A Paradigm Shift Towards a Green and Sustainable Finance Center

34 Paradigm Shift and the Shared Belief climate issues. In this context, “green recovery” with a denotation of equality and justice has been accentuated. This refinement in substance speaks of the continuation of the transition with diversified forces and segments. In the case of Hong Kong, its Green and Sustainable Finance Cross-Agency Steering Group was established in May 2020, officially signaling the beginning of the green transition in its financial system. The Steering Group is committed to accelerate the growth of green and sustainable finance in Hong Kong and support the Hong Kong Government’s climate strategies by playing the key coordinating role in helping to integrate climate and environmental risks in the financial sector. Six key focus areas have been identified in the Steering Group’s Strategic Plan to Strengthen Hong Kong’s Financial Ecosystem to Support a Greener and More Sustainable Future and they are (1) to strengthen climate-related financial risk management; (2) to promote the availability of climate-related information for risk management, capital allocation and investor protection; (3) to enhance capacity building and raise public awareness; (4) to encourage innovation and explore initiatives to facilitate capital flow towards green and sustainable causes; (5) to capitalize on Mainland opportunities to develop Hong Kong into a green finance center in the Guangdong-Hong Kong-Macao Greater Bay Area; and (6) to strengthen regional and international collaboration. In July 2021, the Steering Group announced the support of climate-related disclosures and sustainability reporting by the International Sustainability Standards Board, which was set up to evaluate the potential of adopting the new standard. In addition, the Steering Group began to assess the feasibility of developing Hong Kong as a regional carbon trading center and strengthening collaboration in the Guangdong-Hong Kong-Macao Greater Bay Area. It also launched the Center for Green and Sustainable Finance in the same year as a platform to coordinate the efforts of financial regulators, governmental agencies, industry stakeholders and academia in capacity building, thought leadership and policy development. The Green and Sustainable Finance Capacity Building Support Scheme was piloted in 2023 as a follow-up step to propel capability building. In January 2024, the Steering Group reached the conclusion that adopting International Financial Reporting Standards Sustainability Disclosure Standards was appropriate and technology would be leveraged to support sustainability reporting and data analysis. Furthermore, the Steering Group identified transition finance as a priority for 2024 so as to consolidate Hong Kong’s role as a leading green and sustainable finance hub. In fact, prior to the establishment of the Green and Sustainable Finance Cross-Agency Steering Group, the first local green bond was issued in Hong Kong in 2016. That same year, Hong Kong’s Financial Services and Development Council made a policy proposal to develop the SAR into a regional green finance hub. In 2018, the Hong Kong Quality Assurance Agency (HKQAA) launched the Green and Sustainable Finance Certification Scheme to support the issuance of green bonds in the city. In 2019, the Hong Kong Government completed its inaugural green bond offering. A recent milestone was the launch of the Hong Kong Taxonomy for Sustainable Finance in May 2024, providing a standardized framework for green finance initiatives.