Hong Kong Regulator Aims to Set Green Bonds Benchmark for the Country’s Issuers

The Hong Kong government and Monetary Authority (“HKMA”) are working together on plans to issue green bonds in the coming year, in order to set a benchmark for the country’s corporates who look to issue debt to fund environmentally friendly projects.  Hong Kong is working with the Chinese government in the development of green financing.  A spokesperson elaborates that the issuance of a HKMA green bond will actively promote China’s Belt & Road initiative, and is in accordance with the aim of attracting international investors to fund green projects through the city’s capital markets.

As part of this initiative, authorities hope to play a role in establishing a Qualifying Green Bond scheme by recognising qualified parties for external review of certain criteria.  Such a scheme verifies bonds seeking to be “green” comply with well-recognised standards such as the Climate Bond Standard and China’s Green Bond Endorsed Project Catalogue.

To date, there have been three public green bonds issued in Hong Kong through the city’s subway operator MTR, Link Reit and Xinjiang Goldwind.  It is expected that proceeds from potential sovereign green issues can be used for the financing of upcoming public housing projects that will require HK$117.8 billion (US$15.1 billion) in the coming decade.  Indeed, one can only imagine the extent of positive environmental impact with this additional funding source that necessitates environmental measures be taken into consideration when constructing government buildings, public housing and home ownership schemes.

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