong gathered the Hong Kong government agencies, regulators, CEOs, green finance industry leaders, and market infrastructure service providers to discuss and share their perspectives on what is required to further develop Hong Kong as a leading green sustainable investment centre.
The Forum attracted 1,653 participants physically and virtually from across Asia. It focused on a range of topics, including international, regional, and mainland China carbon trading markets, transition finance, international cooperation on sustainability reporting standards, and innovative sustainable finance products that can help accelerate the transition to a low carbon economy.
Mr. Paul Chan Mo-po, Financial Secretary, Hong Kong Special Administrative Region (“HKSAR”) said during his opening remarks, “Hong Kong has the wide-ranging expertise to emerge as a green finance hub for the region, as well as a premier financing centre for green enterprises and projects. And it has what it takes and what the world needs to play an important role in combating climate change. We will continue to work in concert with our financial regulators and the industry, taking a multi-pronged strategy to promote green and sustainable finance in Hong Kong.”
Dr. Ma Jun, Chairman and President of Hong Kong Green Finance Association said in his opening remarks, “Hong Kong is in the best position to advance the harmonisation of taxonomies by adopting the Common Ground Taxonomy (“CGT”) produced by the IPSF Taxonomy Working Group co-chaired by China and the EU. For example, Hong Kong can package Chinese green assets based on CGT and sell them to the global market. Hong Kong can also explore ways to further integrate with Greater Bay Area (“GBA”) in green and low carbon development through a unified GBA carbon market, mutual recognition of green building codes and green finance products, launching JV green tech funds, and digitising green assets from China.”
During the fireside chat, Dr. Ma was joined by Mr. Eddie Yue, Chief Executive, Hong Kong Monetary Authority (“HKMA”) to discuss green finance policies and product developments shaping China’s green and sustainable ecosystem, the role that Hong Kong can play in the mobilization of green finance in Asia, and how international and regional efforts can be coordinated to finance carbon neutrality in Hong Kong and beyond.
Mr. Eddie Yue, Chief Executive, HKMA commented, “Transition to a low-carbon future requires substantial investment and could overhaul many businesses’ operations and risk profiles. As an international financial centre, Hong Kong has the responsibility and the capability to support the transition effort not just of our own but also the region, particularly Mainland China. The HKMA will continue to work with the industry to make sure that our financial services sector is able to face up to this challenge and seize the related opportunities.”
Mitigating climate risk has become a priority for governments and regulators globally. The Securities and Futures Commission (“SFC”) has worked closely with fellow regulators, government, and industry on the improving international comparability, consistency, and interoperability of climate-related disclosures.
Mr. Ashley Alder, Chief Executive Officer, SFC said, “A vast amount of private funding will be needed to manage Asia’s transition to a sustainable future. With the large size of Hong Kong’s financial footprint and its unique role intermediating financial flows between the Mainland and the rest of the world, we can play a pivotal role in this effort.”
HKGFA’s eight working groups have worked extensively in the past year in promoting green finance principles and best practices to enhance Hong Kong’s position as a leading international sustainable financial centre. As the most dynamic green finance association in the region, it was involved in over 60 sustainable industry capacity-building events this year, up 100% from last year, to address the Environmental, Social, and Governance talent gap needs in Hong Kong. In addition, HKGFA continues to work with the HKSAR government, policymakers, regulatory bodies, and the private sector in advancing Hong Kong’s role as an influential global green finance centre.
The work achieved in the past year was highlighted through the four panel discussions on topics covering:
- The Role of Carbon Markets to Accelerate Carbon Neutrality: industry experts and practitioners discussed how international compliance and voluntary carbon markets operate in practice, the role of Mainland China’s National and Regional emission trading systems in incentivising low carbon activities, and how Hong Kong can facilitate the development of carbon market trading platforms in GBA and serve as a gateway into Mainland China.
- Navigating climate-neutral targets, climate data analytics, disclosure requirements: Investors and service providers shared forward-looking investment perspectives on gaining exposure to assets aligned with net zero targets, collaboration between policymakers and market participants to integrate TCFD, ISSB, and IOSCO regulatory requirements, and the development of benchmarks and methodologies that can help measure climate performance of their portfolios.
- The demand for and role of transition finance and new sustainable finance products: participants highlighted the risks of not helping carbon-intensive industries transition towards net-zero for our ecosystem and financial systems and the importance of a framework of principles and operational infrastructure.
- Innovation in climate solutions: panelists discussed the latest trends of green finance innovation including life cycle assessments, integration of green finance in the supply chain, nature-based solutions, digital green verification, data analytics, and tokenisation of green assets.
HKGFA and its partners also shared some preliminary findings from three on-going research projects. The first is the industry-led research on “Developing Hong Kong as a leading investment fund hub for green infrastructure financing”, which proposed a series of measures to enhance the legal, tax and regulatory environment for green investment funds established in Hong Kong. The report also discussed the feasibility of expanding the definition of infrastructure in Hong Kong tax law for private funds, and establishing a taxonomy for green infrastructure projects.
The second report previewed at the forum is third phase of the Green Buildings Project titled “Decarbonising the building sector in the GBA,” led by the HongKong2050isNow and in collaboration with Greater Bay Area Green Finance Alliance (“GBA-GFA”). After extensive review of GBA’s building energy consumption data, financial incentives and building sector policies, the research group found that regions in GBA are faced with similar challenges to decarbonising buildings, and a future direction for the building sector to achieve net-zero is the engagement with carbon markets.
Authors of the third report, including World Resources Institute (“WRI”). provided a preview on a new study that dives into the GBA carbon neutrality goal by developing a decarbonisation pathway for GBA and aims to provide sector-specific solutions and identify transition finance opportunities.
At the closing session of the forum. HKGFA Chairman Dr. Ma Jun stated that “HKGFA will continue to focus its efforts in strengthening Hong Kong’s role and position as a regional and sustainable financial centre, deepening Mainland collaboration through the GBA-GFA and Green Investment Principles, in addition to driving the development of the carbon trading market, innovative green and sustainable products, capacity building and data advancements.”
The Annual Forum was sponsored by Bank of China (Hong Kong) Limited, The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank, PwC, FTSE Russell, Hang Seng Indexes Company Limited, Moody’s ESG solution, and Natixis Corporate and Investment Banking.
About Hong Kong Green Finance Association
Founded in September 2018, Hong Kong Green Finance Association (HKGFA) provides a unique platform that supports the development of green finance and sustainable investments in Hong Kong and beyond. It aims to mobilise both public and private sectors resources and talents in developing green finance policies, to promote green finance business and product innovation within financial institutions. HKGFA’s main goal is to position Hong Kong as a leading international green finance hub by providing greater access and opportunities for Hong Kong’s financial institutions to participate in green financing transactions locally, in Mainland China and in markets along the Belt & Road. This is in line with the global trend of implementing the UN sustainable development goals and the Paris Agreement.
HKGFA’s key activities are organised through eight working groups, namely Green and Sustainable Banking, Green and Sustainable Private Equity, Green and Sustainable Real Estate, Green Bonds and Product Innovation, ESG Disclosure and Integration, Policy Research and Dissemination, Green and Sustainable Insurance, and External Collaborations. Please visit https://www.hkgreenfinance.org/ for more information.