Green and sustainable finance deals in the Greater Bay Area (GBA), one of China’s priority development regions, rose to a record in the second quarter of the year, boosted by the Hong Kong government’s jumbo bond sales, according to a study.
Debt and loans issued to fund projects with environmental and social benefits in the area, amounted to 66.8 billion yuan (US$9.3 billion) in the three months to June 30, surpassing the previous high of 56.8 billion yuan achieved in the previous quarter.
Volumes grew 80 per cent to 121.7 billion yuan in the year’s first six months from the same period last year.
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The report, released on Thursday by HSBC and CECEP Environmental Consulting Group, a unit of state-owned China Energy Conservation and Environmental Protection Group, assessed the environmental, social and governance (ESG) performance of the region, which comprises Hong Kong, Macau and nine cities in the southern Guangdong province.
“The steady economic and social development of the GBA continues to drive improvements in regional ESG performance,” said Liao Yuan, general manager of CECEP (Hong Kong) Investment, a subsidiary of the group. “Respective governments’ consistent efforts in advancing high-quality development will not only fuel the growth of green financing in the region, but also further reinforce the GBA’s edge in areas such as clean and renewable energy.”
The Guangdong government encourages financial institutions in the bay area to fast track green financing and facilitate the stock market listings of technology enterprises to drive the region’s transformation towards advanced and high-value manufacturing, said Daniel Chan, HSBC’s head of Greater Bay Area.
The strong growth of green and sustainable finance deals in the first half was boosted by the Hong Kong government’s issuance of nearly US$6 billion worth of green bonds in June, and another green bond worth US$5.75 billion in January – Asia’s largest at the time.
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The study also found that of the more than 2,000 listed companies registered or operating primarily in the area, some 73 per cent have made ESG disclosures for the 2022 financial year, up from 71 per cent in the previous year. Hong Kong and Macau firms led with 94 per cent and 92 per cent disclosure rates, respectively.
However, the study noted that the proportion of property firms’ response rate to an invitation by international non-profit organisation CDP to disclose their climate-related information remained low at 15 per cent in 2022, the same as in 2020 and was below the average rate of eight key sectors studied.
This may reflect challenges they face in calculating and managing emissions attributable to external parties such as suppliers, the report said. Some 96 per cent of the bay area’s property firms had been invited to answer CDP’s questionnaire last year, up from 63 per cent in 2020.
The sector is key to China’s decarbonisation success since their carbon emissions – after including those attributed to their suppliers and customers – account for around half of mainland China’s total emissions, according to the China Association of Building Energy Efficiency.
Currently, ESG information disclosure is required on a “comply or explain” basis in Hong Kong under listing rules. But bourse operator Hong Kong Exchanges and Clearing has proposed to tighten them by making climate-related disclosures mandatory under its ESG disclosure framework as soon as early next year.
Among the eight industries studied, the industrials sector led on green and sustainable bonds issuance in the second quarter. It also scored the highest in overall ESG assessment, covering policy, environment, economic and social development, corporate governance and green and sustainable finance.
More from South China Morning Post:
- Climate change: why faster growth is needed in green financing that helps cities become more resilient to extreme climate
- Climate disclosures: Hong Kong must up its game on sustainability to elevate its role as green finance hub, experts say
- Hong Kong stock exchange operator will help city become ‘world’s leading green finance centre’, says Financial Secretary Paul Chan
- Hong Kong raises record US$6 billion from green bond offering as city pushes ahead with its sustainable finance hub ambitions
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