Eddie Yue: Opening keynote - "Scaling up sustainable finance in
Asia" conference
Opening keynote by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary
Authority, at the ASIFMA "Scaling up Sustainable Finance in Asia" conference, Hong
Kong, 17 March 2023.
* * *
Alice, Diana, distinguished guests, ladies and gentlemen, Good Morning,
Let me start by thanking ASIFMA for inviting me to this Sustainable Finance
Conference. It is my great pleasure to share with you Hong Kong's vision and the
concrete steps being taken to strengthen our leading role in green and sustainable
finance.
As we come into Spring after a colder-than-usual winter, this is a good time to talk
about the advances that happen when the right ecosystem is combined with the right
opportunities.
In the financial world, green and sustainable finance brings extraordinary opportunities.
And if we are looking for the best ecosystem for these opportunities to flourish, Hong
Kong is the place.
The climate challenge to Asia is huge, and urgent. Meeting this challenge will require
substantial investment - some US$66 trillion over the next three decades based on
market estimates. China alone will require more than 100 trillion yuan.
The multi-trillion-dollar funding need can hardly be met by the public sector alone, and
climate finance plays a crucial role here. It helps the public sector raise funding from the
market to finance climate projects and initiatives. It also mobilises private capital to
directly fund climate actions. In the process, the private sector gets to mitigate the
climate risks of its own assets while at the same time seeking reasonable returns. By
doing well, we also aim to do good.
As an international financial centre and a green finance hub, our vision is to play a big
role in harnessing the power of finance to support the transition efforts in the region.
The vision is underpinned by our strong commitment and concrete actions that help
create a conducive ecosystem where climate financing can scale, and bring about
desirable opportunities and outcomes for the financial sector.
A vibrant and competitive climate finance ecosystem needs to be underpinned by a few
other critical elements: standards, data and, above all, talent. The work requires
leadership from the public sector and partnership with the private sector. In all these
areas, the HKMA is joining hands with Government agencies, fellow regulators as well
as stakeholders from the financial sector, academia and business community. Much of
our joint effort is coordinated through the Cross-Agency Steering Group on Green and
Sustainable Finance co-founded by the HKMA and the SFC.
First, on standards. A common set of green standards, to the extent possible, is
important to enhance the transparency, comparability and efficiency of climate
finance. Hong Kong is a front runner in setting regulatory requirements for the financial
sector. We are the first Asian jurisdiction mandating climate-related disclosure across
the financial sector by 2025, in line with the global framework set by the Task Force on
Climate-related Financial Disclosures. We also made an early commitment to adopting
new standards promulgated by the International Sustainability Standards Board.
Hong Kong adopts the Common Ground Taxonomy jointly developed by China and the
EU. We are now exploring the development of a green classification framework on the
basis of the China-EU taxonomy, in order to provide the necessary disclosure and
guidance to inform capital allocation and encourage market discipline.
The HKMA has set clear rules - for example by formulating clear supervisory
requirements and integrating climate-risk into the supervisor-driven stress-testing
framework.
The various regulatory requirements help build climate resilience into our banking and
financial sector. In the process, financial intermediaries such as banks also act as
facilitators to help the real sector adapt and transition, in line with global consensus and
commitment to achieving carbon neutrality.
Second, on data. Currently, there is a lack of accessible, standardised data and
analytics support in the market. It presents a challenge, not just for climate risk
management but for other purposes such as portfolio assessment and business
development. We are working with other regulators and the private sector to address
these issues, by improving data accessibility and developing a data repository and
analytics capability for the industry.
We are making good progress. One recent example is the collaboration with the Carbon
Disclosure Project, a leading international environmental disclosure platform, to launch
a climate risk assessment project that assists corporates especially SMEs in reporting
company-level, climate-related data to help financial institutions assess risk and make
credit decisions.
Let me now turn to the third critical element, which is talent. And this is also our key
focus area. We are undertaking multiple tasks here.
Number one is training. We began by collating and sharing information about
highquality training courses and qualifications through a centralised platform run by the
Centre for Green and Sustainable Finance.
Number two is incentives. Through a government-funded green finance training
scheme, we provide subsidies to help market practitioners, students and graduates
obtain training and qualifications related to green and sustainable finance.
Number three is developing a regulator-approved knowledge framework, or what we
call the Enhanced Competency Framework, to provide a more structured programme
for banking practitioners to build their knowledge and expertise in green and
sustainable finance.
This is a major undertaking that calls for close collaboration between the public and
private sectors. It requires more than just regulatory push. The developmental work is
equally important to provide the necessary ecosystem that supports climate
financing. Indeed, Hong Kong has gone a long way in this regard and has firmly
established its leadership role in the field of green and sustainable finance.
As a snapshot, green and sustainable debt issuance in Hong Kong totalled US$57
billion in 2021. It accounted for one third of international issuance of green and
sustainable bonds in Asia. In 2022, we continued to see strong momentum, in
particular in the area of green and sustainable loans.
The vibrant green bond market is in part a result of the many breakthroughs made by
the Government Green Bond programme. Since 2019, the HKMA has assisted the
Government in issuing nearly US$16 billion worth of green bonds targeting both
institutional and retail investors.
We made use of each issuance to innovate and expand the suite of green bond
products in terms of currencies, tenors and distribution channels, thus laying the
foundation for other public and private sector issuers in the region. These issuances
kept pushing the boundaries. Just over the last few years, we made the world's largest
retail green bond issuance, Asia's largest ESG bond issuance, and issued the world's
first tokenised government green bond.
We will continue to seek new breakthroughs. In the coming five years, planned annual
issuance of Government Green Bonds will increase from US$35 billion to US$65
billion. The mandate of this programme will be expanded to cover sustainable bonds as
well. We will also consider how best to incorporate green and sustainability elements
into a new infrastructure bond programme we are developing for the Government.
We will continue to press ahead with the experimentation in tokenised green bonds,
leveraging blockchain technology to enhance the efficiency of bond issuance and
transaction, and to explore real-time tracking and reporting of the environmental impact
of projects funded by bond proceeds.
And to promote financial inclusion, we are now looking into an arrangement to earmark
a certain proportion of future green and infrastructure bond issuances for priority
investment by MPF funds. This will provide a meaningful investment option for MPF
scheme members to receive reasonable returns while investing in a better future for our
city.
Climate finance is a subject that is very dear to the hearts of many of us here. It's also
an exciting subject that I could keep talking about. But I am aware that I have taken
more than a fair share of your time. So what remains for me is to wish the ASIFMA
event every success, and double down on the HKMA's commitment to working with
ASIFMA towards our common purpose of scaling up Hong Kong's green and
sustainable finance.
Thank you.