Speech by Permanent Secretary for Financial Services and the Treasury (Financial Services) at Asian Financial Forum panel discussion (English only) (with photos)
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Good morning. Distinguished panelists and guests, ladies and gentlemen,
It is my great pleasure to join you this morning at the Asian Financial Forum held here at the Hong Kong Convention and Exhibition Centre. As a get-together platform for thought leaders and action initiators, it is very befitting for the AFF to have a dedicated session on green finance. Indeed, sustainability has been a recurrent theme in almost every session of the Forum. As an international financial centre with a very vibrant capital market that sees active participation of both local and international investors, it is also very befitting for the green finance discourse to take place in Hong Kong. And we walk our talk. Just last week, we issued a total of US$5.75 billion green bonds denominated in Renminbi, euro and US dollars with tenors ranging from two to thirty years. The offering is the largest sustainable bond issuance in Asia so far. We are also the first Asian government issuing green bonds in triple currencies concurrently.
As a humble precursor to, I am sure, a very enlightening panel discussion later on, let me give you a brief overview of what we are doing to further the green transformation agenda along three fronts: collaboration, core action and capacity building.
Let me start with Collaboration. We have set up the Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) to examine policy and regulatory issues in green and sustainable finance, identify areas where Hong Kong can promote its strengths and thought leadership in this area, among other objectives. Members include the Financial Services and the Treasury Bureau, the Environment and Ecology Bureau and all our financial regulators. Under the Steering Group, we have established the Centre for Green and Sustainable Finance as a public-private collaboration platform to co-ordinate the efforts of public agencies, industry stakeholders and academia in policy development. The Centre is also a repository for resources, data and analytics supporting an enlightened transition to sustainable development.
Our collaboration efforts go beyond Hong Kong. With our unique connectivity to the Mainland market, we are fast becoming a green and sustainable finance hub for Mainland entities. The Shenzhen Municipal Government's bond issuance in Hong Kong in the past two consecutive years and a similar first move by the Hainan Provincial Government in October last year all contain green and sustainable elements, testifying to the financial infrastructural strength of Hong Kong as a platform for the issuance of green and blue bonds. Similarly, the Hong Kong Exchanges and Clearing Limited (HKEX) signed a Memorandum of Understanding with the Guangzhou-based China Emissions Exchange in March last year to explore collaboration opportunities in carbon finance. We will continue to look for ways to contribute to the achievement of the national carbon peaking and zeroing goals.
As we have been hearing loud and clear in the Forum over the past day, global co-operation is key to tackle climate change and multilateral efforts are indispensable in ensuring sustainable existence of the human race. On this, the HKSAR Government and financial regulators have been joining like-minded peers and participating actively in various regional and international fora. To name but a few, the Hong Kong Monetary Authority (HKMA) co-launched the Alliance for Green Commercial Banks (the Alliance) with the International Finance Corporation (IFC) in 2020. The Alliance organised roundtables and capacity building events to support financial institutions on their green transition. Also, the Securities and Futures Commission (SFC) has been an active participant in various international initiatives relating to sustainable finance, particularly those of International Organization of Securities Commissions (IOSCO) where the SFC has taken leadership roles in the Sustainable Finance Task Force (STF) and its workstreams on corporate reporting and asset management. Likewise, the HKEX has joined the Glasgow Financial Alliance for Net Zero and the Net Zero Financial Service Providers Alliance as part of its ongoing commitment to the long-term sustainable development of global financial markets.
Now, I come to Core Actions, and the list runs long. To summarise, we have issued close to US$16 billion equivalent of government green bonds since 2019, including the recent successful record-breaking issuance mentioned at the beginning of my speech, and retail green bond issuance of HK$20 billion in May last year, which was the world's largest retail green bond issuance at the time. These help build market benchmarks, as well as bring home the message to the general public in allowing their first hand participation in green financing.
To enrich the ecosystem, we strongly believe that private sector participation is indispensable. On this, we have launched the Green and Sustainable Finance Grant Scheme to provide funding support to eligible private bond issuers and loan borrowers for their expenses on bond issuance and external review services. Since its launch in May 2021, the Scheme has granted some HK$150 million for over 170 green and sustainable debt instruments issued in Hong Kong.
A proper taxonomy on transitional activities would provide a crucial foundation for facilitating capital flow towards investments that support climate goals, hence providing a practical approach to transition finance. Thanks to the joint efforts of the People's Bank of China and the European Commission, the Common Ground Taxonomy published last year provides a comprehensive mapping and comparison between the China and EU taxonomies, greatly helping the convergence of global standards of green definitions. The International Platform on Sustainable Finance Taxonomy Working Group, co-chaired by Dr Ma Jun, who is a strong force behind green finance, has identified transition considerations for incorporation into the Common Ground Taxonomy. Here in Hong Kong, the Government and financial regulators, through the Cross-Agency Steering Group, is developing in full swing a local green classification framework, with the aim of aligning it with the Common Ground Taxonomy. The Steering Group has been engaging the financial services industry and other stakeholders for their views. The target is to formulate a proposed structure and key elements of the classification framework for further consultation.
On climate-related disclosure, the SFC and the Stock Exchange of Hong Kong Limited under HKEX has formed a joint working group with a view to developing proposals that are aligned with the International Sustainability Standards Board (ISSB) standards, which are being finalised. The joint working group has conducted soft consultations with over 50 listed issuers and professional bodies and will take into account their feedback when developing the proposals.
For enhancing sustainability reporting, the Steering Group has entered into a co-operation arrangement with CDP and developed the first Climate and Environmental Risk Questionnaire for non-listed companies as well as small and medium-sized enterprises. The Questionnaire is intended to assist the sustainability reporting of corporates that will in turn provide transparency to lenders, investors and supply chain clients for better access to sustainability financing. It will also facilitate collection and assessment of company-level data by financial institutions for risk assessment and relevant business decisions.
A big part of our core actions is of course carbon trading. Last year, we published a feasibility assessment of carbon market opportunities in Hong Kong, which supports the development of Hong Kong into a global, high-quality voluntary carbon market. The HKEX has since worked with stakeholders to inaugurate an international carbon marketplace in Hong Kong. As you know, the marketplace was launched in last October, and as a happy coincidence is called Core Climate as part of Core Actions. Core Climate seeks to connect capital with climate-related products and opportunities in Hong Kong, Mainland China, Asia and beyond. It is currently the only carbon marketplace that offers HKD and RMB settlement for the trading of international voluntary carbon credits. The platform recorded more than 40 trades in less than a month, representing a total volume of around 400 000 tonnes of carbon credits. I am sure Glenda, who will be joining us online and representing HKEX, will share more with you on this exciting development later on.
Last but certainly not the least, Capacity Building. Against the strong headwinds of the global competition for talents, the HKSAR Government has implemented dedicated measures to proactively invite talents from around the world to pursue their career in Hong Kong. Specially, for financial services ESG professionals, Hong Kong employers intending to recruit relevant talents to fill vacancies here need not go through the local availability test anymore. With the expedience offered by this facilitation measure, the whole recruitment process will certainly be expedited.
At the same time, we have put in place a new training support scheme since December last year to encourage local eligible practitioners as well as prospective practitioners to receive training related to green and sustainable finance. The objective is to expand the green and sustainable local professional pool, and facilitate the industry to enhance the resilience in face of climate risks and seize available opportunities. We will reimburse the costs for partaking in training programmes provided by universities, professional institutions, international training providers, etc., covering a wide spectrum of green and sustainable finance topics such as carbon trading, ESG planning, investing analysis, and green finance valuation.
In addition to talents, data and technology are certainly key enablers. We firmly believe that green tech can bring about increase combined value in the search for sustainable solutions. A month ago, also in the same venue here in the Hong Kong Convention and Exhibition Centre, we showcased the bright prospect of some budding green tech companies. We are also actively preparing a pilot issuance of tokenised green bonds in Hong Kong, which will be a major step for the development of green fintech here.
In conclusion, ladies and gentlemen, my sharing has just underscored part of our work on the holistic development of green and sustainable finance in Hong Kong. The story surely does not end here. Our financial services sector will continue to give full play to our strengths in contributing to a net zero future. As President Xi affirmed in his important speech commemorating the 25th anniversary of the establishment of the HKSAR, "Hong Kong's close connection with the world market and strong support from the motherland are its distinctive advantages". From this position of strength, we will continue to expand the products and services suite, enhance the trading mechanism and infrastructure, and explore standards development, envisioning the progressive transition of Hong Kong to a low-carbon economy in the region and beyond.
As an international financial centre, Hong Kong works not only to increasing our own prosperity but also our common shared sustainability. Prosperity and sustainability clearly go hand in hand together. With this, I thank the Hong Kong Green Finance Association for sponsoring this event this morning and wish this event every success. Thank you.
Ends/Thursday, January 12, 2023
Issued at HKT 14:10
Issued at HKT 14:10
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