HKMA sets up inter-agency group for green finance

The Hong Kong Monetary Authority has set up an inter-agency group to promote the city’s role in green and sustainable finance.

The group aims to accelerate the growth of green and sustainable banking in Hong Kong, as well as support the government’s climate strategies, the HKMA said. Seven financial regulators and government bureaus – including the HKMA and the Securities and Futures Commission – will take part in the initiative.

The group will also work with organisations regulated by the Chinese government in the Guangdong-Hong Kong-Macao Greater Bay Area. The government is seeking to enhance co-operation between its southern province Guangdong and Hong Kong.  

The steering group has set up two work streams, the HKMA said in a statement issued after the group’s inaugural meeting on May 5. The first stream will address cross-sectoral regulatory issues, while the second will co-ordinate different agencies’ efforts at developing the green finance market.

Over the next six months, the group will work to reduce the disparities in different regulatory agencies’ disclosure requirements for green financing, the HKMA said.

“We need different agencies to work together to develop the regulations for green financing,” said Edmond Lau, senior executive director at the HKMA, during a teleconference on May 5. “It cannot be developed by a single regulator.”

“Climate change is a source of financial risk impacting the entire financial sector and is highly relevant to our mandate,” said Eddie Yue, chief executive of the HKMA and co-chair of the steering group. “As a premier international financial centre, Hong Kong can play a pivotal role in promoting sustainable development and powering the transition, especially in Asia.”

Huge green investment needs

Asia will need large amounts of investment in infrastructure to mitigate climate risk across the region, according to a recent report from the Asian Development Bank. The report estimated that a total of $1.7 trillion per year will be required through to 2030 for the region to maintain growth momentum and respond to climate change.

Asia’s issuance of green bonds still lags behind that of jurisdictions such as the European Union. Total proceeds of green bonds in the EU reached $96.5 billion last year from 241 issuances, while proceeds in Hong Kong stood at $1.4 billion from five issuances, according to data compiled by Refinitiv. In China, the total green bond proceeds of 2019 were $23.4 billion.

The HKMA joined the Network for Greening the Financial System as an observer in October 2019. It facilitated the Hong Kong government’s inaugural $1 billion, five-year green bond in May last year.