The Hong Kong Special Administrative Region is leading the way in steering the real economy towards net zero as public and private sectors ramp up efforts to tackle major gaps in green financial standards, data, and know-how, officials and financial experts said on Monday.
Addressing a green finance forum held in Hong Kong, Arthur Yuen Kwok-hang, deputy chief executive of the Hong Kong Monetary Authority (HKMA), said the city is “very well-positioned” to support innovative solutions to energize transitional activities that can help strike a balance between decarbonization and economic growth.
According to the HKMA, the total amount of green and sustainable bonds issued in Hong Kong exceeded $80 billion in 2022, accounting for one-third of those issued in the entire Asian region. Over 220 environmental, social, and governance funds with assets under management of $170 billion were authorized
According to the HKMA, the total amount of green and sustainable bonds issued in Hong Kong exceeded $80 billion in 2022, accounting for one-third of those issued in the entire Asian region. Over 220 environmental, social, and governance funds with assets under management of $170 billion were authorized.
As an “indispensable role” in promoting green finance, financial regulators have concentrated efforts to create a conducive environment for industry players to experiment with ideas and grow innovative solutions, Yuen said.
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As a case in point, the HKMA released the Hong Kong Taxonomy for Sustainable Finance in May, aiming to promote informed decision-making in the realm of green and sustainable finance, as well as facilitate the flow of finance. It currently covers 12 economic activities categorized into four sectors namely power generation, transportation, construction, and water and waste management.
Yuen also highlighted the necessity of clear and consistent sustainability-related exposure as investors nowadays do not just focus on financial data but also expect information on sustainability that is consistent, comprehensive, and transparent in the investment process.
However, unlike financial reporting, which has well-established accounting standards and frameworks, sustainability disclosure is often complex and multifaceted, making it difficult to define clear and universally applicable indicators to gauge performance.
Financial Secretary Paul Chan Mo-po this February released several initiatives in his 2024-25 Budget to foster a low-carbon economy. One key priority is to formulate sustainability disclosure standards and roll out a “roadmap” and a “vision statement” to help businesses and financial institutions in sustainability reporting and the analysis of relevant data.
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This aligns with the publication of the “International Financial Reporting Standards — Sustainability Disclosure Standards” (IFRS SDS) by the International Sustainability Standards Board last year.
The IFRS SDS, which is based on four pillars of the Task Force on Climate-Related Financial Disclosures framework — governance, strategy, risk management, and metrics and targets — aims to establish a universal foundation for disclosing sustainability-related information, having gained extensive international support from various stakeholders.
Teresa Ko, trustee vice-chair of IFRS, said that more than 20 jurisdictions have already decided or are taking steps to use the IFRS standards in the regulation framework. These jurisdictions, including Hong Kong, the Chinese mainland, the United Kingdom, and Singapore, account for nearly 55 percent of the global GDP, and more than half of global greenhouse gas emissions.
In Hong Kong, mandatory climate-related disclosure for listed companies, following international standards, guidelines and frameworks will start next year
In Hong Kong, mandatory climate-related disclosure for listed companies, following international standards, guidelines and frameworks will start next year.
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Ko praised Hong Kong’s progress in climate information disclosure, saying she is proud that the Hong Kong Stock Exchange is one of the pioneer exchanges in implementing climate disclosure requirements based on the global baseline standards.
Echoing Ko’s remarks, Richard Wong, chair of economics and the Philip Wong Kennedy Wong professor of political economy at the University of Hong Kong, emphasized the importance of international collaboration and education.
He said it is essential to equip students and researchers with the sound knowledge and skills needed to tackle the complexities of sustainable development around the world.
Themed “Empowering Sustainability and Prosperity in Asia,” the green finance gathering is part of the initiative of the Capacity-building Alliance of Sustainable Investment — an international platform focusing on sustainable finance in emerging markets.
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The event, which welcomed more than 300 participants from 20 jurisdictions, kicked off on Monday and will run through Friday. It will be held in Huzhou, Zhejiang province for the last two days.
