Hong Kong watchdog to drive city’s Greater Bay Area green finance hub ambitions by leading on transparency, international standards

Enoch Yiu
·3-min read

Hong Kong’s Securities and Futures Commission (SFC) will take the lead in shaping disclosure policies and setting international standards to ensure the city acts as a green finance hub in the Greater Bay Area, its chairman said on Thursday.

“Because of the size of Hong Kong’s capital markets, we have a significant opportunity to drive greener and more sustainable development. We can do this by taking the lead in shaping regulatory policies and standards – both for the region and internationally,” Tim Lui told Earth Forum 2021, an annual event on green finance held in the city.

This week, Guangzhou, another major Greater Bay Area city in China’s southern Guangdong province, launched a futures exchange and is exploring launching carbon emissions futures contracts.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Fintech giant Ant Group maps out midterm carbon reduction goal

The promotion of green finance in Hong Kong and Guangzhou follows a pledge by Chinese President Xi Jinping in September last year to attain carbon neutrality in 2060. In November, Hong Kong leader Carrie Lam Cheng Yuet-ngor announced in her 2020 Policy Address that the city would strive to achieve this target by 2050. She also said Hong Kong would introduce more proactive measures to reduce carbon emissions later this year.

Hong Kong has been designated as a green finance centre in the Greater Bay Area under Beijing’s development plan, Lui said on Thursday. “This means, we are in a unique position to complement China’s green development ambitions and connect green finance flows between the mainland and the rest of the world,” he said.

The People’s Bank of China (PBOC), China’s central bank, estimates that the country’s carbon neutrality goal will cost China about 2.2 trillion yuan (US$283.5 billion) annually through 2030, the year the country aims to have its carbon emissions peak, Yi Gang, the PBOC governor, told a joint seminar with the International Monetary Fund on Thursday last week. After that, its yearly expenditure will rise to roughly 3.9 trillion over the following three decades.

If these estimates hold up, the total cost will amount to about 139 trillion yuan. Yi said the central bank plans to promote the financing of companies and infrastructure that can help cut down carbon emissions and reduce pollution. It will utilise a range of financial tools – green bonds, funds and other products – to raise money for such projects. This will also include a national carbon trading market in June, YI added.

In Hong Kong, the SFC will focus on disclosure and transparency issues as part of its efforts to promote green finance, Liu said.

“A top priority is for asset managers to make clear to investors how and to what extent they factor environmental and climate-related risks and opportunities into their investment processes and risk assessments,” he said. “If investors have access to clear, comparable and high-quality disclosures, they can make more informed decisions.”

The watchdog is also working with other local and international regulators to play a leading role in global policymaking and standard setting. “What we are doing on the international front will help ensure Hong Kong’s efforts are aligned with global frameworks and standards, and also drive Hong Kong’s development as a green and sustainable finance hub in the Asia-Pacific Region,” Lui said.

The SFC and the Hong Kong Monetary Authority, the city’s de facto central bank, have become members of the European Commission’s International Platform on Sustainable Finance, which encourages private capital to make environmentally sustainable investments, Lui added.

More from South China Morning Post:

This article Hong Kong watchdog to drive city’s Greater Bay Area green finance hub ambitions by leading on transparency, international standards first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.