Hong Kong must embrace green finance as both opportunity and responsibility, monetary authority CEO says

‘It’s not just about addressing a global issue that might affect everybody, it’s also about protecting our people in our own land,’ Eddie Yue says
‘Hong Kong is Asia’s sustainable-finance hub, and we are in a unique position to support the vision of the green transition,’ he adds

Hong Kong Monetary Authority (HKMA)

Mia CastagnoneandMartin Choi

Published: 8:30pm, 29 Feb 2024

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Supporting the transition to a more sustainable future based on a low-carbon economy is not only an opportunity for Hong Kong’s financial sector but also an important effort for the good of humanity, according to the chief of the Hong Kong Monetary Authority (HKMA).

“The transition to a greener future is a shared responsibility,” Eddie Yue Wai-man, CEO of the city’s de facto central bank, said on Thursday at the Asia Securities Industry & Financial Markets Association (ASIFMA) annual conference. “It’s not just about addressing a global issue that might affect everybody, it’s also about protecting our people in our own land.”

Amid increasingly severe weather events and rising temperatures, Hong Kong must seize the opportunity, Yue said.

“Sustainability is a trend that is going to continue,” he said. “Hong Kong is Asia’s sustainable-finance hub, and we are in a unique position to support the vision of the green transition.”

A photo taken on December 22, 2023, shows a wind farm in Tangshan City, in north China’s Hebei Province. Photo: Xinhua

Hong Kong experienced a series of severe weather events in 2023, including a “once in 500 years” rainstorm in September – a deluge that caused widespread flooding and effectively brought the city to a standstill. Last year was also a significant year from a global climate perspective, being the warmest year on record.

In Wednesday’s budget announcements, the government said it would increase the government debt ceiling to HK$500 billion (US$64 billion) to cover sustainable finance, including its Government Green Bond Programme and other infrastructure projects.

Elsewhere, the HKMA is preparing a transition finance framework to classify which activities can help carbon-intensive firms reach net-zero emissions – and therefore represent legitimate green financing opportunities, deputy CEO Darryl Chan Wai-man said last Friday.

The new framework should be launched by the middle of the year, the HKMA said at a separate event.

“We are targeting to launch the first phase of the taxonomy around the middle of this year,” said Willy Mak, chief manager of banking policy at HKMA, speaking at another seminar on Thursday.

Green finance: surge of climate-transition guidance to promote decarbonisation

The authority is working on summarising industry feedback from a consultation process last May that asked for input into developing a prototype green classification framework for adoption in the local market, he added.

The initiatives aim to help strengthen the city’s position as a leading international green and sustainable finance hub. Governments all over the region are preparing to unleash a flood of transition-finance guidance this year in an effort to provide clarity for investors and help accelerate corporate efforts to cut carbon emissions, according to bankers and asset managers.

Meanwhile, as mainland China’s economy enters a period of moderate growth, it still presents an array of long-term growth opportunities, including the green transition.

“The focus for China is shifting from quantity to quality,” said Yue. “We must not lose sight of the long-term growth drivers coming from China.”

China’s industries are moving up in the value chain, and the nation’s economy will be bolstered by a growing middle class, all while climate policies are driving mainland China to a carbon-neutral economy, Yue said.

All of these trends represent “long-term investment opportunities”, he said. Other positive growth factors in China include its increasing pace of urbanisation and technological innovation.

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