Green Finance and Hong Kong

Luo Wenhua, PhD in Business Administration, reviewed the development of recording finance in Hong Kong and made suggestions:

The development history of green finance can be traced back to the 1970s, while Hong Kong started late.

In July 2015, Xinjiang Goldwind Technology issued its first offshore green bond in Hong Kong.

The Hong Kong green bond market became active in 2018, with the issuance amount reaching US$11 billion, three times the amount in 2017.

In February 2019, the Hong Kong Monetary Authority held a press conference for the "Hong Kong Green Bond Market Report" organized by the Climate Bonds Initiative, stating that Hong Kong has become one of the world's largest green markets.

In 2017, the Financial Development Council made recommendations on how to seize opportunities in Hong Kong to develop green finance: Positioning Hong Kong as a hub for raising green capital: Facing the mainland’s huge funding needs for green infrastructure and the opportunities brought about by the “Belt and Road” initiative , Hong Kong also uses its excellent financial infrastructure to strengthen its project financing services (especially in the issuance of green bonds), and also acts as a platform for green companies to raise stock market funds.

Yu Weiwen, President of the Hong Kong Monetary Authority, pointed out in October this year that ESG has been integrated into the investment management process of the open market and private equity market of the Exchange Fund. The principle is that ESG investment will be given priority when the long-term return of ESG investment is similar to that of other investments. , And gradually increase the share of the Exchange Fund’s ESG investment; the Hong Kong Monetary Authority is assisting the government to implement a green bond program worth 200 billion Hong Kong dollars.

In Europe, the United States, Japan and other places, ESG investment is growing rapidly. Its global scale has exceeded US$30 trillion in 2018. Hong Kong is far below these advanced countries in this respect.

Yu Weiwen stated that ESG has been integrated into the investment management process of the foreign exchange fund's public and private markets. The principle is that ESG investment will be given priority when the long-term returns of ESG investment are similar to other investments.

(Photo by Zheng Zifeng)

Due to the slow development of the Hong Kong ESG market, policy makers and regulators need to step in and promote it.

The SFC's December 2019 investigation report proposed three short-term measures, including: (1) setting expectations for asset management companies; (2) providing guidance and strengthening training; and (3) establishing industry groups to promote exchanges.

Regulatory agencies improve the requirements of policies and regulations so that asset owners will not be entrusted by others, so as to enhance the foundation of industry performance. Improving communication, coordination and coordination will help the industry to share experience and improve together.

At present, the development of ESG in Hong Kong is mainly promoted by regulatory agencies. The Securities Regulatory Commission and the Monetary Authority have successively introduced different measures.

Although the Hong Kong government has contributed a lot in the development of green bonds, it has deficiencies in other areas such as ESG.

Luo Wenhua believes that Hong Kong should learn from the experience of green finance in Germany and the United Kingdom. For example, state participation and the role of policy banks are characteristics of German green finance.

For details, please read the 293th "Hong Kong 01" Electronic Weekly Newsletter (November 29, 2021) "

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