International Experiences in Green Finance Development

54 International Experiences in Green Finance Development: Lessons for Hong Kong the GFIT, which consists of representatives from financial institutions, businesses, non- governmental organizations and financial industry associations. GFIT focuses on improving disclosures and developing taxonomies, with key features being that it sets thresholds and standards for transition activities and allows different sectors to gradually move towards net zero outcomes. London provides a rich range of green financial products. Among them, green bonds are large, mature and have global market participants. The British government issued the world’s first sovereign green bonds and became the largest green bonds issuer in the UK. In addition, the government has also introduced policies to support the development of green funds, green credit and green insurance products. Further, the LSEG provides issuers, corporate entities and investors with sustainable financial products and services across a variety of asset classes and coordinates strategies and standards to make markets operate more efficiently. At the same time, the UK advocates the disclosure of climate-related financial information and the establishment of a long-term transparency mechanism. Specifically, the UK regulators mandate that large companies disclose their climate-related risks and opportunities in accordance with the TCFD. Organizations like the CDP provide a professional disclosure system which is fully consistent with the TCFD recommendations to help entities to meet disclosure requirements. As a leading provider of financial market infrastructure, the LSEG analyzes sustainability data from different sources and incorporates it into standardized data processes to promote transparency. Furthermore, the UK is committed to establishing a standard framework for sustainable investment, ensuring compatibility and consistency across different regions. Specifically, the UK government established the GTAG, a group of financial market stakeholders and experts whose main responsibilities are to provide advice on the design and implementation of the UK Green Taxonomy, integrate it into the government policy development process and monitor the government’s implementation of the Green Taxonomy. This taxonomy will establish a common framework that provides clear and detailed definitions of “green”. This will not only ensure the effectiveness of the green financial system and promote investment in sustainable projects, but also improve interoperability and make global standards more harmonious. New York hosts many of the world’s largest companies whose needs in green finance differ from small companies. Furthermore, as the energy policy is of relevance to households and even individuals, it makes them also important “customers” in green finance. Services and products must grow with the increase and diversification of the green finance demands. Indeed, the differences in economies and geographical locations between various regions lead to different thinking models and development stages of green finance. Timeframe plays a crucial role in understanding the correlation between sustainability and the return of investment. The issue of climate change has a completely different time dimension than capital markets. Long-term investors with diversified portfolios will consider not only sustainability issues but also the impact of behavioral changes when implementing their investment strategies. The development of products and projects related to creating sustainable land and transportation, and enhancing infrastructure and environmental capacity will be more in line with Hong Kong’s economic structure. At the same time, when building the disclosure framework and classification standards, Hong Kong can adopt a gradual inclusion approach and do it in batches. First, regulators may direct disclosures from insurance