Hong Kong is a leading international financial centre and has a significant role to play in developing a global green and sustainable finance strategy. Hong Kong is dedicated to adopting the first set of global sustainability disclosure standards and transitioning the financial ecosystem towards carbon neutrality.
The Green and Sustainable Finance Cross-Agency Steering Group was set up by the Hong Kong Government in May 2020. It is co-chaired by the Hong Kong Monetary Authority and the Securities and Futures Commission (SFC), with members comprising the Environmental Bureau, the Financial Services and the Treasury Bureau, Hong Kong Exchanges and Clearing Limited (HKEX), the Insurance Authority and the Mandatory Provident Fund Schemes Authority. Its aim is to coordinate the management of climate and environmental risks in the financial sector and accelerate the growth of green and sustainable finance in Hong Kong.
The Steering Group is committed to mandating climate-related financial disclosures within the TCFD framework across all relevant sectors by 2025. Listed companies are required to provide climate-related disclosures. Banks, asset managers, insurance companies and pension trustees are in the disclosure pipeline. This has made Hong Kong one of the first jurisdictions in proposing and implementing laws and regulations to mandate TCFD-aligned financial reporting.
The Steering Group has set the following priorities:
- Climate-related disclosures and sustainability reporting - SFC and HKEX will collaborate with the Financial Reporting Council and the Hong Kong Institute of Certified Public Accountants to consolidate the roadmap for evaluating and eventually rolling out the new disclosure and reporting standard in alignment with the TCFD recommendations.
- Carbon market opportunities - China is dedicated to transitioning to a green, low-emission and climate resilient economy. Hong Kong, as an international financial centre and China’s gateway, has the potential ability to direct investors’ capital towards the national carbon neutrality goal. The Steering Group has set up a Carbon Market Work Stream to assess the feasibility of developing Hong Kong as a regional carbon trading centre to capture the opportunities in the cap-and-trade carbon market and the voluntary carbon market in China and overseas.
- Centre for Green and Sustainable Finance - The Steering Group has launched the Centre for Green and Sustainable Finance to co-ordinate the efforts of financial regulators, Government agencies, industry stakeholders and academia in capacity building, thought leadership and policy development.
Climate or sustainability reporting will enable investors to evaluate the exposure of climate risks and the level of greenhouse gas emissions underlying their investment portfolios and help them with their decision making about their capital allocation. Global sustainability standards will ensure consistent, comparable and reliable information being made available to investors. Hong Kong as an international financial centre will play a key part in promoting global climate-related sustainability and advancing the global economy towards the goal of carbon neutrality.