Special commissioned by Alexandra Tracy, President of Hoi Ping Ventures / 特約撰稿Hoi Ping Ventures主席 Alexandra Tracy
Green finance in Hong Kong has really started to take on some momentum over the past few months, with a raft of announcements from policy makers which will have an impact across a range of financial sectors.
In a bold signalling move, Hong Kong has become the first Asian government to sign up to the Green Bond Pledge, while issuing its first tranche of sovereign green bonds in May. In a similar vein, the Hong Kong Monetary Authority will reportedly soon become a signatory to the United Nations Principles of Responsible Investing, and is looking at joining the central banks’ Network for Greening the Financial System.
More tangibly, on the ground, HKMA has also announced a new sustainable bank initiative for Hong Kong banks, aiming to push them towards greater “greenness” and will create a Centre for Green Finance to provide technical assistance. On the investment side, HKMA’s Exchange Fund is looking to incorporate more ESG principles into its activities, while the Securities and Futures Commission and the Hong Kong Stock Exchange are looking to heighten ESG disclosure by listed companies and fund providers.
So, green finance in Hong Kong is moving forward, and this is a good thing. Financial markets must evolve to keep ahead – Hong Kong can’t play the “offshore RMB” card for ever – and competence in this area is likely to be essential to maintaining global market competitiveness.
What is green finance for?
But let’s look at the bigger picture for a moment: not so much, “what is green finance?” (and how do we get really good at it ?), but also, “what is green finance for ?”
There is a huge demand for financing for green and sustainable development, infrastructure and business. Trillions of dollars need to be invested in our region every year to achieve the Sustainable Development Goals. Construction of cclimate smart infrastructure alone in developing Asia is likely to cost nearly US$2 trillion annually.
Much of that investment, over time, will increasingly come from so called “mainstream” investors, as we see business practices shifting towards more green and sustainable norms. Where green finance is needed – in the short to medium term – is to fill market gaps and to fund projects and businesses that traditional fund managers and banks currently won’t touch.
When this is done correctly, it can be incredibly powerful and transform local markets.
For example, the Connecticut Green Bank in the US has implemented one of the most successful commercial building energy efficiency programmes in the world, creating a structure for long term financing of energy upgrades, which was not then available from banks in the state. The positive performance of loans under the programme has since attracted several private funders into this sector.
Similarly, the Indian Solar Loan Programme transformed the market for solar home systems in Southern India from a small, cash only business into a thriving sector which was able to attract significant bank capital. With initial support from the UN, local banks could become familiar with the potential risks of funding solar and appreciate the opportunities in this growing business line. They are now lending on purely commercial terms.
Transforming business as usual
Green finance plays a crucial role in financing businesses that struggle to raise funding from traditional sources. Its value lies in transforming “business as usual” – enabling green and sustainable activity that might not otherwise be able to succeed.
At the same time, green finance is itself a business, which can generate substantial rewards both for its proponents and for the wider economy. Growing the pool of capital available in Hong Kong to green businesses will create new opportunities for the financial services sector, as well as supporting the low carbon technology, construction and supply chain sectors.
在切實執行方面，金管局還宣布了一項針對本地銀行業可持續發展的新計劃，旨在推動各銀行邁向更「綠」，另外亦將成立綠色金融中心以提供技術支援。在投資方面，金管局外匯基金希望將更多ESG (環境、社會與管治) 原則納入其運作當中，而證券及期貨事務監察委員會及香港交易所則建議加強上市公司及基金服務供應商的ESG披露規定。
由此可見，香港在綠色金融上正迅速發展，這絕對是一件好事。金融市場必須與時並進才能保持國際領導地位。香港不能永遠只依靠「離岸人民幣」這張王牌 — 發展綠色金融的能耐可能對香港能否維持全球市場競爭力至關重要。
隨著時間的推移，隨著商界採納綠色和可持續的標準規範，以上所述的投資項目資金將會越來越多來自所謂的「主流」投資者。而推動綠色金融的作用 — 在中短期內 — 便是填補市場的空白，為傳統基金經理和銀行目前不會參與融資的項目和業務提供資金。