Acting SFST's speech at "EU and Hong Kong: The Green Way Forward" forum (English only) (with photo)
16.3.2023

Following is the speech by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan, at the "EU and Hong Kong: The Green Way Forward" forum today (March 16): Thomas (Head of European Union Office to Hong Kong and Macao, Mr Thomas Gnocchi), I&ntilde;aki (Chairman of the European Chamber of Commerce in Hong Kong, Mr I&ntilde;aki Amate), ladies and gentlemen, Good afternoon! I am pleased to join you here today at the "EU and Hong Kong: The Green Way Forward" conference. Riding on the success last year, this year the conference comes to its second edition for senior business leaders and government representatives to discuss how we can chart a green way forward together. Both the EU (European Union) and Hong Kong have committed to achieving carbon neutrality, and there are indeed many opportunities for us to explore and collaborate. Combating climate change is an important issue across the globe. World leaders reaffirmed their commitment to combating climate change at COP27 in Egypt last November. In our country, the Central People's Government has set out in the 14th Five-Year Plan to promote comprehensive green transformation of economic and social development, and it endeavours to have carbon dioxide emissions peak before 2030 and achieve carbon neutrality before 2060. In Hong Kong, we also strive to reduce Hong Kong's carbon emissions by 50 per cent before 2035 and achieve carbon neutrality before 2050. In light of global efforts in promoting green transformation and tackling the challenges from climate change, financing is required in a massive scale. As Asia's leading international financial centre, Hong Kong is well-positioned to be the green and sustainable finance hub of the region. Over the years, the amount of green debt arranged and issued in Hong Kong has been increasing steadily, with local, Mainland and overseas issuers using Hong Kong's green finance platform. Multilateral agencies such as the World Bank, the European Investment Bank and the Asian Development Bank have also made use of our platform to issue green bonds. In 2021, the volume of green and sustainable debt (including both bonds and loans) issued in Hong Kong amounted to US$56.6 billion, which is four times of the previous year, and Hong Kong accounted for one-third of the Asian green and sustainable bond market in 2021. In addition to green bonds, we have also seen the world's first Asian Green Bond ETF, Asia's first Green Retail Certificate of Deposit, as well as the world's first offshore ESG A-share ETF were issued in Hong Kong, demonstrating the wide range of sustainable financial products developed in our market. The Government will continue to work in concert with our financial regulators and the industry to develop green and sustainable finance in Hong Kong through a multipronged strategy, providing the necessary infrastructure and impetus for market development. Since 2019, we have successfully issued Government green bonds under the Government Green Bond Programme totalling close to US$16 billion equivalent. This year, we made the largest ESG bond issuance in Asia totalling US$5.75 billion equivalent in January, including Euro-denominated green bonds totalling EUR1.25 billion, and we issued the world's first government tokenised green bond in February. These issuances set an important new benchmark for potential issuers in Hong Kong and the region, and enriched the green and sustainable finance ecosystem. To support green and sustainable bond issuance and lending to further enrich the green and sustainable finance ecosystem in Hong Kong, the Government launched the Green and Sustainable Finance Grant Scheme in 2021 to provide subsidy for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services. It subsidises the bond issuance costs subject to a maximum subsidy of HK$2.5 million per issuance, and external review costs subject to a maximum subsidy of HK$800,000 per issuance. The scheme has been well received by the industry. As at late-February 2023, we have granted over HK$160 million to over 210 green and sustainable debt instruments issued in Hong Kong, involving a total underlying debt issuance of nearly US$70 billion. To co-ordinate the management of climate and environmental risks to the financial sector, accelerate the growth of green and sustainable finance in Hong Kong and support the Government's climate strategies, the Green and Sustainable Finance Cross-Agency Steering Group was established by relevant government bureaux and financial regulators in May 2020. The Steering Group is taking forward a number of initiatives to advance Hong Kong's green and sustainable finance development. Following the publication of the Common Ground Taxonomy report by the International Platform on Sustainable Finance, the Steering Group will, with the aim of aligning with the Common Ground Taxonomy, work towards proposing the structure and core elements of the local green classification framework for consultation, which shall facilitate easy navigation among the Common Ground Taxonomy, the Mainland's taxonomy and the EU's taxonomy. In addition, the Steering Group supports the development of a global uniform set of sustainability reporting standard. The Steering Group will make climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations mandatory across relevant sectors no later than 2025. In March 2022, the International Sustainability Standards Board (ISSB) published the exposure drafts on the general requirements for sustainability-related disclosure standard and climate-related disclosure standard, which are built on the TCFD recommendations. The Securities and Futures Commission and the Stock Exchange of Hong Kong Limited formed a joint working group with a view to developing proposals that are aligned with the ISSB standards for Hong Kong-listed issuers. The joint working group conducted soft consultations with over 50 listed issuers and professional bodies in 2022 and will take into account their feedback when developing the proposals. Ladies and gentlemen, the HKSAR Government will continue to work closely with the industry and relevant stakeholders to develop Hong Kong as a green and sustainable hub in the region, leveraging the enormous opportunities presented by the Greater Bay Area development and the Belt and Road Initiative, and serving as a premier financing platform for international and Mainland green enterprises/projects. We look forward to continued collaboration with the EU as we seek to combat climate change together as members of the global community. Thank you and I wish you all a rewarding conference today.