Mostafa Monira Firdouse, Green Finance Advisor of Friends of the Earth (HK)

Green bonds are becoming top investment vehicle of choice for the private and public sectors to finance projects. On March 2019 Hong Kong government issued Green Bond Framework, specified eligible categories in the Hong Kong SAR. such as renewable energy, waste management and resource recovery, water and waste water management etc. Sectors are attractive to the growing number of investors with an interest in sustainable investment options and are generally oversubscribed. While most green bonds are issued by banks, it is increasingly common for corporations to issue their own bonds. Big brands in the technology, utilities, automotive and consumer products sectors are among those that have done so.

Along with the advantages, there are also challenges and uncertainties for green bond issuers as the market is still new. Besides, green bond investors are becoming more demanding and increasingly want independent assurance that bond proceeds have been monitored and managed appropriately. Considering the crucial importance, it is necessary to develop local expertise in green certification services. The HKSAR Government has been encouraging the Hong Kong Quality Assurance Agency (“HKQAA”) to develop a Green Finance Certification Scheme (“GFCS”), which provides third-party conformity assessment on green financial instruments by making reference to a number of international and national standards.

There are number of things should be discussed about the framework. However, I wanna start with GREEN BUILDING category, which immediately caught my eyes, specially, project eligibility, which includes: construction of new government buildings/ facilities and renovation/ retrofitting of existing government buildings/ facilities that have received or are expected to receive a recognised green building certification. We all know, the Hong Kong’s public housing supply will be ramped up to account for 70 per cent of the target for the next decade, the government announced on Dec. 20, 2018 in a major policy change to provide more affordable homes. The move is a departure from a policy adopted in 2014, where public rental housing and subsidised flats accounted for 60 per cent of the total housing supply target, while the remaining 40 per cent would be private flats.

My questions:

  • Green Building category covers public housing, educational institutions, hospitals etc.?
  • How about financial markets and banks, any new product coming to serve green financing needs?
  • What is the competitive advantage for existing private housing, while government is taking over 10% of more share?
  • Besides, why social benefits are not included in this framework?