A Paradigm Shift Towards a Green and Sustainable Finance Center

8 Introduction This report puts forward a third viewpoint that while Hong Kong should endeavor to keep its IFC status, a shift of paradigm from traditional finance to green and sustainable finance is necessary. In December 2020, the Hong Kong Green and Sustainable Finance Cross-Agency Steering Group launched the Strategic Plan to Strengthen Hong Kong’s Financial Ecosystem to Support a Greener and More Sustainable Future . Following that, a number of initiatives have been taken to advance the SAR’s role as a green and sustainable finance center. The Steering Group also reaffirmed its commitment to strengthening Hong Kong’s financial ecosystem and developing it into a green and sustainable finance center. In spite of the actions taken, as shown on the Global Green Finance Index, Hong Kong kept between 36 th and 41 st place from 2021 to March 2024. The above-mentioned efforts have not yet realized the Strategic Plan’s goal of green transition. This report seeks to answer why the paradigm shift from a finance center to a green and sustainable finance center is both necessary and feasible. In the remaining parts of this report, we develop our argument in the following steps. First, we present an inventory of changes in Hong Kong’s economy, which imply the weakening status of the city as an IFC. Then, we uncover the structural changes in its financial market and reveal how they are threatening Hong Kong’s long-term competitiveness. Following that, we explain how structural changes in the market impact the city’s position as an IFC. This analysis is furthered with Hong Kong’s paradigm shift to green and sustainable development. We argue that the global consensus on green development in recent years provides a new anchor for Hong Kong to appeal to the international economy again. We conclude by discussing the implications of this research and offering recommendations for the Hong Kong Government in supporting this paradigm shift.