Hong Kong-Beijing green finance collaboration?

I had the pleasure recently of delivering a speech to the Beijing CPPCC in which I make a number of suggestions to enhance financial ties between Hong Kong and the Beijing municipality. Areas in which we can deepen cooperation include helping Beijing connect to the international green investment and financing market through tapping the international advantages of Hong Kong’s capital markets. We also should consider coordinating on the development of international standards for green finance and use Beijing-Hong Kong cooperation in voluntary carbon markets trading as the starting point to jointly build an international carbon trading market. See more details below:

On tapping Hong Kong’s capital markets

? To achieve the “dual carbon” goal, promoting green transformation and technological innovation will require huge amounts of investment. The financing gap is one of the main challenges facing China’s green and low-carbon development, and this gap must be filled by market funds.

? Hong Kong ranks among the world’s four major international financial centres, is connected to the world’s financial markets and and brings together the world's leading?green finance assessment and certification agency and international investors. Hong Kong can serve as a green investment and financing platform for Beijing to meet international standards. Financial institutions in Beijing and Hong Kong should work together to develop Beijing's sustainable development projects into ESG investment products, broadening the international funding sources required for green transformation and technological innovation.

? Meanwhile, combining the advantages of Hong Kong being the largest RMB offshore centre and its commitment to promoting innovation of RMB stock trading mechanisms, I see potential opportunities for Beijing-Hong Kong cooperation to promote energy trade and bilateral RMB investment settlement, and promote the internationalization of RMB.?

On international standards for green finance

? In 2022, China’s green financial standards will have two important achievements in line with international standards: the mutual recognition of China-EU sustainable finance classification standards, and the international integration of green bond principles. Riding on this, Beijing should continue to strengthen the geographical advantages as the location of the national financial management department, major domestic financial institutions, and important financial infrastructure, and accelerate the establishment of an international green financial standard centre. Working together with Hong Kong, Beijing will have access to rich international experience, an international financial regulatory system, leading green financial institutions, and human resources, helping to further deepen Beijing-Hong Kong green financial cooperation.

? As one of the founding members of the United Nations Environment Program's financial initiative organization "Net Zero Banking Alliance" (NZBA), HSBC has been actively participating in supporting the establishment of a green financial cooperation framework between China and the world.

? Examples include the “Belt and Road” Green Investment Principles (GIP), the China-UK Climate and Environmental Information Disclosure Pilot Project, and the China Green Bond Market Development Project.

? Looking forward to 2023, we are willing to continue to help Beijing and Hong Kong cooperate to explore mutual recognition of international standards for green finance and make China's contribution to the development of international standards for green finance.

On voluntary carbon markets cooperation

? Carbon trading has gradually become one of the most important channels for global enterprises to obtain financing. In the coming years, it will become an important financial market parallel to the stock and bond markets.

? In 2022, Beijing Environment Exchange has been upgraded to a national-level green exchange that is open to the rest of the world. It’s committed to undertaking the functions of a national carbon trading centre such as National Voluntary Emission Reduction to promote the innovation of the national carbon market development.

? In Hong Kong, the Hong Kong Stock Exchange has launched a new international carbon market Core Climate in October 2022, providing an efficient and transparent trading platform for voluntary carbon credit products and tools.

? The voluntary carbon emission reduction trading can be a starting point for Hong Kong and Beijing.

? Beijing and Hong Kong can work together on the voluntary carbon emission reduction trading to carry out more exchanges on jointly building an international carbon trading market. We should consider the joint establishment of an international carbon trading market research group, gathering together governments of the two cities, think-tanks, exchanges, financial institutions, emission control companies, third-party verification agencies, carbon finance development agencies, energy-saving and emission-reduction technology companies, and professional consulting agencies to foster communication and planning for Beijing and Hong Kong to jointly build an international carbon trading market.