Hong Kong regulator announces new green finance measures

It has also established the Centre for Green and Sustainable Finance (CGSF) to take new measures to further Hong Kong’s green finance development. The CGSF aims to help the financial industry manage the risks and capture the opportunities of climate change, which will also serve as a storage for resources, data and analytics helping with transition to more sustainable development.

According to a statement of the HKMA, the Steering Group aims to make progress in the mandating of climate-related disclosures in relevant sectors aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework.

It has set up a Carbon Market Work Stream (CMWS) to assess the feasibility of developing Hong Kong as a regional carbon trading centre to strengthen collaboration in the Guangdong-Hong Kong-Macao Greater Bay Area. The CMWS will look for opportunities arising from the cap-and-trade carbon market and the voluntary carbon market in China and overseas.

John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “These recent announcements, which further moves the city forward in its ambition to be a leading green financing hub in the region, illustrates the focus and commitment of Hong Kong to this agenda. It already has all the key ingredients required to make this happen, such as an open economy and a stable and robust convertible currency, as well as a well-developed body of laws that deliver investor confidence in the ability of the city to fairly and quickly adjudicate on any disputes that may arise.”

“One unavoidable fact though is that there will be a disconnect between the jurisdiction of transaction, Hong Kong, and the jurisdiction of investment activity which will most likely be mainland China. In this regard, the progress in establishing the Greater Bay Area with harmonisation on areas such as regulatory compliance and standards, will be an important element in delivering on Hong Kong’s ambition,” he said.

The Steering Group launched its green finance plan in December 2020, under which, financial institutions including banks, asset managers, insurance companies and pension trustees started to undertake more climate-related disclosure obligations in Hong Kong.

The Steering Group was established by the HKMA and the Securities and Futures Commission (SFC) in May, aiming to establish a more coordinated approach to climate and environmental risks management in the financial sector and to accelerate the growth of green and sustainable finance in Hong Kong.