Spring has arrived in Hong Kong and brought with it a green flourish, especially in the form of government-led green policies and strategies.
From helping companies to access transition financing for more environmentally-friendly operations to providing funding support for the green tech sector, the Hong Kong government is pushing ahead to establish the Special Administrative Region (SAR) as a leading player in the Asian green finance and technology environment.
While Hong Kong’s financial secretary chose the colour peach (to reflect optimism) for the cover of this year’s Budget statement, the actual Budget contained a considerable number of green proposals. They included the launch during the first half of 2024 of a green and sustainable fintech proof-of-concept subsidy scheme. Details are yet to be announced, but the understanding is that the proof-of-concept subsidy scheme will provide early-stage funding for pre-commercial companies involved in next-generation green tech research and advanced manufacturing.
Hong Kong Monetary Authority is planning to launch a green taxonomy framework
Fintech expansion
Currently Hong Kong has about 1,000 fintech companies. The majority are connected to the finance sector, but some provide technological solutions in environment, social and governance (ESG) analytics, ESG reporting preparation, and associated green areas. At a recent Hong Kong green fintech summit, Hong Kong fintechs were urged to look beyond finance and asset management and increase their integration with business sector technologies that support analysis and reporting on ESG issues and related subjects.
Underscoring the push to enrich Hong Kong’s green finance ecosystem is the announcement of the extension from mid-2024 to 2027 of the green and sustainable finance grant scheme. This scheme helps enterprises to access transition financing as they move towards decarbonisation by providing subsidies for expenses on bond issuance and external review services. So far, more than US$100bn has been provided in subsidies to eligible bond issuers and loan borrowers for the issuance of more than 340 green and sustainable debt instruments in Hong Kong.
As part of a broader effort to accelerate the development of Hong Kong’s green finance capabilities as a vehicle for growth, during the first half of 2024 the Hong Kong Monetary Authority is planning to launch a green taxonomy framework for classifying economic activities considered environmentally friendly or sustainable. As a starting point, the prototype will be made available to banks and other financial sectors. According to the consultation paper, the framework will use taxonomy common to mainland China and the EU as a major reference for sustainable finance initiatives that will be acceptable across different jurisdictions.
Adoption of ESRS could provide a competitive advantage
Green Week
Meanwhile, straddling the end of February and March, and designed to raise Hong Kong’s profile as a leading player in green technology and finance development, Hong Kong Green Week brought more than 1,600 participants from close to 30 jurisdictions to the SAR to attend a series of sustainability-themed events.
On the sidelines of Hong Kong Green Week, ACCA Hong Kong brought together standard-setters and sustainability leaders from the European Financial Reporting Advisory Group, the European Federation of Financial Analysts Societies and the GHG Protocol’s Independent Standards Board to discuss the EU Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standard (ESRS). In spite of CSRD and ESRS being EU directives, the EU standard-setters noted that, given Hong Kong’s position as a major financial hub, its adoption of ESRS could provide a competitive advantage as it aligns with the future requirements of sustainable reporting.
