Hong Kong can take the lead to set disclosure example in sustainable financing, bankers say

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Each of Hong Kong’s 2,500 listed companies must put numbers on potential impact from extreme climate events, according to draft rules due for final approval in 2023

Any fund manager with a portfolio larger than US$1 billion must disclose the emissions data of companies they invest in, starting this month, the SFC says

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BNY Mellon Investment Management’s chief executive Hanneke Smits (first right), spoke during a panel on sustainable finance, moderated by HKEX’s chief executive Nicolas Aguzin (extreme left) at the Global Financial Leaders’ Investment Summit at the Four Seasons Hotel on 2 November 2022. Photo: Enoch Yiu.

Enoch Yiu

Published: 6:31pm, 2 Nov 2022Updated: 8:00pm, 2 Nov 2022

Hong Kong can take the lead in promoting sustainable finance in the Asia-Pacific, as the city is among the first to incorporate disclosures for environment, social and corporate governance (ESG) in its audit and listing rules, global bankers said.

Each of Hong Kong’s 2,500 listed companies must put numbers on potential impact from extreme climate events like severe typhoons and rising sea levels, according to draft rules due for final approval in 2023. Any fund manager with a portfolio larger than US$1 billion must disclose the emissions data of companies they invest in, starting this month, according to the Securities and Futures Commission (SFC).

“There is an opportunity for Hong Kong to take the lead in this area, [by] establishing international standards and set the regional best practices in disclosures,” said Anand Selvakesari, who leads personal banking and wealth management at Citigroup, during a panel discussion on sustainable finance at the Global Financial Leaders’ Investment Summit in Hong Kong.

“The availability and quality of ESG data has been an industry issue, as the current regulatory requirements are fragmented, while the disclosure requirements vary in different markets,” he said, adding that better disclosure standards can help the emerging markets to get more funding to finance their ESG projects.

Anand Selvakesari, Citigroup’s chief executive of personal banking and wealth management, at the Global Financial Leaders’ Investment Summit at the Four Seasons Hotel in Central, on 2 November 2022. Photo: Sam Tsang

Sustainable finance refers to the sale of green bonds or other forms of fundraising to promote ESG activities, the fight to avert climate change, reduce pollution and community activities. It is an area that Hong Kong’s government is focusing on, as it tries to develop the city as a regional hub for green financing on its way to carbon neutrality by 2050.

Up to US$56 billion of ESG bonds and loans had been arranged in Hong Kong as of 2021, putting the city at the very top of Asia’s green fundraising efforts, a fact that underscores how Hong Kong can “lead by example,” Financial Secretary Paul Chan Mo-po said during his pre-lunch keynote address at the summit.