HKMA Pushes Hong Kong as Green Bond Hub
Riding on the growing focus of sustainable investing and climate change, the Hong Kong Monetary Authority said the city could develop to become a green bond hub for Greater Bay Area.
In an effort to combat climate change and reduce global temperatures, financiers globally have joined with other industries to contribute via sustainable finance and investments. In 2019, for example, Hong Kong arranged and issued $10 billion of green bonds – or nearly 4 percent of the $261 billion issued globally that year.
«Hong Kong, as a leading financial center, can make a substantial contribution to bringing this [climate change ]goal into reality,» said Edmond Lau, senior executive director at the HKMA, in a statement. «Multiple incentive policies have been launched to attract market participants to join the great green wave.»
Issuer and Investor Optimism
In a survey commissioned by the Hong Kong Institute for Monetary and Financial Research (HKIMFR), where Lau is also a deputy chairman, issuers cited various advantages of the Hong Kong market including the broad scale of international investors, availability of government subsidies, and low legal and marketing costs.
From the investor perspective, 40 percent named as the key motivation for green bond participation the presence of socially responsible issuers and transparent disclosure on environmental, social and governance-related issues.
And with regards to challenges, survey respondents highlighted issues around verification costs certification procedures, low public awareness and heterogeneous standards.
Strategic Recommendations
Moving forward, the survey recommended that the green bond advocates focus on improving related infrastructure to drive the agenda forward.
Strategic recommendations include improved ESG disclosures; supporting responsible investment and government issuance; greater convergence towards international practices; facilitation of cross-border issuance; and the construction of related indices and an exchange.
«We hope that this report raises awareness of the general public on the benefits of green finance and serves as a starting point of an active dialogue among market participants, researchers, and policymakers, who share the common goal of making our home a greener and better place for future generations,» Lau said.
