SFST's speech at briefing for Asia House corporate members in London, UK (English only) (with photo)
Michael (Mr Michael Lawrence, Chief Executive of Asia House), ladies and gentlemen,
Good morning. It gives me great pleasure to join you all today. We value our friendship with Asia House, which serves as an excellent platform for high-level commercial and political dialogue. I understand that today's briefing is part of the Asia House COP28 Programme. I would like to take the opportunity today to talk about green and sustainable finance development in Hong Kong.
The Central People's Government has set out in the 14th Five-Year Plan to promote comprehensive green transformation of economic and social development, and endeavour to have carbon dioxide emissions peak before 2030 and achieve carbon neutrality before 2060. In Hong Kong, we announced Hong Kong's Climate Action Plan 2050 in October 2021 that targets to reduce Hong Kong's carbon emissions by 50 per cent before 2035 and achieve carbon neutrality before 2050.
To this end, we will continue to work in concert with our financial regulators and the industry to develop green and sustainable finance in Hong Kong through a multipronged strategy. We will accelerate the development of Hong Kong into an international centre for green technology and finance, and proceed in five directions, including green finance application and innovation for helping green projects obtain capital more conveniently and flexibly through financial innovations apart from traditional financing channels, training for talent, enhancing the exchange and co-operation with the Guangdong-Hong Kong-Macao Greater Bay Area and international markets, etc. Indeed, Hong Kong is already a very active market, with total green and sustainable debt (including both bonds and loans) issued in Hong Kong increasing by over 40 per cent from 2021 to reach US$80.5 billion in 2022. As at the end of last year, there were 177 ESG ( Environmental, Social and Governance) funds authorised by our regulator with total assets under management (AUM) of US$142 billion. On a year-on-year comparison, the number of authorised ESG funds has increased by 86 per cent and the AUM has increased by 8 per cent.
Since 2019, we have successfully issued government green bonds under the Government Green Bond Programme totalling close to US$16 billion equivalent. In January this year, we made the largest ESG bond issuance in Asia totalling US$5.75 billion equivalent, including Euro-denominated green bonds totalling 1.25 billion euros, and we issued the world's first government tokenised green bond in February this year. These issuances set an important new benchmark for potential issuers in Hong Kong and the region, and enriched the green and sustainable finance ecosystem. In particular, the tokenised green bond was a pilot issuance to test out the compatibility of Hong Kong's existing legal and regulatory framework and financial infrastructure with tokenised issuances. We made use of tokenisation technology in the process of bond issuance, including coupon payment, secondary trading, maturity redemption, etc. We will consolidate the experience gained, review the development potential and prospects of tokenised bond issuances in Hong Kong, and consider policy initiatives to promote the wider use of tokenisation technology in the local capital market.
To encourage participation from the private sector, we launched the Green and Sustainable Finance Grant Scheme in 2021 to provide a subsidy for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services. It subsidises the bond issuance costs, subject to a maximum subsidy of HK$2.5 million per issuance, and external review service cost, subject to a maximum subsidy of HK$800,000 per issuance. As at end-March this year, we have granted close to HK$170 million to over 220 green and sustainable debt instruments issued in Hong Kong, involving a total underlying debt issuance of over US$70 billion.
The Hong Kong Stock Exchange launched a voluntary carbon trading platform called Core Climate in October last year. Investors will be connected to projects committed to repairing the planet, ensuring that climate-related issues are progressively improved, and driving the global transition towards net zero. Market participants can use this platform to trade high-quality voluntary carbon reductions and promote capital flow to high-quality green projects. This is a crucial step towards building Hong Kong into an international high-quality voluntary carbon market and consolidating Hong Kong's status as a green and sustainable financial hub.
Core Climate is currently the only carbon market that provides both Hong Kong dollar and Renminbi settlement for international voluntary carbon credit trading, which will help attract a diverse group of participants. The platform has attracted institutions from different industries in Hong Kong, Mainland China and overseas to participate. Core Climate provides a robust market infrastructure and effective, transparent and verified carbon credit products and tools for companies and investors to achieve net zero commitments. The carbon credits on the platform come from internationally certified carbon emission reduction projects, including forestry, solar energy, wind energy, hydropower and biomass energy. Any high-quality green project that can avoid, reduce or remove greenhouse gas emissions can apply to join Core Climate as long as it has been verified by international standards.
The Financial Secretary earlier announced in the Budget that we will set up a Green Technology and Finance Development Committee, inviting industry representatives from green technology, green finance, green standard certification, etc to assist in the formulation of an action agenda for promoting the development of Hong Kong into an international green technology and finance centre.
Ladies and gentlemen, the Hong Kong Government will continue to work closely with the industry and relevant stakeholders to develop Hong Kong as a green and sustainable hub in the region, leveraging the enormous opportunities presented by the Greater Bay Area development and the Belt and Road Initiative, and serving as a premier financing platform for international and Mainland green enterprises and projects.
Thank you very much.
Ends/Tuesday, April 18, 2023
Issued at HKT 23:45
Issued at HKT 23:45