Interview｜The new generation emphasizes "impact investment" Xu Zhengyu: Hong Kong ESG ecology is changing

In recent years, the global market has paid more and more attention to the environment, society and governance (ESG). Many listed companies have added ESG to their annual indicators, and green and sustainable finance have also emerged.

In an exclusive interview with "Hong Kong 01", the Secretary for Finance and Treasury Xu Zhengyu said that the authorities will start from many aspects, including systems, supervision and talents, to promote Hong Kong as a green financial hub in Asia.

The global demand for green finance is rapidly increasing. As an international financial center, Hong Kong has been encouraged by the government in recent years to use Hong Kong's capital platform to finance green projects.

Statistics show that the total amount of green bonds and loans arranged and issued in Hong Kong last year reached 12 billion US dollars, and the cumulative amount has exceeded 38 billion US dollars. The first batch of green retail certificates of deposit, the world's first batch of Guangdong-Hong Kong-Macao Greater Bay Area-themed green bonds, and the first batch of green bonds issued overseas by mainland city governments, Xu Zhengyu described in his interview as "how good the momentum is."

Xu Zhengyu pointed out that the society attaches more importance to ESG and does not want to sacrifice the aspirations of sustainable development for future generations.

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He believes that as society pays more attention to ESG and hopes to meet the needs of the present generation without sacrificing the aspirations of sustainable development for future generations, secular finance or sustainable finance has become a global trend, and funds play a very important role in the process. Important role, countries are also thinking about how to use finance as a means to make transformation and resource allocation more efficient, and Hong Kong can find an important role in it. "I think the core of finance is resource allocation, that is, a group of people are willing to carry money out. There is another group of people who are willing to take a certain amount of risk to make investments. Hong Kong is an international financial center with credibility and can bring together mainland and international investors and issuers. This is very consistent with our financial DNA."

In the ESG investment market, Xu Zhengyu pointed out that Europe has always "before doing well", but now Asia is paying more and more attention to ESG development, and the new generation of Hong Kong also pays more attention to ESG, emphasizing "Impact investment". "And the wealthy family began to pass on, the new generation will think about the benefits to society and the environment before or after making money."

Xu Zhengyu pointed out that the latest ESG investment is no longer limited to specific individual projects. The entire ecology is changing.

ESG investment is no longer limited to specific projects

The Budget announced at the beginning of the year that the maximum amount of the green bond plan would be doubled to 200 billion yuan. Last week, the SAR government successfully sold a new batch of green bonds with an equivalent value of US$3 billion, including US dollar bonds and Euro bonds. The SAR government issued Euro bonds for the first time, and the authorities will soon issue RMB green bonds.

Xu Zhengyu said that in the development of the green bond market, the government hopes to take the lead. This has been well recognized by the market, but the government is not the whole market. Therefore, it is also hoped that private individuals will participate more in green financing. Measures include the promotion of funding schemes.

Hong Kong has integrated the two previously launched programs, the "Bond Funding Pilot Program" and the "Green Bond Funding Program" into the "Green and Sustainable Financial Funding Program", and extended the funding range from green bonds to green loans. Thirty funding applications have been approved so far.

Xu Zhengyu pointed out that the latest ESG investment is no longer limited to specific individual projects. The entire ecology is changing. Most of the proceeds from green bond financing in the past were invested in individual green projects or buildings, such as the government's tax building in the Kai Tak Development Area. , But now it may not be directly linked to green projects. Instead, companies or even issuers are required to link to sustainability indicators. If they can meet the indicators, they can reduce the interest that can be paid.

"There is a financial incentive to allow institutions or issuers to do a good job in ESG and reduce financial costs." Xu Zhengyu revealed that there are already several green loan products in this category in the government subsidy program.

The government will do more market education and promotion in the future, one of which is to prepare for the issuance of retail green bonds‵.

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Emphasis on supervision to prevent "brown color playing green"

As for the "greenwashing" issue that many people are concerned about, Xu Zhengyu bluntly stated that the bureau's role in supervision is duty-bound to prevent "brown coloring from being green."

He pointed out that the government has dealt with it from several levels. On the one hand, it supports the EU and the country to discuss a Common Ground Taxonomy report. On the other hand, it requires some industries to do something about climate change before 2025. Aspects of financial disclosure.

"Whether it is a company or a fund product, if you make more disclosures, you will naturally have more knowledge."

In terms of related talents, the government has planned to add environmental, social and corporate governance (ESG) and asset management compliance professional areas to the talent list.

Xu Zhengyu believes that ESG talents are generalists, but they are highly professional, involving environmental protection, engineering and financial knowledge. "I talked to some universities earlier. In fact, many engineering students may traditionally want to work in engineering companies after graduation, or go to Power companies, but now they can do some sustainable planning.” He said, for example, some companies may have a lot of retail markets and consume a lot of electricity. Students from the engineering department may come up with some energy-saving methods to help customers. It doesn't feel hot, but it can save electricity at the same time.

Xu Zhengyu added that the government will do more market education and promotion in the future. One of them is to prepare for the issuance of retail green bonds. "