Paul Chan, the financial secretary for Hong Kong, presented the 2023–24 budget on February 22, 2023, emphasising China’s “3060 Dual Carbon Goals,” the promotion of a green economy and sustainable growth, portraying the desire to make Hong Kong a major financial and green technology center worldwide.
In light of this, the Hong Kong government has implemented a number of policies and worked with a variety of organisations and individuals to encourage the growth in the green technology and finance sectors. Some of these initiatives include: Creating a Green Tech Fund to support research and development initiatives aiding Hong Kong in decarbonizing and improving environmental protection; issuing tokenized green bonds worth HK$800 million under the Government Green Bond Programme, the first of its kind ever to be done by a government.
This was the outcome of a collaboration between the Bank for International Settlements’ (BIS) Hong Kong Centre for the Innovation Hub and the Hong Kong Monetary Authority on Project Genesis, which created a digital infrastructure for tokenizing green bonds.
-By eliminating middlemen and enabling the issuer to distribute bonds directly with the investors, bond tokenization speeds the typically drawn-out process of bond issuance. Bond subscription can now be made for as little as HK$100, thanks to the tokenization of the issuance, which expands the pool of investors and boosts the involvement of retail investors in the financing of green projects. Additionally, the digital system gives green bond holders information on asset performance so they can check how proceeds are being used and have more confidence in the green impact of their investment.
-providing grants for more than 200 debt instruments since the launch of the Green and Sustainable Finance Grant Scheme in 2021, involving a total underlying debt issuance of close to US$70 billion;
-issuing US$5.75 billion equivalent of government green bonds denominated in US dollars, euros, and RMB, which was the largest ESG bond issuance in Asia;
-and launching Core Climate by the Hong Kong Exchange and Clearing Limited, an international carbon marketplace for the traditional financial sector. This platform aims to link capital with opportunities and products relevant to climate change in Hong Kong, Mainland China, Asia, and elsewhere. More than 40 trades were performed in the first four weeks of this initiative’s inception in October 2022, demonstrating its allure. It is equivalent to almost 400,000 tonnes of carbon credits.
To accelerate the development of Hong Kong into an international centre for green technology and finance, the government is set to proceed in five directions, one of which is to facilitate “green projects to obtain capital more conveniently and flexibly through financial innovation apart from traditional financing channels”.
Paul Chan’s speech included specific plans, such as the issuance of retail green bonds worth at least HK$15 billion in the upcoming fiscal year, the expansion of the Government Green Bond Programme’s focus to include sustainable finance initiatives, a review of the potential and prospects for the development of tokenized bond issuance, and consideration of policy initiatives to encourage the wider adoption of tokenization technology in Hong Kong’s capital market.
The proactive measures taken by the Hong Kong government, which are demonstrated by its prior efforts and ambitious future targets, demonstrate its commitment to supporting green finance and innovation and creating Hong Kong as a premier green technology and finance hub.
With Hong Kong leading the way in green, sustainability-linked, and social financings and green bonds issuance, as well as the knowledge and talent that go along with them, we anticipate that in addition to the tokenization of green bonds and trading of carbon credits continuing to grow and gain traction in the coming years, there will also be an increase in green and sustainable finance products to achieve Hong Kong’s green and sustainability goals as well as national advancement to achieve them.
- Published By Team Hongkong Journalist