Green Finance Advisor of Friends of the Earth (HK)

In 2020, China, Japan and Korea announced net-zero carbon commitments, which accelerates the transition to cleaner energy from fossil fuels. In 2021, Biden rejoined the Paris Agreement immediately after taking office, reversing a decision by former President Donald Trump, and planned to set a goal for net-zero emissions by 2050.

Hong Kong, had also set a goal of reaching carbon neutrality by 2050. The Hong Kong government just sold its second U.S. dollar-denominated green bond on 26 Jan 2021, tapping rising demand for socially-responsible debt to help meet its own environmental goals. The city’s government priced $2.5 billion of securities in a three-part deal consisting of five-year, 10-year and 30-year green notes. All three bond tenors priced lower than the initial price guidance given at the start of marketing. The bond’s five-year and 10-year tranches each drew orders more than five times their respective issuance sizes, with the 30-year note more than seven times oversubscribed, according to a press release from the Hong Kong government. The offering follows Hong Kong’s maiden green dollar bond deal in May 2019, when it sold a $1 billion five-year dollar note. Hong Kong has taken initiatives in recent years to foster its local green bond market with an aim of developing the city into a leading international hub for green financing.

Although issuance of green notes declined last year in China, previously a world leader, social bond offerings around Asia surged with authorities shifting their attention to the pandemic. There are signs that green debt sales may bounce back, after at least 10 Chinese borrowers sold such securities already this year, according to data compiled by Bloomberg.

Translating these carbon-neutrality promises into action remains difficult, particularly for countries that rely heavily on coal and other fossil fuels in the power sector. Therefore, climate remained at the focus of corporate strategy in 2021, with a growing number of companies setting carbon-neutral targets and hopefully become a norm.

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