All banks in Hong Kong must achieve net-zero greenhouse gas emissions by 2030, according to the Hong Kong Monetary Authority (HKMA). They must also ensure that their lending to companies and projects reaches net-zero by 2050. Additionally, the HKMA aims for the Exchange Fund’s investment portfolio to be net-zero compliant by 2050 and will introduce further measures to promote green bond issuance in the city.
These targets are part of the HKMA’s “Sustainable Finance Action Agenda,” unveiled recently. HKMA CEO Eddie Yue Wai-man emphasized that climate change is “the defining challenge of our time” and highlighted Hong Kong’s role as an international financial centre in facilitating sustainable fund flows while ensuring banks manage the risks of net-zero transitions.
Sustainable finance, as defined by the World Bank, incorporates environmental, social, and governance (ESG) factors in investment decisions. Under the Paris climate agreement, global leaders have committed to limiting global warming to “well below” 2 degrees Celsius, with efforts to keep it at 1.5 degrees. While China aims for net-zero emissions by 2060, Hong Kong plans to reach this goal before 2050.
In his recent policy address, Hong Kong Chief Executive John Lee Ka-chiu outlined measures to strengthen the city’s green finance ecosystem. HKMA Deputy CEO Arthur Yuen Kwok-hang also announced efforts to reduce operational carbon emissions in banks, including energy-saving practices and limiting overseas travel, to achieve net-zero compliance by 2030.
Beginning in 2030, banks will be required to report their strategies for phasing out high-carbon-emission lending and supporting clients in achieving net-zero emissions. The HKMA will also ensure the Exchange Fund’s investments align with net-zero goals by 2050. Cheung Leong, Chief Strategy Officer at the Exchange Fund Investment Office, noted that the Fund has invested in renewable energy projects, such as wind and solar power, with positive returns in recent years.
To further promote green finance, the HKMA aims to increase the proportion of green bonds issued in Hong Kong to around one-third of the total, up from the current 22%. Kenneth Hui, the HKMA’s Executive Director (External), said the city is striving to become a leading sustainable finance hub in the region. Last year, green bonds worth US$30 billion were issued in Hong Kong, a sharp rise from US$6 billion in 2019, with 470 debt instruments receiving subsidies through a green finance scheme. Between 2018 and 2023, the Hong Kong government issued US$28 billion worth of green bonds for 116 projects.