Cross-Agency Steering Group announces next steps to advance Hong Kong’s green and sustainable finance strategy

18 Jul, 2021 10:27
source: Singularity Financial

Singularity Financial Hong Kong July 18, 2021 – On 15 July 2021, The Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) announced the next steps to advance its collaborative strategy to bolster Hong Kong’s position as a leader in green and sustainable finance and help transition the financial ecosystem towards carbon neutrality.

As priorities, the Steering Group will focus on climate-related disclosures and sustainability reporting, carbon market opportunities and the launch of the new Centre for Green and Sustainable Finance (Centre).

The Announcement is the latest from the Steering Group, which was established in May 2020 and includes the Hong Kong Monetary Authority (HKMA), Securities and Futures Commission (SFC), Environment Bureau, Financial Services and the Treasury Bureau, Hong Kong Exchanges and Clearing Limited (HKEX), Insurance Authority the Mandatory Provident Fund Schemes Authority.

The Steering Group set out its initial, comprehensive “Strategic Plan to Strengthen Hong Kong’s Financial Ecosystem to Support a Greener and More Sustainable Future” in December 2020. The Strategic Plan sets out six long-term focus areas, including promoting the flow of climate-related information in financial markets and directing capital toward green and sustainable causes, in addition to five near-term action points.

The Announcement

The Announcement effectively outlines practical steps the Steering Group is taking to implement the Strategic Plan by highlighting three near-term priority areas of focus:

  1. Climate-related disclosures and sustainability reporting: The Steering Group reiterates their support for the International Financial Reporting Standards (IFRS) Foundation’s proposal to establish a new Sustainability Standards Board for developing and maintaining a global, uniform sustainability reporting standard. In the Announcement, the SFC and HKEX commit to collaborate with the Financial Reporting Council and the Hong Kong Institute of Certified Public Accountants to develop a roadmap to evaluate and potentially adopt the forthcoming standard.
  2. Carbon market opportunities: The Steering Group has set up a Carbon Market Workstream (CMWS) co-chaired by the SFC and HKEX to assess the feasibility of developing Hong Kong as a regional carbon trading centre. The CMWS will actively explore opportunities presented by both the cap-and-trade and voluntary carbon markets in China and overseas.
  3. Centre for Green and Sustainable Finance (the Centre): The Steering Group has launched the Centre to help the financial industry manage climate change-related risks and opportunities. The Centre is a cross-sector platform comprising financial regulators, government agencies, industry stakeholders and academia, and will initially focus on capacity building, thought leadership and policy development.

The Announcement represents the next set of concrete steps that local regulators are taking to make Hong Kong a world centre for green and sustainable finance. The Steering Group has identified talent and data as the priority areas of action. Accordingly the Centre has established working groups to develop strategies and roadmaps to promote capacity building and develop data repository and analytics capability. The working groups will consult other stakeholders when formulating their recommendations.

The Steering Group will continue to take forward the other action points announced in its December 2020 strategic plan, including participating in the work of the International Platform on Sustainable Finance on taxonomy and promoting climate-focused scenario analysis.

Ashley Alder, Co-Chair of the Steering Group, Chief Executive Officer, SFC said:

“As an international financial centre, Hong Kong has a significant role to play both regionally and globally in the development of sustainable finance to address the risks posed by climate change. Hong Kong can lead the way in climate reporting by adopting the first set of global sustainability standards to ensure that consistent, comparable and reliable information is available to help investors understand the extent to which their portfolios are exposed to climate risks and they are financing emissions.”

Eddie Yue, Co-Chair of the Steering Group, Chief Executive, Hong Kong Monetary Authority (HKMA) said:

“The lack of globally aligned standards, as well as capacity and data constraints, are hindering the growth of green and sustainable finance, not just in Hong Kong but also globally. The Steering Group has been coordinating the efforts across stakeholders in Hong Kong and the region in meeting these challenges, while exploring ways to capitalise on the enormous opportunities resulting from the transition to a greener world, such as in the capital and carbon markets. With the launch of the Centre, we hope to create a focal point to bring together policy makers, financial market professionals, the academia and other stakeholders for deeper exchange and collaboration.”