The Hong Kong Monetary Authority (HKMA) on Tuesday launched new measures to promote green finance, echoing China’s plan to support Hong Kong to become a green finance hub for the Greater Bay Area.
“Climate change is one of the major risks threatening the well-being of mankind. It must be tackled on a global basis and across different sectors of the economy,” HKMA chief executive Norman Chan Tak-lam said at the opening speech of The HKMA Green Finance Forum on Tuesday.
“How the banking and financial system operates will clearly have an impact on the way in which climate risk is managed or reduced,” he said.
HKMA also launched three new measures in support of the mission to reduce climate change risks and to achieve sustainable finance. It will develop a common framework to assess the “Greenness Baseline” of individual banks; adopt a principle that priority can be given to green and Environmental, Social and Governance (ESG) investments if the long term return is comparable to other investments on a risk-adjusted basis; and establish the Centre for Green Finance (CGF) under the HKMA Infrastructure Financing Facilitation Office.
Between 2016 and 2030, about US$6.9 trillion a year will be needed for green infrastructure investment globally, according to the estimation of the Organization for Economic Co-operation and Development (OECD). In 2017, global green bond issuance totaled US$161 billion.
On Sunday, Financial Secretary Paul Chan Mo-po said in an article in his official blog that newly-issued green bonds in Hong Kong amounted to US$11 billion in 2018, which was three times the amount in 2017. Chan said the Hong Kong government will continue to promote Hong Kong as a green finance hub and encourage the financial sector and the public to support the development.
On Tuesday, the Hong Kong government announced that it expects to attend a series of investor meetings in relation to a proposed green bond offering. Subject to market conditions, a USD-denominated green bond offering may follow, according to a statement. HKMA is acting as the government’s representative in this matter.
Mary Huen Wai-yi, chairwoman of the Hong Kong Association of Banks (HKAB), said the HKAB welcomes the HKMA’s new measures to promote green finance, which nowadays is a global trend. Huen said the HKAB had last month set up a commission for green finance development.
Helen Wong Pik-kuen, chief executive for Greater China at HSBC, said the bank has so far reached 30% of its target of issuing US$100 billion of sustainable banking and green finance products by 2025. Gao Yingxin, vice chairman and chief executive of Bank of China (Hong Kong) Limited, said the bank has already included green finance principles in its lending businesses.
The latest green finance development in Hong Kong came after the central government launched the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area in February.
The plan said the central government supports the development of Hong Kong as a green finance center in the Greater Bay Area, and set up an internationally recognized green bond certification institution. The central government also supports Guangzhou in developing a pilot zone for green finance reform and innovation, and to study the establishment of an innovative futures exchange that takes carbon emission as its first trading commodity.