Hong Kong’s finance chief said the government plans to issue HK$175.5 billion (US$22.5 billion) worth of green bonds over the next five years, with some bond issuances open to the general public “to reap the benefits” of sustainable development.
The green bonds will be obtainable on a regular basis in different currencies and tenors to set a yield curve for the market in a offer to develop the city as an international hub for sustainable finance, Financial Secretary Paul Chan Mo-po said on Wednesday.
“As an international finance centre, offshore yuan trading hub and international asset management centre, Hong Kong has the conditions and advantages to develop to become a leading green and sustainable financing hub in the region,” Chan said at the ESG and Green Finance Opportunities Forum organised by the Chamber of Hong Kong Listed Companies on Wednesday.
As green and sustainable development is also the concern of the public at large, “we will issue some of these green bonds for retail [investors], so that citizens can also participate and reap the benefits”, he added.
Green bonds are fixed-income products designed to fund projects that are environmentally friendly and could top US$29 trillion globally over the next decade.
The financial secretary first announced the government green bond programme in the 2018-19 budget in a bid to develop Hong Kong as an international green finance hub and combat climate change. In January, the government completed the sale of a second batch of green bonds totalling US$2.5 billion.
The funds generated from the bond sales will not just be used for building green infrastructure, they could also be invested in green industries, said Chan.
The Hong Kong Monetary Authority was also planning to help the government expand their green bonds to other currencies besides US dollars, chief executive Eddie Yue Wai-man said at the same conference.
“We are thinking about issuing retail green bonds early next year, stimulating Hong Kong’s green finance ecosystem and allowing citizens to participate and invest in the green economy,” Yue said. “Through the government’s green bond initiative, we hope to show other bond-issuers that Hong Kong can provide a professional one-stop green bond financing service, promoting the city to become a leading choice for green financing.”
Hong Kong’s push for sovereign green bonds is in line with a growing trend by governments around the world to issue green bonds. Globally, green and sustainability bond and loan issuances totalled US$809.5 billion in the first half of this year, nearly tripling from the US$286.7 billion in the same period last year, according to Refinitiv. This number also exceeded the total of US$743 billion recorded in the whole of 2020.
A report issued by the Organisation for Economic Cooperation and Development in May said that the sovereign green bond market is expected “to keep growing over the longer horizon, as an increasing number of governments assess green bond issuance as a valuable tool to display moral leadership on climate change and sustainability, and to fund commitments under the Paris Agreement”.
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