Hong Kong authorities leads Asia in green-bond issuance, turns into fifth largest worldwide – Cyber Tech

The Hong Kong authorities has turn into the most important supply of climate-aligned authorities bonds in Asia and the fifth largest cumulative issuer of presidency inexperienced bonds on this planet, in response to a brand new report from the Local weather Bonds Initiative.

The town’s sustainable debt market achieved its largest progress but in 2023, rising by 236 per cent yr on yr to US$18.2 billion, in response to the non-profit’s report on Monday.

Inexperienced-theme debt made up many of the market, at US$15.6 billion, with the social theme accounting for US$2.6 billion. Social and sustainability issuance volumes from Hong Kong grew for a 3rd consecutive yr, rising by 29 per cent to US$2.56 billion.

“Transition finance is a major development in world sustainable finance growth, providing super progress alternatives in financing the transition of excessive carbon emitting industries in Asia,” stated Ma Jun, chairman and president of the Hong Kong Inexperienced Finance Affiliation.

“Hong Kong can seize this chance by increasing its native [Common Ground Taxonomy] to incorporate transition actions, to mitigate greenwashing and to facilitate capital flows throughout jurisdictions.”

Inexperienced bond issuance grew 173 per cent yr on yr in 2023, and the Hong Kong authorities was the world’s fourth-largest supply of aligned authorities inexperienced bonds, behind the UK, Germany and Italy.

“Because the main Asian authorities issuer of inexperienced debt, Hong Kong can additional pioneer transition merchandise linked to decarbonisation efficiency and incentives, develop transition-related disclosures, and foster a science-based transition method, solidifying its place as a number one sustainable financing hub for Asia,” Ma stated.

The research was produced in affiliation with the Hong Kong Financial Authority (HKMA) and Hong Kong Inexperienced Finance Affiliation, and with help from Commonplace Chartered.

Hong Kong’s inexperienced bond volumes had been pushed by document single-year progress of US$1.4 billion in authorities issuance. Authorities-issued inexperienced bonds accounted for 92 per cent or US$14.4 billion of the inexperienced bond quantity, with the rest coming from monetary corporations.

“As a regulator, we’ve to work onerous to increase our protection of our taxonomy,” Lilian Tse, senior supervisor of the HKMA’s banking coverage division, stated throughout a panel dialogue at an occasion hosted by the Capability-building Alliance of Sustainable Funding on Monday. “We hear the market actually desires transition actions for issuing transition bonds and loans, so we’re working onerous on that.

The HKMA understands that the market wants time to gear up and construct capability to place the taxonomy to good use, and can put effort into partaking with banks and increasing its taxonomy, she stated. “We encourage the sector to make use of our taxonomy to assist mobilise capital,” she added.

The town’s 2024-25 funds requires issuing between HK$95 billion (US$12 billion) and HK$135 billion value of bonds annually by way of the 2028-29 funds, together with inexperienced sustainable bonds and the Sustainable Finance Grant Scheme, which lasts till 2027.

The federal government’s local weather objectives are to halve emissions by 2035 and attain internet zero by 2050.

The Local weather Bonds Initiative report stated non-government issuance quantity fell in Hong Kong in 2023 amid the financial downturn popping out of the pandemic.

As circumstances enhance, Hong Kong has a chance to spice up the amount and high quality of its sustainable debt markets, revitalising the breadth of the issuer base and restoring personal sector issuance to historic ranges, the report stated.

Extra reporting by Martin Choi