Posted inRegulation

Hong Kong has carbon trading ambitions

A cross-agency steering group announces progress to advance the territory’s green and sustainable finance development.
Low visibility on Victoria Harbour in Hong Kong

In view of Hong Kong’s “status as a champion of international standards, a facilitator to channel global capital into the Mainland and an international financial and risk management centre”, the steering group is exploring how Hong Kong can develop into a regional carbon trading hub, which would include the development of a global high-quality voluntary carbon market.

“Carbon trading will be a key tool to mobilise finance for the transition to a low carbon economy,” said Ashley Alder, co-chair of the steering group and chief executive officer of the Securities ad Futures Commission (SFC), in a statement.

In addition, the group will work with relevant authorities on carbon market opportunities as part of the Guangdong-Hong Kong-Macao Greater Bay Area cooperation.

Established in May 2020, the Green and Sustainable Finance Cross-Agency Steering Group is co-chaired by the Hong Kong Monetary Authority (HKMA) and the SFC. Members include the Environment Bureau, Financial Services and the Treasury Bureau, Hong Kong Exchanges and Clearing Limited, Insurance Authority and the Mandatory Provident Fund Schemes Authority.

Improving data quality

Two working groups set up under the Centre for Green and Sustainable Finance (GSF) also reviewed the capacity and data constraints faced by the financial services sector. They recommended developing a common GSF qualification framework, support for practitioners and young people to take up GSF training; and providing young people with practical industry experience.

They also proposed enhancing access to and availability of GSF data and data analytics tools, and filling key data gaps identified by market participants.

To take forward the working groups’ recommendations, the HKMA will begin work to develop a new module on GSF under the “Enhanced Competency Framework for Banking Practitioners”. The GSF Centre will also launch information portals on GSF data and resources.

Consistent taxonomies

Moreover, following the publication of the Common Ground Taxonomy (CGT) report by the International Platform on Sustainable Finance (which put forward areas of commonality between China and the EU’s taxonomies), the steering group will explore developing a green classification framework for adoption in the local market which helps provide easy navigation among the CGT, China and the EU’s taxonomies.

“With our work on capacity building, data and taxonomy in particular, the steering group seeks to ensure that financial institutions and market practitioners have the relevant skills and information, as well as an internationally recognised framework, to manage climate risk and capture the resulting opportunities,” said Eddie Yue, co-chair of the steering group, and chief executive, HKMA.

The steering group claimed it is making progress towards mandating climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework by 2025 across relevant sectors.

Part of the Mark Allen Group.