Hong Kong is pushing ahead with its aspirations to be recognised as the regional hub for green finance and technology, with the launch of sustainability-related initiatives to provide a further boost. In June, the HKSAR government raised a record US$6bn from the latest green bond issuance scheme.
Denominated in euros, renminbi and US dollars, the latest green bond issuance surpassed the US$5.75bn raised in January. With the government planning to allocate around HK$240bn to climate change mitigation and adaptation over the next 15 to 20 years, a robust programme of green bond issuance will provide a welcome source of funding to finance the multi-billion-dollar spending programme.
A home-grown green classification framework could help Hong Kong’s ambitions
Global first
Notably, the latest tranche of bond offerings came hot on the heels of the HK$800m worth of tokenised green notes issued in February. As well as paving the way for further digital bond offerings, the sale of tokenised green notes was the first by a government globally.
Given the critical role a green taxonomy can play in shaping green financial markets, the Hong Kong Monetary Authority (HKMA) recently commissioned a study to explore establishing a green classification framework. According to the HKMA, this would help to underpin Hong Kong’s role in bridging green financial flows between the Chinese mainland and the rest of the world.
Importantly, a home-grown green classification framework could help to elevate Hong Kong’s ambitions to become a leading international green finance hub. However, while environmental financing specialists generally welcome the idea of a green taxonomy, they also wish to see projects funded by the government’s green bond issuance steered towards developing wind, solar and energy storage solutions as well as green buildings and waste-water treatment, which they say should already be transitioning to green and low-carbon emissions.
Net-zero vision
In the same week that green bonds brought in new record funding, the Hong Kong Science and Technology Parks (HKSTP) – which provides a campus-like incubator environment to around 100 green tech ventures – announced a plan to achieve net-zero emissions by 2045.
SMEs incorporating ESG concepts can gain an advantage, especially when they participate in global supply chains
Under its Net-Zero 2045 Vision, HKSTP has set near- and long-term targets that are in line with the global aim to limit the overall global temperature rise to 1.5C. Targets include reductions of 42% in carbon emissions in operations; 25% in carbon emissions in downstream leased assets such as carbon emission from tenants and waste; and 52% in carbon emissions from capital goods, including procurement specifications for carbon-intensive materials.
Green advantage
Meanwhile, as environmental, social and governance (ESG) issues continue to move up the corporate agenda, the Hong Kong Trade Development Council (HKTDC) is offering free ESG consultations to SMEs in various sectors including construction, transport, catering and services. The trade promotion agency believes that it is important for SMEs to recognise that ESG is not just a compliance model, but a business opportunity.
The HKTDC points out that those SMEs incorporating ESG concepts into their business operations can gain an advantage, especially when they participate in global supply chains. However, with many of Hong Kong’s SMEs still in the early stages of rebuilding following the Covid-19 pandemic, the challenge of balancing ESG with business recovery remains a very real concern.
