FoE(HK) Green Finance Blog 香港地球之友綠色金融網誌

Karen Ho, Green Finance Advisor of Friends of the Earth (HK)

The Stock Exchange of Hong Kong Limited (HKEX) just published last Friday its Consultation Paper “Review of the Environmental, Social and Governance (ESG) Reporting Guide and related Listing Rules”.

One of the key focus of its consultation paper is climate change. HKEX proposed to require disclosure of policies on measures to identify and mitigate the significant climate-related issues which have impacted, and those which may impact the issuers, and the action taken to manage them. It proposed to revise the Environmental KPIs to require disclosure on a description on target set regarding emissions, energy use and water efficiency, waste reductions etc and steps taken to achieve them. It also proposed to require disclosure of Greenhouse Gas Scope 1 and Scope 2 emissions. All of disclosure mentioned are subject to “comply or explain”.

Better Disclosure means Better Market Efficiency

As we discussed in our blog last week, HKSAR Government is catching up on Green Finance and we are pleased to see that HKEX is seeking to strengthen its ESG rules. Whilst the Task Force on Climate-related financial disclosure (TCFD) Recommendations focus on material risks and opportunities from climate change perspectives, HKEX’s Guide applies more broadly across all environmental and social areas.

It is clear that climate change has already begun to affect global business, with extreme weather, threatening company assets and supply chains. As the environment evolves, companies that improve their energy efficiency and create new products and services will survive and companies that are slow to change will struggle.

Investors rely on ESG data to identify which companies may be best positioned to succeed in a sustainable world. FoE welcomes HKEX’s commitment in strengthening disclosure on ESG and climate-related information as it would help to drive better market efficiency. 

Si Ling Wong, Green Finance Advisor of Friends of the Earth (HK)

The theme of this Blog is “Green Finance”. So what is Green Finance actually? One could google and get a very detailed definition from the website. My simple interpretation is “Responsible Investment”.

When we talk about finance or investment, the first thing that comes into mind would be money making – this is very true and fair. Everyone works to earn and support living and if an investment is not going to bring any benefit, who will be doing it?

That’s why we may need more incentive/ pressure from the government. Hong Kong has been a bit behind our peers in this area but the government is trying to catch-up. Starting from 2017, listed companies are required to follow the comply-or-explain obligations from the Hong Kong Stock Exchange in making their Environment, Social and Governance (“ESG”) reporting. The HKSAR Government announced the launch of the Green Bond Grant Scheme in June 2018 to subsidize eligible green bond issuers in obtaining certification under the Green Finance Certification Scheme established by the Hong Kong Quality Assurance Agency. The Securities and Futures Commission (“SFC”) issued a circular to provide guidance to management companies of SFC-authorized green or ESG funds on enhanced disclosures last month. A roadshow for the HKSAR Government’s first green bond under its HK$100 billion green bond program was also kicked-off last Tuesday.

More information on the latest HKSAR government’s green initiatives could be read here: https://www.hkma.gov.hk/eng/key-information/press-releases/2019/20190507-4.shtml

While the government is picking up the pace, general public could also contribute via “Responsible Investment” – buying shares/ bonds issued by companies that pay effort in managing ESG, allocating assets into funds that incorporate ESG in their investment decision-making process, etc. No big money is needed – every penny counts.

One last reminder: watch out for “Greenwashing”. Some corporates might use “green” deceptively just to promote their products/ brands. It will always be good to take a closer look at these “green” labels to avoid being fooled and dumping money into something actually evil and not sustainable.

Hong Kong is the leading asset management centre in Asia. FoE (HK) is pleased to see that HKMA will adopt a principle that priority can be given to Green investments. The government should demonstrate its green finance leadership by not only investing in green projects but also divesting from fossil fuels, and also encourage asset owners and investors to do so. Over 1,000 institutions with almost USD $8 trillion have committed to divest in fossil fuels.

The Hong Kong Monetary Authority (HKMA) today unveiled three sets of measures to support and promote Hong Kong’s green finance development. Climate change is universally regarded as the biggest threat to humanity. Friends of the Earth (HK) [“FoE (HK)”] lauds these measures and believes that they will help alleviate climate change.

Hong Kong is one of the top three international finance centres. However, the city ranks poorly compared to its traditional peers and even neighbouring cities on green finance, being placed 31st on the Global Green Finance Index. FoE (HK) welcomes the establishment of the Centre for Green Finance (CGF) under the HKMA Infrastructure Financing Facilitation Office (IFFO) to strengthen our position as a global green finance hub. 

To promote Green Finance in Hong Kong, FoE (HK) launched a “Green Finance Blog” on Earth Day 2019 (https://www.foe.org.hk/greenfinanceblog/). FoE(HK) will also announce our Green Finance Roadmap for Hong Kong on the World Environment Day, 5 June 2019. 

香港金融管理局 (金管局)今日公布三項措施以支持及推動香港綠色金融發展。氣候變化已被全球公認為對人類最大的威脅，香港地球之友歡迎相關措施並認為有助緩減氣候變化。

香港是亞洲領先的資產管理市場，本會樂見金管局優先考慮綠色投資。政府除了投資綠色項目，同時應向化石燃料撤資，並鼓勵其他資產擁有人及投資者跟隨，以展示出綠色金融領導地位。現時全球已有擁有約8萬億美元資產的超過1,000個機構承諾向化石燃料撤資。

香港是全球三大國際金融中心之一，可惜在全球綠色金融指數(Global Green Finance Index)只排行31名，綠色金融發展不敵傳統金融中心以及鄰近城市。本會歡迎在金管局基建融資促進辦公室下成立綠色金融中心，以鞏固香港綠色金融中心的地位。

為了推動綠色金融發展，香港地球之友在2019年世界地球日推出綠色金融網誌(https://www.foe.org.hk/greenfinanceblog/) ，並會在2019年6月5日世界環境日宣布本會提出的香港綠色金融路線圖。

Green Finance may sound like a remote concept, however it is closer to our everyday lives than we think.

In promoting Green Finance, we are helping to channel investments into opportunities which has both a good rate of return and also has a positive impact to the environment.

In the long run, it will promote more accountability from the financial industry across the ecosystem of banks, insurance companies, investment companies, corporates seeking financing, etc, to price such sustainability in their products, creating a win-win situation for both investors and for the planet.

In Hong Kong, there is a framework for Green Bonds.

Hong Kong is Asia’s fourth largest bond issuance center (Source: SCMP, June 2018) so us at FoE (HK) believes that we can do more to promote and encourage the issuance of such Bonds across corporations and investors. In addition to Green Bonds, there are other investment vehicles that we would like to introduce in this blog so you can also be aware of the types of Green Financing opportunities available to you.

As an additional reference material, the UN has also mentioned Green Financing as one of their regional initiatives in Asia Pacific, and you can read more about it in their website: – https://www.unenvironment.org/regions/asia-and-pacific/regional-initiatives/supporting-resource-efficiency/green-financing.

Furthermore we would like to share the view from practitioners in Hong Kong (Prof. Entela Benz-Saliasi – Adjunct Associate Professor of The Hong Kong University of Science and Technology, Ms. Alexandra Boakes Tracy – Founder and President of Hoi Ping Ventures), please enjoy the interview video.

綠色金融聽起來像一個遙遠的概念，但近年此議題已愈來愈靠近我們的現實生活。

推廣綠色金融，能令投資轉化為機遇，獲得高額回報之餘，對環境更具有正面幫助。長遠來說，綠色金融將可促使銀行、保險公司、投資公司、尋求融資的企業等金融機構負上更多責任，積極推出具可持續性產品，為投資者和地球創造雙贏局面。

在香港，我們已有綠色債券。

而香港更是亞洲四大債券保險市場之一 (資料來源: 南華早報, 2018年6月)，因此香港地球之友相信應在企業及投資者間廣泛推廣此類債券。

除綠色金融外，這個網誌將介紹更多投資工具，請密切留意著我們，亦希望你能找到適合自己的綠色投資類型。

順帶一提，聯合國已把綠色金融訂為亞太區重點關注議題之一，想了解更多，可瀏覽以下網址： https://www.unenvironment.org/regions/asia-and-pacific/regional-initiatives/supporting-resource-efficiency/green-financing.

現在，請各位觀賞兩位金融從業者對綠色投資的分享。