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HK leverages its unique global role to promote green finance

By Christopher Hui | HK EDITION | Updated: 2022-01-24 10:14

Christopher Hui

The 15th Asian Financial Forum, co-organized by the Hong Kong Special Administrative Region government and the Hong Kong Trade Development Council on Jan 10 and 11, provided a premier platform for thousands of leaders in government, finance and business sectors from over 80 countries and regions to exchange insights and explore business and investment opportunities. It was also one of the events to kick-start celebrations for the 25th anniversary of the HKSAR.

Under the theme "Navigating the Next Normal Towards a Sustainable Future”, the AFF offered a platform for political and business leaders around the world to discuss how to lead the future development in response to the unpredictable impact of the COVID-19 pandemic on our lives, society and economy. With the COVID-19 pandemic situation in many parts of the world yet to be brought under control and mutant strains spreading rapidly, the development of the global pandemic is full of uncertainty. At the same time, tighter travel restrictions imposed by governments around the world and potentially persistent supply bottlenecks in various regions could hinder global production activities and push up inflation. Governments are actively adapting to the new normal in the post-pandemic world by building more-resilient supply chains and economic systems and making the economic recovery more stable and balanced.

Dr Shang Fulin — the chairman of the Committee on Economic Affairs of the National Committee of the Chinese People's Political Consultative Conference, the former chairman of the China Banking Regulatory Commission and the former chairman of the China Securities Regulatory Commission — gave a keynote speech at the AFF. Dr Shang said that under the new development pattern of domestic and international dual circulation, the Chinese mainland will unwaveringly promote reform and opening-up, and is committed to strengthening cooperation with other countries to cope with global crises. He also affirmed the importance of Hong Kong as a trade and investment gateway connecting the mainland and the rest of the world, and pointed out that a stable social and political environment will create favorable business conditions for Hong Kong, enabling Hong Kong to play its role as an international financial center.

Furthermore, I participated in the plenary session on "Navigating the Next Normal Towards a Sustainable Future”, during which I shared that the world should look into solutions to an imminent global issue — climate change — and that the COVID-19 pandemic taught us the importance of building resilience into our financial system, as well as the collaboration between all countries and regions to address global crises.

The session was joined by heavyweight speakers from around the globe, including the deputy prime minister and minister of finance of Belgium, Mr Vincent Van Peteghem; the deputy prime minister and minister of finance of Hungary, Mr Mihály Varga; the minister of finance of Thailand, H E Mr Arkhom Termpittayapaisith; the chairman of the board of the Commissioners of Financial Services Authority of Indonesia, Dr Wimboh Santoso; the chair of the European Securities and Markets Authority, Ms Verena Ross; the president and chairman of the Asian Infrastructure Investment Bank, Mr Jin Liqun; the president of the Islamic Development Bank, H E Dr Muhammad Sulaiman Al Jasser; and the president of the New Development Bank, Mr Marcos Troyjo. The speakers shared their insights on the characteristics of the post-COVID-19 global economic and business new normal, as well as how public and private sectors can collaborate to orient the global economy toward a green future with sustainable growth. They highlighted the critical role technology and digitalization will play in economic development in the future, and stressed the importance of encouraging the cooperation of public and private capital in assisting green transformation.

Tackling climate change

As we drive a paradigm shift in the global economic and business landscape, we must not focus solely on the near-term challenges posed by the current COVID-19 pandemic, but also take this opportunity to better prepare the global economy and financial system for the pressing problem of climate change and steer toward sustainable development.

Climate change is an imminent global issue that requires global cooperation to solve. As an international financial center, Hong Kong has always been a global hub for business, finance and talents. We are delighted that the AFF could serve as a platform for investors as well as political and business leaders around the world to discuss how, through impact investments, forward-looking business strategies and resolute policy measures, we can lead the global economy toward a green future and achieve sustainable development.

In addition to promoting cooperation across regions, Hong Kong itself of course has spared no effort in tackling climate change. The government announced in October that it aims to reduce Hong Kong's carbon emissions by 50 percent before 2035 as compared to the 2005 level, and achieve carbon neutrality before 2050. In the next 15 to 20 years, the government will devote about HK$240 billion ($30.8 billion) to take forward various measures on climate change mitigation and adaptation, reflecting our determination and plan to achieve carbon neutrality. To this end, leveraging our role as an international financial center and our competitive edges — which include a huge financial market, a robust world-class regulatory framework, and our position as a hub of world-leading financial and professional institutions, green assessment and certification organizations, as well as international investors — Hong Kong is making every effort to develop itself into a green and sustainable financial center in the region and to provide funds for the development of the green economy.

Promoting green finance

To promote the development of the green bond market, a total of over $7 billion worth of green bonds, including 5 billion yuan ($788 million) and 1.75 billion euros ($1.98 billion) of green bonds (which in total are equivalent to more than $2.7 billion) has been successfully issued since May 2019 by the SAR government under the Government Green Bond Programme. At present, the borrowing ceiling of the GGBP has been doubled to about $26 billion (HK$202 billion), allowing for issuance of more green bonds within the next five fiscal years from 2021-22, having regard to the market situation. We are also preparing to issue the inaugural retail green bond for the participation of the general public and the deepening of their knowledge on green finance.

To attract more green and sustainable bond issuers and borrowers to use Hong Kong's fundraising platform and professional services, the government launched a three-year Green and Sustainable Finance Grant Scheme in May 2021 to provide a subsidy for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services. Through the GSFGS, we wish to attract more enterprises to issue green and sustainable bonds and debts in Hong Kong, and encourage more financial institutions, professional service providers and external reviewers to set up and expand businesses in Hong Kong, with a view to constructing a holistic ecosystem for green finance. As of the end of last year, around 50 applications had been approved under the GSFGS, covering various types of green and sustainable debt instruments.

The Green and Sustainable Finance Cross-Agency Steering Group, formed by the Financial Services and the Treasury Bureau and relevant organizations, promulgated a Strategic Plan in December 2020 that elaborated our shared vision to promote green and sustainable finance, focusing on driving climate-related disclosures and sustainable reporting, carbon market opportunities and, through the newly established Centre for Green and Sustainable Finance, fostering talent and capacity building, developing data repository and analytics capability, etc. We will work with the financial industry and relevant stakeholders to implement the plan.

The Central People's Government set out in the "Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and Vision 2035 of the People's Republic of China” to promote a comprehensive green transformation for economic and social development, and to endeavor to have carbon emissions peak before 2030 and achieve carbon neutrality before 2060. The development of green finance in Hong Kong has always been strongly supported by the central government, and Hong Kong is committed to developing into a green finance center of the Guangdong-Hong Kong-Macao Greater Bay Area, so as to contribute to the country's achievement of the aforesaid goals.

Regarding green financing for the mainland, the Shenzhen Municipal People's Government issued its first offshore renminbi municipal government bonds, part of which were green bonds, in Hong Kong in October. It was the first time that a mainland municipal government issued bonds outside the mainland. We will continue to strengthen our efforts to promote market development, align Hong Kong's regulatory standards with international best practices, encourage more mainland institutions to use Hong Kong's financing platforms and professional services to conduct green and sustainable investment, financing and certification, and promote the financing for green and sustainable infrastructure and projects serving the Belt and Road Initiative.

As the mainland and key overseas markets are dedicated to transition to a green, low-emission and climate-resilient economy, the global carbon market is expected to grow significantly. As an international financial center, Hong Kong is in a unique position to play a strategic role as the gateway for funds flowing into and out of the mainland. The Steering Group has completed a preliminary assessment of carbon market opportunities for Hong Kong, and will further explore how Hong Kong may develop into a regional carbon trading center, including the development of a global high-quality voluntary carbon market. The Steering Group will work with relevant authorities on carbon market opportunities as part of the Greater Bay Area cooperation.

Hong Kong will continue to actively promote the development of our green and sustainable financial market from all fronts, not only channeling international funds to support the transition of national and regional economies to a green economy, but also promoting the inclusive and mutually beneficial development of the mainland and foreign capital markets. The SAR government will spare no effort to develop Hong Kong into a green and sustainable financial hub in the region and contribute to the country and the world.

The author is the secretary for financial services and the treasury of the Hong Kong Special Administrative Region.

The views do not necessarily reflect those of China Daily.

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