Hong Kong’s green finance sector is poised to take advantage of the upsurge in Chinese mainland businesses’ enthusiasm for sustainable practices, despite many of them facing cost pressures and lacking familiarity with green financing alternatives, a report revealed on Thursday.
The report, jointly released by the Hong Kong Trade and Development Council (HKTDC) and the Association of Chartered Certified Accountants (ACCA), said that 99 percent of surveyed mainland firms are committed to making sustainable investments in the next three years.
It also found that Hong Kong is seen as their preferred platform for accessing relevant professional services.
Irina Fan, director of HKTDC Research, said that Hong Kong is Asia’s leading green finance hub, adding that the city is capable of influencing the mainland's transition toward a progressively sustainable and eco-friendly future.
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In 2020, China announced a set of targets to reach peak emissions before 2030 and carbon neutrality before 2060. As the country's prime gateway linking the mainland with the rest of the world, the Hong Kong Special Administrative Region has also been ramping up efforts to attach a green label to its global financial hub status.
Official figures show the total amount of green and sustainable bonds issued in Hong Kong exceeded $80 billion in 2022, accounting for one-third of those issued in the entire Asia region. Over 200 environmental, social, and governance funds with assets under management of $159 billion were authorized as of September 2023.
Financial Secretary Paul Chan Mo-po this year unleashed several initiatives in his 2024-25 Budget to foster a low-carbon economy. One key priority is to formulate sustainability disclosure standards and roll out a "road map" and a "vision statement" to help businesses and financial institutions in sustainability reporting and the analysis of relevant data.
Meanwhile, some persistent headwinds were highlighted by those surveyed. Among them, “cost pressures” were cited by 82 percent of respondents as a major challenge, as sustainable investments may not necessarily yield ideal returns in the short term.
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Also, knowledge about green financing alternatives in the mainland remains somewhat limited, with around 47 percent to 56 percent of participants indicating that they are unfamiliar with a significant portion of the available choices.
But such obstacles have not dampened the sustainability drive. Some 71 percent of respondents expressed a willingness to utilize green financing channels more, including green loans and green bonds, while reducing reliance on traditional financing.
The overwhelming majority of survey respondents are focusing on aligning with governmental policy goals concerning environmental impact, particularly in terms of significantly decreasing carbon emissions, according to the report.
Numerous enterprises also underscored the advantages of embracing more environmentally friendly business strategies, such as improved access to green financing and the establishment of favorable brand reputations globally.
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Sam Chen, regional lead of policy and insights for ACCA China, stressed the importance of understanding the local context and utilizing green funding and technology, which has become vital as more companies place a growing emphasis on sustainable initiatives.
There is now a broader recognition that a holistic strategy toward sustainability is imperative for businesses to move into a more environmentally sustainable future while maintaining their value propositions, Chen said.
The research report was compiled using the findings of a survey of 283 companies regarding their sustainability goals in the medium term. Participants in the study were selected from ACCA's membership base in China, which consists of financial experts spanning various sectors.
