Norman Chan: Welcome remarks - 2018 Green and Social Bond
Principles Annual Conference
Welcome remarks by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary
Authority, at the 2018 Green and Social Bond Principles Annual Conference, Hong Kong, 14 June
2018.
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Financial Secretary, Martin, distinguished guests, ladies and gentlemen,
1. Welcome to the 2018 Green and Social Bond Principles Annual Conference, co-organised
by the Hong Kong Monetary Authority (HKMA) and the International Capital Market
Association, supported by the Hong Kong Financial Services Development Council.
2. Today's conference is the flagship event in the world of green finance, and rightly so. Since
the publication of the Green Bond Principles (GBP) in 2014, it has become the de facto
global standard for green bond issuance. These days, a majority of the green bonds issued
globally follow the GBP framework, and many major markets base their local green bond
standards on the GBP. In this Conference, we will have the opportunity to hear more about
the latest enhancements to the GBP, and how green standards have been developing in
different parts of the world.
3. Today's conference is notable also because of its location. As Martin said, it is the first time
that the conference is held in Asia. Looking at the turnout, it is a good choice. I am not just
referring to over 900 registered attendees - this is clearly impressive. I am also referring to
the geographical mix, with a large showing from Asia, in addition to delegates from Europe.
This is a testament to the rapid growth of the green bond market in region.
4. Indeed, over the past few years, the green bond market has grown exponentially, including
the green bond market in Hong Kong, and we are very pleased about this development. For
many years, the HKMA has been working to promote the development of the Hong Kong
bond market. Today, Hong Kong is the third largest bond issuer in Asia ex-Japan, behind
only the Mainland of China and South Korea.
5. The HKMA plays more than just the promoter role in green finance. As many of you may
know, the HKMA is the investment manager of the Exchange Fund. With assets under
management over USD500 billion at the end of last year, we are one of the world's largest
asset owners. The HKMA has been very supportive of responsible investment, and has
incorporated environmental, social and governance, or ESG, principles into our investment
processes. Our disclosure rules would not allow me to give too many details. Suffice to say
that items from green bonds to renewable energy projects such as wind farms feature in our
portfolio.
6. As a long term investor, the HKMA considers risk and return over a long horizon. We believe
looking at an investment proposal through the ESG lens would complement our normal
riskreturn analysis, and help unveil the long-term value and risk of an investment.
7. In particular, we invest in green because we see it as a driver of long-term value, in addition
to wanting to do the right thing. Contrary to some perception that investing in green
undermines return, our experience shows that many green investments that are good for the
environment can also be good for investors over the long term. I see the application of green
and ESG in investment as just another balancing act that investors have to perform. Exactly
where and how to draw the line depends on the specific circumstances at hand. While
some green bonds may produce slightly lower yield or returns as compared with the
conventional bonds, I truly believe that time has come for asset owners to take a more
progressive and proactive stance in supporting green finance. I don't think there is much
disagreement amongst the stakeholders on whether green finance can make a difference in
promoting long-term environmental sustainability. The big question is whether the
stakeholders, especially the asset owners, be they pension funds or sovereign wealth funds,
want to make a difference by taking concrete steps to invest in green finance. We in the
HKMA are prepared to play our part and I sincerely hope our peers will join us in owning and
pursuing the goal of supporting green finance.
8. Ladies and gentlemen, we have today a rich agenda and the presence of many
distinguished speakers. I hope that this will be a successful conference and all of you will
have a fruitful and productive discussion.
9. Thank you very much.