Hong Kong’s green agenda

Increasingly common extreme weather conditions underscore the reality that the clock is ticking for the world to transition to a low-carbon environment.

The Hong Kong Special Administrative Region (SAR) has pledged to achieve carbon neutrality before 2050 and has an interim target of reducing Hong Kong’s carbon emissions by 50% before 2035 compared with 2005 levels.

Action plan

In order to achieve its pledge, the government has launched a series of initiatives. Key among them is the Climate Action Plan 2050, which was launched in 2021. This outlines four major decarbonisation strategies and measures: net-zero electricity generation, green buildings, green transport and waste reduction.

‘These four buckets link to Hong Kong’s major emissions,’ said Lit Ping Low, PwC Hong Kong’s Asia-Pacific climate change lead partner, speaking at the firm’s recent event focusing on strategies to reduce greenhouse gas (GHG) emissions.

Of course, global protocols and standards inform the responses of individual countries. Among different measurements of carbon emission, the most commonly adopted is the Greenhouse Gas Protocol, established in 1998 as an international standard for corporations to account and report GHG emissions.

The newly released IFRS Sustainability Disclosure Standards, issued by the International Sustainability Standards Board, require listed companies to adopt the GHG Protocol to calculate carbon emission generally, unless there is any local regulatory requirement.

At the same time, in addition to reporting on their scope 1 and 2 emissions, large companies are now being pushed to calculate their scope 3 emissions, which include indirect emissions from their supply chain. Scope 1 emissions are from sources owned or controlled by the company, while scope 2 emissions are generated indirectly from the consumption of purchased electricity, heat or steam.

This has led many companies to work with their suppliers to measure and reduce their emissions, as well as to educate them on the importance of emissions reduction. ‘You can only manage what you can measure,’ Low said, adding that the measurement is important to help with finding solutions. Meanwhile, the government is also helping SMEs with data, including helping to create a data collection platform.

International centre

With finance one of the key pillars of Hong Kong’s economy, accelerating the SAR’s development as an international centre for green and sustainable finance can help with the low-carbon transition.

In his policy address last October, Hong Kong Chief Executive John Lee said that the government aims to promote the SAR as the preferred financing platform for mainland and overseas organisations and green enterprises, building an international carbon market.

To this end, in 2020 the Hong Kong Monetary Authority and the Securities and Futures Commission established the Green and Sustainable Finance Cross-Agency Steering Group (CASG) in order to to coordinate the efforts of financial regulators, government agencies, industry stakeholders and academia in capacity building and policy development, and to serve as a repository for resources.

The government also launched the Green and Sustainable Finance Grant Scheme in May 2021 to provide subsidies for eligible bond issuers and loan borrowers. Since then, more than 220 related debt instruments have received grants.

According to Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, as of March 2021 Hong Kong had approved grants for debt instruments focused on green and sustainable finance totalling over HK$71.5bn. 

In a keynote speech at the Asia Summit on Green Economy in May, Hui said that Hong Kong is ideally positioned to take the lead in green finance as an energetic and resilient international financial centre, adding that promoting the green economy for sustainable development is a matter of global concern.

Talent is key

During the transition towards a low-carbon economy, there is a critical need to expand the talent pool and enhance the relative capacity for professionals from diverse backgrounds.

As part of his 2022/23 Budget speech, Paul Chan, Hong Kong’s Financial Secretary, announced the launch of the Pilot Green and Sustainable Finance Capacity Building Support Scheme. Under the scheme, which will run for three years, the government has allocated HK$200m (US$25.6m), with eligible applicants each entitled to up to HK$10,000 (US$1,279) reimbursement.

Among the eligible training programmes is the Climate Finance course, run jointly by ACCA and CFA Institute. The course covers climate change, carbon pricing, sustainable business models, and climate risk and opportunities in the context of business and investment analysis. It provides an introduction to climate change and related economic and environmental impact, as well as climate solutions.

Christina So, head of ACCA Hong Kong and Greater Bay Area (GBA) lead notes that there is a growing need for finance professionals to understand the impact of ESG factors on businesses and their clients. ‘In a world where key stakeholders are demanding more from companies and their net zero objectives, green finance has become a ‘must-have’ skill for accounting and finance professionals to create long-term value, driving the migration to sustainable economies and businesses. With talent development at the core, we empower Hong Kong’s talent to upskill for a sustainable future and shape a better world.’

The collaboration between ACCA and CFA Institute marks a step forward in environmental, social and governance capacity building, helping professionals to get the necessary knowledge and skills to support the transition to a low-carbon and sustainable economy.