Why Hong Kong must push green finance

June 02, 2016 11:59
As the world requires trillions of dollars of investments to promote sustainable development, there will be huge opportunities for financial hubs such as Hong Kong.

Under the Paris climate accord concluded at the end of 2015, signatories agreed to work toward holding the increase in global average temperature to well below 2 degrees Centigrade above pre-industrial levels.

To achieve the ambitious goal, countries across the world will need to make huge capital investments.

At the G20 summit in February this year, major powers held discussions on promoting sustainable and low-carbon emission development, as well as how to raise US$90 trillion to achieve that.

It is estimated that Asia alone would require a total of US$2.4 trillion to facilitate the development of renewable energy sources up until 2030.

Given that, it really doesn't take an expert to figure out that "green finance", which refers to a global initiative to combine the world of finance and business with environmentally friendly activities, will present enormous business opportunities for global financial hubs such as Hong Kong.

Earlier this year, I placed before Hong Kong's Legislative Council the issue of how our city can tap into the emerging global green finance market.

I believe there are several ways in which the government can facilitate the development of green finance in Hong Kong. Here are some points:

1. Hong Kong has lagged behind almost all other major financial centers in promoting the green bond market. As it is expected that China will have to issue a lot of green bonds to finance environment-friendly projects in the days ahead, Hong Kong should make the most of its advantage as the world's largest offshore clearing center for the renminbi and tap into the huge green bond market in the mainland.

2. In order to facilitate the development of green finance, the government should set official standards for the definition of green financial products and projects to make sure all industrial or infrastructural projects financed by green bonds are truly environmentally friendly, so as to enhance global investors' confidence in our market.

3. The Hong Kong stock exchange should review its listing requirements and introduce more flexibility so as to encourage more promising green start-ups to go public and raise funds in the city.

4. Our government must work closely with the financial sector to nurture more local talent specializing in the various aspects of expertise in green finance, such as the professional assessment of environmental and climate risk and returns forecast of projects that intend to raise funds in the green financial market.

This article appeared in the Hong Kong Economic Journal on June 1

Translation by Alan Lee

[Chinese version 中文版]

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Member of Legislative Council (Functional Constituency – Accountancy)