Green and Sustainable Finance in Hong Kong

GEOG7101 Presentation

HE Mucong 3035769203
LAM Yan Tong 3035823619
Green and Sustainable Finance in Hong Kong

Why does it become popular? CLIMATE CHANGE!!!

Clean energy & efficient transport ⟹ reduce carbon emission

Infrastructure ⟹ protect communities

Public sector + Government + Private sector ⟹ meet the demand

What is green finance?

A range of innovative financial instruments and mechanism that

encourage green investments
Methods / Methodology

Study Area: Hong Kong

Study Sector: Green and Sustainable Finance

Time Period: 2015 - Present

Research Method: Supply and Demand Analysis

Supply Side

Green bonds arranged and issued in Hong Kong Issuer Tpye of Green Bonds in Hong Kong, 2019

Source: HKIMR
 Supply Side

Country of Green Bonds Insurance in Hong Kong Currency Denomination in Hong Kong Market

Source: HKIMR
Demand Side
The Use of Proceeds of Green Bonds China’s Demand for Green Investment
RMB bn
in Hong Kong

Source: DRC
Source: HKIMR
 Demand Side
Main Considerations for Investors in Hong
Rising demand will make more attractive premium Kong Green Investment Market

Source: Lau et al. (2020) Source: HKIMR

Leading green and sustainable finance hub in the future
what other segment should be further Beyond green bond, what other green and
supported to grow green and sustainable sustainable financial products should be further
finance in Hong Kong promoted in Hong Kong

Source: HKGFA
Results
➢ The amount of green bonds issued in Hong Kong has risen rapidly since 2015. Financial institutions,
corporates and government are the main issuers of green bonds in Hong Kong.

➢ Mainland entities were the largest issuer while USD denomination products dominated the Hong Kong
market. There is a need to accelerate the process of yuan internationalization and promote
yuan-denominated products innovation.

➢ The use of proceeds of green bonds in Hong Kong is dominated by green buildings while mainland
China has great investment demand in energy investment, urban infrastructure and transportation.

➢ Rising green bond demand will make premium more attractive for issuers.

➢ Investors have some concerns about green and sustainable investment. Green financial products
should be further improved in investment returns, transparency of information disclosure, risk
management etc.

➢ Strenuous efforts should be taken to develop the overall green and sustainable financial market in
Hong Kong, more segments, products and guidance should be promoted to maintain Hong Kong’s
competitiveness as the leading green and sustainable finance hub.
Conclusion & Discussion - Tapping into the Global-China conduit

Hong Kong’s support:

Bond Connect Scheme (2017) - Northbound flow
- Conduit of trade, Green Bond Grant Scheme (2018) - extend the scope of products
capital and talent Southbound Bond Connect (future) -attract green bonds investment
- Act as catalyst - green
standards ⟹
- Match with growing
international supply of
⟹
green capital ⧫ Bridge between the Mainland
- Loaning capital to (Greater Bay Area) & the world
Mainland Chinese
organisations
- Drive global capital ⧫ Belt & Road Intiative