Integration

To support the energy transition in Asia, the HKMA invested in a green bond fund managed by an international organisation.  This fund allocated capital to green bonds offered by Asia-Pacific issuers, with the proceeds dedicated to financing green projects that deliver environmental or climate-related benefits.  As of the fund’s financial year-end in 2025, it reported various positive environmental impacts across multiple categories, including renewable energy, clean transportation, green buildings, energy efficiency and waste management.  With greenhouse gas (GHG) emissions avoided as a commonly referenced impact metric, the fund reported a 13% increase in avoided GHG emissions compared to the prior year.  Other positive environmental impacts achieved included energy savings, wastewater treated, and waste prevented or recycled.

Beyond its positive environmental impacts, the fund delivered a return comparable to our performance benchmark over the same period.  This demonstrates that sustainable investing can achieve the dual objectives of generating good financial performance while delivering positive environmental impacts.

The HKMA invested in a company specialising in carbon transformation through a private market fund.  Utilising advanced electrochemical processes powered by renewable energy, the company converted carbon dioxide into new hydrocarbons and chemicals that could serve as fuels or raw materials for manufacturing.

This innovation enabled the creation of commercial value from a substance that was previously regarded as a pollutant.  Notably, the sustainable aviation fuel (SAF) produced by the company could reduce carbon emissions by up to 90% compared to conventional jet fuel, making it one of the most effective options for lowering emissions among existing SAF types.

Recognising that innovation and technology are essential for energy transition and infrastructure development in Asia’s emerging economies, the HKMA signed a partnership agreement with the Asian Infrastructure Investment Bank (AIIB) in June 2025 to invest in a portfolio of venture capital funds that prioritise investments in the region.  This strategic partnership aims to create a demonstration effect, encouraging other investors to scale their venture investments in emerging Asia.

The collaboration also deepens the ties between the HKMA and the AIIB, and reinforces Hong Kong’s status as a leading innovation and technology centre, as well as a green finance hub in Asia.

The HKMA invested in a green bond issued by a quasi-government organisation. Funding from this green bond has been allocated to several projects, including the upgrading of ageing equipment at various sewage treatment plants. These enhancements encompass improvements to monitoring and control systems as well as pumps, aimed at producing positive environmental benefits from wastewater management, waste reduction and recycling.

Besides continuous wastewater and sludge treatment, these plants achieve a remarkable sludge recycling rate of 100%, by composting or repurposing dehydrated sludge to produce fertiliser, charcoal, cement and other construction materials. The plants also harness digester gas generated during the sludge treatment process to power boilers and generate electricity.

The HKMA invested in a green bond issued by a multi-development bank, which financed various projects, including the rehabilitation of a national canal system. As one of the country’s largest irrigation systems, the canal was designed to divert surplus water from rivers to arid regions.

The project focuses on rehabilitating the deteriorating canal lining to prevent seepage, conserve water, enhance water usage efficiency and enable the reclamation of waterlogged areas. Additionally, it introduces capacity building measures for local stakeholders to promote the adoption and optimal use of modern irrigation techniques, such as micro-irrigation and sustainable farm practices.

By expanding irrigation to additional land and increasing the availability of drinking water, the project is expected to create positive social impacts, improving the quality of life of local communities and supporting the development of the agriculture industry.

The HKMA has invested in a company specialising in producing an eco-friendly thermoplastic material from unsorted household waste, including organic materials such as food waste, as well as unrecyclable materials. Unlike conventional chemical recycling systems that rely on energy-intensive high temperatures to produce plastic, the company has pioneered a low-temperature production method powered entirely by its solar array. The plastic material, 100% derived from waste, offers a sustainable and versatile alternative to oil-based resins commonly used in industries ranging from retail to consumer durables. It is also compatible with existing standard manufacturing processes and cutting-edge technologies such as 3D printing.

The company is a steadfast supporter of the circular economy. The diagram below illustrates the positive environmental outcomes achieved by its state-of-the-art plastic production process:

The HKMA has an investment in a pan-African wind farm operator, which accords high priority to social and biodiversity considerations, in addition to producing clean energy. Prior to the arrival of wind farms, local villagers used toxic food traps to deter predators from harming their livestock, but this had inadvertently killed off certain endangered species of vultures.

To help local villagers protect their livestock, which represent a significant portion of their wealth, the investee company builds livestock shelters as an extension of the wind farm installation, protecting livestock from falling prey to natural predators. Further, the wind farm operator engages an on-site bird monitoring team to warn of any appearance of vultures attracted by the occasional carcasses left over by predators, such that the wind turbines can be shut down to avoid striking the vultures.

The minimisation of livestock being killed by predators creates a win-win situation: preserving the villagers’ livelihood, and at the same time reducing vulture deaths caused by the wind turbines, which in turn preserves an endangered species.

Good ESG practices can expand revenue sources of corporations by creating more business opportunities as illustrated by this example involving a supply chain operation. An investee company, which is a Mainland integrated logistics warehouse operator dedicated to cold chain, medical, chemical and high-end consumer sectors, faces increasing demand for higher ESG operational standards. The growing ESG requirements emanate mainly from calls by multinational corporations (MNC) for their service providers to meet higher decarbonisation targets in line with the Paris Agreement. In response, the company has engaged an external ESG consultant to help devise a three-year ESG plan to reduce its carbon emissions intensity by 50% by 2030.

The comprehensive decarbonisation plan led to major achievements, which in 2021 alone included:

These ESG initiatives have earned the company a “Low Carbon and Green Management Case Award” from the China Federation of Logistics and Procurement. Given the achievements and recognition, the investee company is able to win new business opportunities from many consumer and chemical MNCs that accord priority to ESG practices.

The HKMA has invested in a company involved in the production of clean hydrogen and carbon black (i.e. a carbon extract in powder form). Hydrogen is a common gas and can be used widely to produce ammonia for fertilisers, while carbon black is a reinforcing agent used in various goods such as automobile tires, inks, plastics and other rubber products.

The conventional production process for the production of hydrogen and carbon black releases large amounts of greenhouse gas into the atmosphere. The company has deployed an advanced methane pyrolysis technology to split natural gas into hydrogen and solid carbon, powered by electricity from renewable energy sources. This technique produces green hydrogen and carbon black with a much lower level of carbon emissions discharged than the prevailing conventional production process.

Using this new methane pyrolysis technology, it was estimated that carbon emissions could be reduced by 97% for the same amount of hydrogen and carbon black produced, and other harmful contaminants could also be reduced. In addition, this new production technology entails a lower cost and a higher production yield than other existing methods of producing both hydrogen and carbon black.

The HKMA has invested in a pest control company which adopts environmentally friendly solutions. While traditional pesticides and chemicals can exterminate pests effectively, dead pests have adverse implications for public hygiene if not promptly or properly disposed of, and environmental concerns can also arise from the seepage and disposal of chemical ingredients.

The company’s biocide-free solution is to deploy physical pest traps, thereby avoiding the use of harmful chemicals. The company also uses internet-linked motion sensors to remotely detect whether pests have been trapped. With this new technology, the company can optimise route planning to collect trapped pests and reduce the mileage travelled, thereby lowering carbon emissions.

The net effect on carbon as measured on a company-wide basis has shown an encouragingly low reading of 0.36 kg/CO2e/$ net sales, which is close to the industry average for low-carbon-emitting sectors such as legal services and software publishing.

While the construction industry is a major contributor to carbon emissions, one of the warehouse developers in our investment portfolio, adopts a net zero carbon process in its overall construction and operation of warehouses.

Standards and metrics for measuring the baseline of net zero carbon are in place, and construction planning takes into consideration the sustainability of materials and components used. The resulting warehouse is carbon-efficient and designed with sustainable features, including solar thermal systems, electric vehicle charging portals, natural lighting and rainwater harvesting. The carbon footprint of the warehouse construction has net 25.8% lower carbon emissions than a standard logistics building, according to measurements by an independent consultant.

To further offset carbon emissions from the construction work, 32,799 net trees were planted during the process. Post-construction, the warehouse reduced carbon emissions by 26.9% in its daily operations compared with a standard warehouse.