SFST's speech at HKUST Climate Adaptation and Resilience Conference 2022 (English only)
12.12.2022

Following is the speech by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at the HKUST Climate Adaptation and Resilience Conference 2022 today (December 12): Professor Tam (Dean of the Hong Kong University of Science and Technology (HKUST) Business School, Professor Tam Kar-yan), Professor Zhang (Head and Chair Professor of HKUST Department of Finance, Professor Zhang Chu), Christine (Chief Development Strategist of the HKUST Institute for the Environment, Professor Christine Loh), Eddie (Chief Executive of Hong Kong Monetary Authority, Mr Eddie Yue), ladies and gentlemen, Good morning. It gives me great pleasure to join you today for the HKUST Climate Adaptation and Resilience Conference. My thanks to HKUST for inviting me to join this very meaningful event, and congratulations to all who have put in efforts for the organisation of this conference. Today we are discussing an issue of global significance, so let's look at what's happening in a global context. At the COP27 (27th Conference of the Parties to the United Nations Framework Convention on Climate Change) that recently took place in Egypt, it has been agreed among participants that the Paris Agreement would remain intact, and the commitments are indeed reaffirmed and strengthened despite global headwinds. Also, there has been progress achieved across the board and the 1.5 degree Celsius target for global temperature rise is still in sight. Moreover, participating parties agreed to set up a historic loss and damage fund at COP27 to support developing countries that are particularly vulnerable to the adverse effects of climate change. We can see that despite difficulties and challenges of our times, concrete progress is still being made globally to address one of the biggest challenges facing mankind. Hong Kong, as an international financial centre connecting global capital with opportunities, has our unique and indispensable role to play in this. In the following few minutes, allow me to introduce to you our efforts around channeling capital to empower green and sustainable development. We have been working in concert with the financial regulators and the industry and taking a multi-pronged strategy to promote green and sustainable finance in Hong Kong, providing the necessary infrastructure and catalyst. Good progress has been made for various initiatives and market development. Total green and sustainable debt (including both bonds and loans) issued in Hong Kong quadrupled from 2020 to reach US$56.6 billion in 2021. Among others, the volume of green and sustainable bonds arranged in Hong Kong amounted to US$31.3 billion in 2021, accounting for one-third of the Asian international green and sustainable bond market. This shows that the development of green and sustainable finance in Hong Kong offers promising prospects. By leveraging our advantages as an international financial centre, Hong Kong can facilitate matching between international capital and quality green projects, contribute proactively to helping our country achieve its "3060 Target" in relation to carbon emission peak and carbon neutrality, as well as propelling Hong Kong towards our carbon neutrality target before 2050 and promoting green transformation of our economy. The Government has indeed took the lead to participate in the green and sustainable finance market. Since the establishment of the Government Green Bond Programme in 2018, the Government has successfully issued close to US$10 billion equivalent of green bonds which were well received by investors. This includes our inaugural retail green bond totalling HK$20 billion issued in May this year. It was the world's largest retail green bond at issuance. We will expand the issuance of government green bonds, with an increase in the total issuance amount by more than five times within the five years from 2021-22 as compared with the pre-2021-22 situation. We are also exploring to launch a pilot issuance of tokenised green bonds targeting institutional investors under the Government Green Bond Programme. We have shared this via a previous policy statement published for the development of virtual assets sector in Hong Kong. That is another hot topic to discuss and we are exploring how financial innovations can empower green transformation. Besides the Government's initiatives, it is equally important to promote the private sector's participation. Under the Green and Sustainable Finance Grant Scheme, as at early December 2022, we have granted close to HK$150 million to over 170 green and sustainable debt instruments issued in Hong Kong. We welcome and encourage more bond issuers and loan borrowers to make use of this Scheme and issue more green and sustainable bonds and loans in Hong Kong. Further on that, to promote sustainable development of this sector, nurturing talent is crucial. Having regard to the new trend of developing a low carbon and sustainable economy, we have earmarked HK$200 million for launching the three-year Pilot Green and Sustainable Finance Capacity Building Support Scheme which provides subsidies for the training and acquisition of relevant professional qualifications in sustainable finance as part of a collaborative effort to build capability for the industry. We have been liaising and communicating with stakeholders in the industry and course providers on the implementation details. We have begun accepting applications for registration as an eligible programme since late October this year. The Scheme will be officially launched very soon. The eligibility requirements and procedures for subsidy application by individuals, the first batch of eligible programmes, as well as other details will be published then. Also, formed by relevant government bureaux and financial regulators, the Green and Sustainable Finance Cross-Agency Steering Group launched the Sustainable Finance Internship Initiative in October this year to create more sustainable finance internship opportunities in Hong Kong for students, facilitating them to gain relevant hands-on experience and supporting the development of the green and sustainable finance talent pool in Hong Kong. Last but definitely not the least, we have been joining hands with financial regulators to take forward various measures to develop Hong Kong into a global, high-quality voluntary carbon market. HKEX (Hong Kong Exchanges and Clearing Limited) signed a MoU (Memorandum of Understanding) with the Guangzhou-based China Emissions Exchange in March 2022 to explore co-operation opportunities in carbon market financing. In July this year, HKEX launched the Hong Kong International Carbon Market Council, which aims to build momentum in the development of an efficient and effective Hong Kong-based international carbon market. In October this year, HKEX launched Core Climate, a new international carbon marketplace that facilitates effective and transparent trading of carbon credits and instruments. Core Climate participants can trade voluntary carbon credits to neutralise or compensate for the buyers' carbon emissions. This is a key step towards developing Hong Kong into a global, high-quality voluntary carbon market and consolidating Hong Kong's position as a green and sustainable finance hub in the region. Core Climate is currently the only carbon marketplace in the globe that offers Hong Kong dollar and Renminbi settlements for the trading of international voluntary carbon credits. All projects available on Core Climate, including carbon avoidance, reduction and removal projects, are verified against the Verified Carbon Standard by Verra. The platform recorded more than 40 trades in less than a month between October 28 and November 24, 2022, representing a total volume of around 400 000 tonnes of carbon credits. Looking ahead, HKEX will continue to actively expand the carbon trading ecosystem, including expanding product types and services, improving trading mechanisms and infrastructure, exploring the development of relevant standards applicable to Hong Kong, and promoting the transformation towards a low-carbon economy in the region, with a view to developing Hong Kong into a leading international carbon market. Ladies and gentlemen, we will continue our efforts and work closely with the financial sector and relevant stakeholders to develop and promote Hong Kong as a green and sustainable hub in the region. We will leverage on the enormous opportunities presented by the Greater Bay Area development and the Belt and Road Initiative to serve as a premier financing platform, and we will facilitate international and Mainland green enterprises/projects in raising funds through issuing bonds, funds, initial public offerings and other channels. I hope today's conference will bring us more wisdom and insights as we chart the way forward together. Thank you.