Today, Friends of the Earth (HK) (FoE (HK)) and Center for Economic Sustainability and Entrepreneurial Finance, The Hong Kong Polytechnic University (CESEF) jointly organized an online forum on Green Finance titled, “ESG Implementation in Hong Kong”.
Mr. Chan Ho Lim, Joseph, JP, Under Secretary, Financial Services and the Treasury Bureau and Wilfred Yiu, Head of Markets, Hong Kong Exchanges and Clearing Limited delivered keynote speeches and analyzed the latest policy and regulatory system of environment, social and governance (ESG) development in Hong Kong.
“Hong Kong’s status as the Asia’s leading international financial centre has well-positioned Hong Kong to be the ESG finance hub for raising green capital and offering green financial products in the region. We have seen green bonds gaining popularity and market traction in Hong Kong. The cumulative green bonds arranged and issued in Hong Kong amounted to USD26bn by the end of 2019, and the volume in 2019 is 2.5times of that a couple of years ago,” Mr. Joseph Chan said.
During the panel discussion, key financial practitioners examined the opportunities and challenges in promoting ESG.
ESG redefines value and purpose for an equitable and sustainable Future
Mrs Mei Ng, BBS, Chairperson of Friends of the Earth (HK) mentioned in her opening remarks, “ESG integration in policy-making, business decision-making and financial investing is key to catalyze a greener, cleaner, healthier and more equitable Future and Economic Recovery. ESG’s goal should be to redefine value and purpose and to redeem fair play, fair value, fair share, fair say and fair choice. Growth with No Woes, Invest with No Regrets.”
Obstacle to ESG promotion: Lack of awareness and guidelines
To enable the public to gain a deeper understanding of the current development and demands of ESG practitioners, Friends of the Earth (HK) previously commissioned CESEF to carry out focus group interviews. The results were published in today’s forum. The research included questionnaires and interviews with 46 respondents who were key ESG stakeholders with backgrounds from banking, asset management, investment fund, investor relations investor relation executives of Hong Kong listed firms, etc. The report revealed that 46% interviewees cited the lack of understanding of ESG as the main reason for the slow ESG implementation.
The current market is lacking representable and certified ESG references, thus industries have difficulties in measuring how to transform ESG performance into business values. The report also pointed out that 41% interviewees felt that there are insufficient comparable historic data. Without ESG data guidelines, systematic data analysis will hardly happen. In addition, near 40% interviewees were worried that ESG implementation will lead to negative returns for their companies. They were afraid that they will have unsatisfying ESG performance when compared with competitors.
Hong Kong needs to upgrade ESG quality, standards and monitoring
In light of the research, Friends of the Earth (HK) made three recommendations to the Government and regulators: Firstly, strengthen the disclosure of ESG performance from enterprises. Regulatory bodies have to understand the needs of ESG practitioners at different stages, so as to better monitor and enhance ESG disclosure quality. Secondly, to formulate various guidelines and indicators related to ESG performance. At the moment, the market lacks comprehensive guidelines, which makes it hard for the industry to evaluate ESG performance effectively. Thirdly, encourage greater promotion of ESG product choices and regulation. Product development and regulation must work in coordination to boost ESG development in the local market.
Build public confidence in ESG and incubate Green Finance human capital
“Public and stakeholder trust and confidence in ESG is a critical factor. Hong Kong needs to enhance the quality of data integrity and transparency, reporting standard and regulatory monitoring. That is why Friends of the Earth (HK) is promoting green finance education and ESG analyst certification to build public and stakeholder trust and to incubate green finance human capital.” Dr. Jeffrey Hung, Chief Executive Officer of Friends of the Earth (HK) added.
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