HKSAR Government’s digital green bonds offering
The Hong Kong government has successfully offered approximately HK$6 billion worth of digital green bonds under the Government Green Bond Programme. The two-year bonds attracted a wide range of institutional investors globally. The bonds were issued in HKD, RMB, USD, and EUR, with different pricing for each tranche. This is the second digital bond issuance by the HKSAR Government, building on the success of the inaugural tokenised green bond issued in February 2023.
The new issuance incorporates technological innovations and achieves breakthroughs in investor participation, issuance process streamlining, standardisation, and integration of green bond disclosures with digital assets platforms. The bonds leverage existing market infrastructure and adopt the International Capital Market Association's Bond Data Taxonomy for improved efficiency and interoperability. The issuance enhances transparency, accessibility, and the social awareness of sustainable development. It represents the first multi-currency digital bond offering in the world and the first digitally native bond issuance in Hong Kong.
The clearing and settlement system is the Central Moneymarkets Unit (CMU), with HSBC Orion serving as the digital assets platform. Various financial institutions and legal advisors were involved in the preparation for the issuance. The proceeds from the bonds will be used to finance and/or refinance projects falling under the ‘Eligible Categories’ outlined in the Government's Green Bond Framework. Vigeo Eiris provided a Second Party Opinion on the framework, and the bonds received the Green and Sustainable Finance Certification Scheme Pre-issuance Stage Certificate from the Hong Kong Quality Assurance Agency.
For further information, please visit https://www.info.gov.hk/gia/general/202402/07/P2024020700516.htm
Rise of climate transition encourages decarbonisation-focused projects
Accelerating the energy transition requires concrete action and collaboration between the public and private sectors. Transition finance plays a critical role in achieving this goal. It allows for the shift toward decarbonisation, provides opportunities for the private sector to generate returns, supports the public sector in funding efforts, and includes carbon-heavy industries in the transition.
However, it is important to distinguish between portfolio decarbonisation and actual climate decarbonisation. Private sector involvement is crucial, but the mobilisation of capital has been insufficient, particularly in developing markets. Blended finance, which combines public and private investment, and public-private partnerships can help fund sustainable projects, especially in developing countries. Additionally, supporting carbon-intensive industries in the transition is necessary, as they possess expertise and require investment to achieve carbon reduction. The Sustainable Markets Initiative (SMI) has developed a transition finance framework to guide stakeholders and accelerate the flow of capital toward viable and credible transition finance structures. This framework emphasises meaningful ownership risk uptake, large-scale transition finance, support for transitioning high-emitting businesses, transparent emissions measurement and pricing, public and private investments, and unwinding public support as transitions are completed.
Depoliticising the issue and avoiding simplistic approaches are essential. By coming together, policymakers and investors can seize the historic opportunity to address the challenge of our era and support realistic action for a sustainable future.
For further information, please visit https://www.weforum.org/agenda/2023/01/davos23-transition-finance-decarbonization/
The introduction of a subsidy scheme in Hong Kong to support green fintech start-ups
The Hong Kong government plans to launch a subsidy scheme for start-ups specialising in sustainability data collection, analysis, and reporting. This initiative aims to leverage Hong Kong's financial technology expertise and support the development of a green fintech hub. The city already has around 1,000 fintech companies focused on providing solutions for environmental, social, and governance (ESG) analytics. The subsidy scheme, set to launch in the first half of the year, will provide early-stage funding to pre-commercial green fintech companies, fostering the expansion of the ecosystem. Digital technologies such as machine learning, IoT, and sensors can enhance the efficiency and accuracy of collecting and analysing corporate climate and ESG data.Green fintech companies also offer tools for climate-related risk assessment, benefiting small and medium-sized enterprises with limited resources. The government's support has played a role in this growth, including financial assistance for green bond and loan issuance. The government is also prioritising corporate sustainability disclosures and climate-transition finance. Hong Kong Exchanges and Clearing will require listed companies to adhere to upgraded climate change-related disclosures from next year. The Hong Kong Monetary Authority will publish a taxonomy for credible green and climate-transition activities, aligning with international and mainland China taxonomies.
Transition finance, supporting hard-to-abate sectors in their shift to low-carbon operations, is expected to be a key aspect of green finance in the Asia-Pacific region. Policy support for climate-transition technologies is fuelling investment in sustainable bonds.
For further information, please visit https://finance.yahoo.com/news/hong-kong-launch-subsidy-scheme-093000662.html