Building a World Top Green and Sustainable Bond Hub

6 Hong Kong’s Transition Towards a Green and Sustainable Finance Center: Building a World Top Green and Sustainable Bond Hub The Green and Sustainable Finance Cross-Agency Steering Group (CASG) has published the Strategic Plan to Strengthen Hong Kong’s Financial Ecosystem to Support a Greener and More Sustainable Future which covers comprehensive dimensions and points out that the city needs a more detailed and localized roadmap to promote the green and sustainable finance market. Indeed, what does the goal of becoming a green finance center mean for Hong Kong in practical terms? Is there any instrument that can be prioritized to boost the green market and also serve as a lever for Hong Kong’s green transition? Answering these questions requires us to first review Hong Kong’s advantages in developing its green finance system. 1.1 Strong Policy Support for Hong Kong to Develop a Top- tier Green Finance Center with the Bond Market as a Focus In recent years, there have been several policies at both national and local levels supporting Hong Kong’s role as a green bond hub, especially the Belt and Road Initiative and the development plan of the Guangdong-Hong Kong-Macao Greater Bay Area. In March 2018, the Arrangement between the National Development and Reform Commission and the HKSAR Government for Advancing Hong Kong’s Full Participation in and Contribution to the Belt and Road Initiative was signed. It proposes “To promote the development of a green bond market based on the Hong Kong platform, and to support qualified Chinese institutions in issuing green bonds to raise funds for projects related to the ‘Belt and Road Initiative’ through the Hong Kong platform; to promote the establishment of internationally recognized green bond certification bodies”. In February 2019, the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area clearly states that it aims “To support the development of Hong Kong into a green finance center in the Greater Bay Area and set up an internationally recognized green bond certification institution”. In May 2020, the People’s Bank of China (PBoC), China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission and the State Administration of Foreign Exchange issued the Opinions on Financial Support for the Construction of the Guangdong-Hong Kong-Macao Greater Bay Area. It suggests promoting green finance cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area through a number of approaches: “To explore the establishment of unified green finance standards in the Guangdong-Hong Kong-Macao Greater Bay Area. To encourage more enterprises in the Guangdong-Hong Kong-Macao Greater Bay Area to make use of the Hong Kong and Macao platforms for financing and certifying green projects, to support local legal-person- status financial institutions in Guangdong in issuing green bonds and other green financial products in Hong Kong and Macao, raising funds to support green enterprises and projects in the Guangdong-Hong Kong-Macao Greater Bay Area. To support Hong Kong in building a green finance center in the Guangdong-Hong Kong-Macao Greater Bay Area, and to establish an internationally recognized green bond certification body.” In June 2022, the GuangdongGovernment issued the Guangdong Carbon Peak Implementation Plan, in which it proposed to deepen cooperation and exchanges in low-carbon fields among Guangdong, Hong Kong and Macao, to establish a sound liaison and coordination mechanism to address climate change, to promote cooperation in green finance, and to explore the