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International cooperation on green finance

Finance is for serving the real economy. While we promote green and sustainable economic development, financial services should also contain these two elements to guide the flow of funds in suitable directions. And this is our objective for promoting green finance.

With the frequent occurrence of extreme weather conditions, the global world has been facing challenges of climate change. The development of green finance is widely recognised as one of the fundamental measures to combat the challenges. To transform the world economies into a sustainable model, including developing renewable energy, and improving the resilience of infrastructures to extreme climate, huge capital investment is needed. The Organisation for Economic Co-operation and Development (OECD) estimated that in the period from 2016 to 2030, the annual funding required for green infrastructure projects worldwide will be as high as almost US$7 trillion.

As a global leading financial centre, Hong Kong can play an active and important role in the process. I proposed various initiatives in the past Budgets to promote the development of green finance in Hong Kong. Last year, green bonds arranged and issued in Hong Kong amounted to some US$11 billion, more than triple that of 2017.

To further promote Hong Kong as a green finance hub, facilitate exchange of views in the industry and cultivate support from the society on green finance, we have actively cooperated with a number of international organisations and industry associations (e.g. the International Capital Market Association (ICMA), Climate Bonds Initiative (CBI) and Hong Kong Green Finance Association (HKGFA), etc.) by co-organising large-scale conferences. For example, the Green and Social Bond Principles Annual General Meeting and Conference was held in Hong Kong last year, which was also its relocation from Europe to Asia for the first time.

This Tuesday (May 7), Hong Kong Monetary Authority (HKMA) is going to organise a Green Finance Forum in Hong Kong, inviting experienced representatives of the industry to talk about the prospect of green finance and encourage the industry to incorporate green elements into corporate governance and operations more effectively. Roadshow for the first batch of bonds to be issued under the Government Green Bond Programme will also be organised soon. Following the forum, the Securities and Futures Commission will conduct a meeting with regulators’ representatives from the Mainland of China and the European Union on May 9, gathering relevant policy makers and regulators of the three parties as well as Financial Stability Board's Task Force on Climate-related Financial Disclosures, in order to deliberate on the future development and collaboration on green finance and related issues.

It is encouraging to note that in the last month, HKMA signed a Memorandum of Understanding with the International Finance Corporation (IFC), a member of the World Bank Group, to co-organise the 6th Climate Business Forum in Hong Kong in 2020. IFC’s decision to organise large-scale international conference in Hong Kong reflects that our efforts in promoting green finance are highly recognised internationally.

Climate Business Forum is IFC’s annual flagship event attended by political and business leaders from around the world. The forum covers a broad spectrum of themes. In addition to latest development of green finance, green city, buildings, infrastructure, transportation, energy storage and finance, etc. are also included. The Government will provide staunch support for this important event and will continue to implement measures to showcase Hong Kong’s efforts in promoting green finance and combating climate change, as well as to consolidate Hong Kong’s position as a green finance hub.

In fact, multilateral agencies like IFC have been playing an important role in promoting the sustainable development of developing countries in the past decades. Through cooperation with these agencies, we can leverage on their rich experiences, powerful network, resources and international recognition to create synergies, with a view to attracting more financial investments committed to social values to make use of Hong Kong as a transaction platform.

IFC has set up a regional office in Hong Kong since 2000. Hong Kong is now the regional hub of IFC in the East Asia and the Pacific region. HKMA has deepened its strategic partnership with IFC in recent years, including promoting and enhancing skills and knowledge of infrastructure investment and financing through HKMA’s Infrastructure Financing Facilitation Office (IFFO).

Looking forward, the Government will continue to strengthen its collaboration with these multilateral agencies to promote the development of the international financial market and to enhance Hong Kong’ image and influence as an international financial centre.

May 5, 2019