Tackling global climate change is central to competition and innovation.
Countries representing 85 percent of the world’s emissions have signed up to national emission reduction targets before the Paris talks starting today.
The world is moving towards a low carbon economy. Businesses are calling for more ambitious action, with a clear signal from Paris to set a high carbon price.
There may be more risk in being left behind than in taking the lead.
The Pearl River Delta is vulnerable to climate change. Even limiting the global temperature rise to 2 degrees, swaths of the PRD could be underwater by 2100 with a sea level rise of 4.6 meters.
Other climate risks to health, water and food security may also occur.
The Guangdong Civil Affairs Bureau announced in 2013 that the economic cost of dealing with the consequences of climate change was 49 billion yuan (US$7.7 billion).
Hong Kong, owning about 30,000 factories within the PRD and relying heavily on supplies from the region, faces challenges from these climate risks.
Although cities’ high consumption patterns make them part of the problem, they can also be part of the solution. Particularly those such as London and Hong Kong which host global financial centers.
The overall UK low carbon sector is now outpacing the growth rate of the economy as a whole, contributing £45 billion (US$67.8 billion) to the economy in 2013, an increase of almost 30 percent in three years.
Hong Kong has started to embrace the social and economic benefits of low carbon transition. The Hong Kong SAR government’s Climate Change Report 2015 presents the good work done by government and private sector, emphasizing benefits in the form of new green jobs and enhanced “livability”.
We look forward to seeing how Hong Kong will shape its commitments beyond the current 2020 target.
Mainland China’s pledge to reduce its carbon intensity by 60-65 percent by 2030 provides new impetus.
Like London, Hong Kong faces risks as an international financial center.
The Inter-governmental Panel on Climate Change estimates a “carbon budget” that the world can “afford” to emit, that would likely limit global temperature rise to 2 degrees.
This budget is roughly equivalent to one third of the fossil fuel reserves. In this scenario, two thirds of the reserves should never be burned, which makes them “stranded assets”.
Calls for divestment from fossil fuel (and announcements from investors that they intend to follow this route) are becoming commonplace in the United States and Europe.
The exposure of investors, including pension funds and the insurance sector, is potentially huge. Hong Kong will not be immune.
The Bank of England has recognized this potential threat to financial stability and is committed to tackling the challenge, focusing on information disclosure.
Better information allows investors and policy makers to make sound risk management decisions.
Hong Kong is also engaging, with debate on Hong Kong stock exchange’s proposals to strengthen the rules on carbon disclosure for listed companies.
And financing global de-carbonization is a major opportunity. China is committed to greening its financial system to support its low carbon transition.
A UK-China working group on international green finance is already active.
We welcome the lead taken by the Financial Services Development Council in examining the opportunities for Hong Kong.
“One Country, One Climate” – Hong Kong can contribute.
Innovative low carbon solutions bring better lives, better business and a better planet.
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