Hong Kong Asserts ESG Leadership

The following post summarizes some key ideas from a recent edition of the CFA Institute podcast The Sustainability Story. CFA Institute’s Matt Orsagh, CFA, CIPM spoke with Grace Hui, head of Green and Sustainable Finance at Hong Kong Exchanges and Clearing Limited. Ms. Hui co-chairs the Market Development Workstream and the Carbon Market Workstream of the Green and Sustainable Finance Cross-Agency Steering Committee established by the Hong Kong Monetary Authority and Securities and Futures Commission. In this podcast, Ms. Hui discusses the growth of the ESG market in Asia.

The ESG market in Asia has seen significant growth in the past 5 years. In 2016, there were only 3 green and ESG related bonds at the Hong Kong stock exchange. As of September 2021, 135 green and ESG related bonds are listed. And this growth is not stopping anytime soon, according to Grace Hui, head of green sustainable finance at Hong Kong Exchanges and Clearing Limited. Ms. Hui notes that these new products help narrow the gap of green financing, opening the door to a wider pool of borrowers while providing investors with more choices.

With the inevitable increase in demand for ESG information and transparent ESG disclosures, the Hong Kong Exchanges and Clearing Limited launched the Sustainable & Green Exchanges (STAGE). “STAGE is a platform where we draw the investors and issuers together. We require issuers to provide an annual positions report, telling investors where the money is spent and any environmental or societal impact that’s been achieved with those proceeds,” Ms. Hui said.

Ms. Hui also highlighted the importance of addressing climate change by giving incentives to corporations to actively reduce carbon emissions. “Investors need to start looking at the valuation of companies by taking into account the carbon price.”

Having been designated by the government in China to be the green finance center of the greater bay area, Ms. Hui said, “Hong Kong has the infrastructure, the regulations, and the business environment to support China’s carbon neutrality.”

Ms. Hui added, “In the world of sustainability, there shouldn’t be any competition. We should work a lot closer with other stock exchanges in this region to help unify some of the things that we are doing so that we have more liquidity and transparency.”