Hong Kong aims to become premier green, sustainable finance hub

Hong Kong is planning to become a “premier centre” for green and sustainable finance globally in line with the global trend to peak greenhouse gas emissions, and the market’s target to reach carbon neutrality by 2050.

Financial Secretary Paul Chan said at the Global Financial Leaders’ Investment Summit that the potential and opportunities of Hong Kong as an international financial centre (IFC) are “boundless.”

“We are determined to excel in many areas. Among them, our fundraising platforms, our role in Renminbi’s internationalisation, the unique Connect Schemes with the Mainland, asset and wealth management, centre for risk and corporate treasury management and much more,” he said.

Chan noted the National 14th Five Year Plan supports Hong Kong’s development as a green financial centre, particularly its positions in the Guangdong-Hong KongMacau Greater Bay Area.

“Adherence to high international standards is also why we have good prospects to succeed. We have reporting and disclosure standards that align with international best practices. We are seeking to adopt a green classification framework along the Common Ground Taxonomy. Green bonds issued in Hong Kong are trusted by global investors,” the financial secretary said.

The Hong Kong government has been issuing green bonds since 2018, with the green and sustainable debts issued or arranged in the market reaching over US$56b in 2021, increasing four times from 2020 and being the top in Asia.

“To encourage the development of green finance, we continue to provide expense subsidies for eligible issuers and borrowers for their borrowings in Hong Kong,” Chan said.

Some of its initiatives in becoming a green financial hub include its issuance of 30-year and 20-year green bonds denominated in US dollars and Euros, respectively, last year. It is the first Asian government to do so, and bonds were the longest tenor of Asian government bonds at the time.

Other projects

Other developments include support from Mainland provincial and municipal governments such as Shenxzhen’s issuance of their first-ever offshore RMB green bonds worth RMB3.9b in Hong Kong last year, and Hainan’s issuance of blue and sustainable bonds worth RMB5b in Hong Kong for marine and sustainable projects, amongst others.

“In May this year, we issued the inaugural retail green bonds of US$2.5 billion, which was also the largest globally. The costs are slightly more expensive and administration a little more burdensome. But it will reinforce our residents’ sense of ownership of our green vision and help us achieve financial inclusion goals,” Chan added.

For the Fintech sector, Chan said that Hong Kong has an extensive presence of top global financial institutions in the market, adding that it is now home to over 800 companies, up from less than 180 five years ago. Many of the fintech firms were founded by entrepreneurs from Mainland, France, Isra and the UK amongst others.

Chan said Hong Kong is also adopting a “multi-pronged approach” to develop the fintech sector which includes the Fintech 2025 strategy, and the linking up of sandboxes of all financial regulators to facilitate development across the sector.

Hong Kong also aims to encourage innovation, and develop essential infrastructure such as a faster payment system to connect all bank accounts and electronic wallets for individuals, leveraging on Hong Kong’s “super-connector” role to facilitate cross-boundary collaboration for fintech solutions development. The government also aims to build the capacity and nurture the ecosystem.

“But we do not stop here. The virtual asset policy statement mentioned earlier sets out our vision, regulations, thoughts on investor protection and attempts in emerging areas such as NFT (non-fungible token), tokenisation, and eHKD,” Chan said.

“As an IFC, Hong Kong is open and inclusive towards global innovators. We are working with the financial regulators towards providing a facilitating environment for the sustainable and responsible development of the virtual asset sector in Hong Kong,” he added.