Hong Kong finance chief has promised to bankroll big efforts in green and sustainable finance, adding flesh to the bone of the city’s ambitions to transition into a low-carbon economy and be a leading green finance hub in Asia and beyond. Experts said they believe the move is a well-timed and bold one that must be taken without delay.
The special administrative region government proposed a package of measures that includes the issuance of green bonds of up to HK$175.5 billion (US$22.63 billion) in the following five years for the creation of a citywide green ecosystem
Under the budget for the 2021-22 fiscal year presented by Financial Secretary Paul Chan Mo-po on Wednesday, the special administrative region government proposed a package of measures that includes the issuance of green bonds of up to HK$175.5 billion (US$22.63 billion) in the following five years for the creation of a citywide green ecosystem.
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“Globally, the Chinese mainland, the United States and the Europe collectively have a long-standing strategic focus on green and sustainable finance — an area where major economies are expected to make concerted efforts and create significant synergy,” said Fielding Chen Shiyuan, senior vice-president of strategic planning and corporate development at China Construction Bank (Asia).
“In the coming few years, green finance has what it takes to be the part of the financial services sector that will see the most dramatic growth. For Hong Kong, fueling the city’s ambitions to transition into a low-carbon economy and to be a leading green finance hub in Asia and beyond is certainly a well-timed and bold move. Time and tide wait for no man,” he said.
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Chen applauded the measures as offering “a rare and golden opportunity” for green bond investors, encouraging more companies to relish the idea of issuing green bonds, and helping with the creation of a citywide green ecosystem in a broader sense. Chen said he expects the SAR government will double down on green finance in fields such as bank loans and stock market listings.
Our Hong Kong Foundation Assistant Research Director Kenny Shui Chi-wai said he believes the government’s role in getting the city’s green push off the ground cannot be underestimated.
“For instance, lack of access to relevant data, such as energy use of buildings and future projection of extreme weather events, has been frequently cited as a major challenge in supporting low-carbon transition and assessing climate-related risks. This makes it difficult for financial institutions to assess their investment portfolios’ impacts on decarbonization and potential risks,” Shui said.
Shui said that the SAR government should play the role of public-goods provider by financially supporting the establishment of an open-access database with climate-related datasets and models that are ready to use by financial institutions.
The proposed green measures came soon after Chan pledged earlier in February to unveil a long-term strategic plan by the middle of this year to make Hong Kong carbon-neutral by 2050.
Such an ambitious target was announced in Chief Executive Carrie Lam Cheng Yuet-ngor’s policy address in November, and followed a similar one from the Chinese mainland.
In a statement released on Wednesday, Lam said the continued issue of green bonds and promotion of new-energy transportation will go a long way toward that ambitious target.
“Notably, the financial secretary has placed green and sustainable finance and the digital economy at the forefront of Hong Kong’s continued pursuit to consolidate and strengthen her role as an international financial center with the full support of the central government,” Lam said.
Simon Smith, senior director of research and consultancy at Savills Hong Kong, said one thing worth noting is that the city’s commercial and residential buildings are huge consumers of energy. The industry itself has a big role to play in every discipline, from town planning to construction, to bolster Hong Kong’s carbon-neutral vision.
“It’s likely that many older buildings will not be able to comply with the new sustainability standards and will have to be redeveloped. As an example, 15 percent of residential stock is over 50 years old,” Smith added.
