The co-hosting of a forum at COP28 by the Hong Kong Financial Services Development Council and Friends of the Earth marks the latest step taken by the Special Administrative Region (SAR) to promote its green credentials. It is the first time a non-governmental Hong Kong organisation has ever participated at a COP.
The government advisory body and the Hong Kong NGO best known for its commitment to protecting the environment were collaborating in promoting Hong Kong as a hub for green and sustainable finance.
With the Asian region requiring US$66 trn in climate investment over the next 30 years, according to the Asia Securities Industry & Financial Markets Association, Hong Kong was keen to use its presence at COP28 to position itself as a leading regional and international centre for green financing by highlighting its issuance of green bonds. Since the SAR launched its first green bond in 2019, cumulative issuance under the government’s green bond programme has reached nearly US$24bn, accounting for about a third of the Asian green bond market. Using distributed ledger technology, Hong Kong has even issued the world’s first tokenised green bond, which raised US$102m.
After a massive, once-in-500-years rainstorm, the focus on climate change has ratcheted up
Sustainability reporting
And it’s not only in the green bond market where Hong Kong is striving to be a leader. The SAR was one of the first jurisdictions in the world to align its reporting standards with the International Sustainability Standards Board’s inaugural standards for companies worldwide to report on their sustainability-related risks and opportunities.
Initially planned for January 2024, but delayed until 2025 to give the 2,600 companies listed on the Hong Kong Stock Exchange more time to prepare, climate risk reporting will move from a ‘comply and explain’ approach into the realms of mandatory reporting. Under the new requirements, listed companies will have to disclose any climate-related targets they have set, and whether any climate change mitigation and adaptation efforts they undertake will change their business models and strategies.
The HKMA recommends banks step up their preparedness for risks arising from climate events
During a year in which Hong Kong experienced its hottest summer since records began in 1884, stronger than usual typhoons and a once-in-500-years rainstorm that spawned a surge in insurance claims, the focus on climate change and its potential for causing devastating impact has ratcheted up several notches. Hong Kong weather experts are predicting more frequent and stronger climate change-related rainstorms, and residents have been told to be prepared for what used to be considered extreme weather becoming the norm.
With this in mind, the Hong Kong Monetary Authority (HKMA), the SAR’s de facto central bank, has turned its attention to the impact of local climate change issues by recommending that Hong Kong banks step up their preparedness for risks arising from extreme climate events such as flooding and typhoons, as well as policy changes related to carbon emissions. The first in a series of climate risk-related stress tests conducted by the HKMA on 27 banks found that flooding and typhoons represented a major risk for the lenders.
Talent is golden
However, to keep its climate change solutions on track, Hong Kong needs talent. Whether it is professionals with sustainable finance experience, climate change knowledge or experts with ESG know-how, potential employers can expect to be involved in a bidding war.
In an attempt to strengthen Hong Kong’s pipeline of ESG (environmental, social and governance) talent, the government is offering cash subsidies for professionals to take ESG-related training courses. Immigration requirements have also been relaxed to attract overseas professionals with the expertise to fill the city’s sustainability and climate-change jobs. However, the type of talent Hong Kong is looking for is being sought all around the world. As a result, some hiring managers are targeting consultants from Big Four firms – including those working with their competitors.
