Hong Kong is in pole position to be a link between Europe, and the UK specifically, and Asia when it comes to creating a set of global ESG standards and a greener financial system.
Speaking at a panel during the City Week 2020 event, for which ESG Clarity is media partner, Dr Au King-Lun, executive director at the Financial Services Development Council, outlined the link between London and Hong Kong when it comes to setting a global ESG agenda for financial products.
He said Hong Kong has become a leader on ESG in the region by making it compulsory for a list of companies to disclose ESG information, as well the Hong Kong Stock Exchange (HKEX) planning to launch the HKEX Sustainable and Green Exchange (STAGE).
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At the same time, the Hong Kong government plans to issue another $8bn+ in green bonds over the next five years, while China is already the second largest green bond market in the world.
“We already have a lot of collaboration between the public and private sectors,” he said. “But we also need to see collaboration between markets, and here Hong Kong and London can achieve more synergy.”
According to Dr King-Lun, Hong Kong wants to position itself as a “gateway into Asia”, with a number of collaboration opportunities open to European companies, and especially London-based businesses.
Dr King-Lun said a recent survey conducted by the Financial Services Development Council has shown that Asian investors are displaying an increased interest in ESG, with a number of entrepreneurs looking towards philanthropy.
“Hong Kong serves as the regional headquarters of 141 British firms, so the link is strong,” said Dr King-Lun.
“British banks can bring the best practices over from the UK to Hong Kong and guide local companies on how to develop green agendas and products. Many financial firms in HK have strong UK roots.”
At the same time, he said Hong Kong and the UK have the opportunity to share talent on both sides.
“Europe has a deeper pool of expertise on [ESG] than Asia and Hong Kong,” he said. “The demand for green finance and ESG in Hong Kong has really taken off. We need to import talent and expertise from the UK.”
But he added that an intellectual exchange “doesn’t mean a one-way transfer of expertise”, since ESG requires the understanding of a particular geography, so the UK can also benefit from the knowledge of Asian experts.
In addition, Dr King-Lun said London and Hong Kong could consider mutual certification of products to help in the creation of common ESG standards.
However, he added that while Asia has been making strides in ESG, it is still not at a stage in its economic development where it can impose carbon-free manufacturing.
“Much of Asian industry is quite oil or petrol dependent,” he said. “We want to try and come up with an eco-system that can bridge the gap between Asia, China and Europe.
“We see this as an opportunity for Hong Kong to be a conduit between Asia and Europe when it comes to green finance and ESG.”