Why the Asia-Pacific needs Hong Kong’s help to fight climate change
- As the effects of climate change start to take hold, Hong Kong’s role as a leading green and sustainable finance hub is increasingly important
- Hong Kong is well-positioned to channel investment to those who need it most and provide the opportunity of a lifetime to potential investors
Hong Kong is well-positioned to channel the required investment into countries that need it most, particularly through participation by its financial institutions in green financing transactions in the wider Asia-Pacific region. Hong Kong is a leading international bond market, and it has one of the world’s most active equity markets.
The Asia-Pacific, meanwhile, is still home to many countries whose capital markets have yet to develop to the level needed to support them in the transition. Some countries in the region have yet to issue a green bond. The Asia-Pacific accounted for 50 per cent of total climate finance in 2022, but South Asia received just 4 per cent. China’s domestic climate finance mobilisation accounted for 51 per cent of the total.
We need to enhance the capacity of financial institutions, regulators and stock exchanges, both in Hong Kong and the wider region, to enable climate finance and climate projects to thrive and set more robust global financial standards.
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Multilateral development banks can also support both the public and private sectors in creating enabling environments for such projects to thrive, thanks to having decades of experience navigating the political and economic terrains of these markets, de-risking projects through guarantees and mobilising equity and debt to finance them.
To mitigate the risks posed by climate change and respond to the increasing value placed on sustainable businesses by investors, consumers and governments alike, becoming more climate-oriented will be key for private-sector companies in the Asia-Pacific to meet rising expectations and stay competitive.
But this shift also offers the investment opportunity of a lifetime. With its deep pool of financial institutions and businesses looking for investment opportunities in emerging markets, Hong Kong is uniquely placed to capitalise on the wider region’s efforts to accelerate a resilient, inclusive transition. With sustainability moving up the agenda for all stakeholders, there has rarely been a better time to do so.
Riccardo Puliti is regional vice-president, Asia and the Pacific, at the International Finance Corporation