Keynote Address at Climate Business Forum: Asia Pacific


28 Feb 2024

Keynote Address at Climate Business Forum: Asia Pacific

Darryl Chan, Deputy Chief Executive, Hong Kong Monetary Authority

Kim-see Lim, Regional Director for East Asia and the Pacific, distinguished speakers, guests, ladies and gentlemen,

  1. Good morning, and welcome to the second day of the Climate Business Forum: Asia Pacific.
  2. As we heard at the discussion yesterday, climate change is continuing at an alarming rate, resulting in more frequent and extreme weather events. For those of us living in Hong Kong, this brings back memories from last September, an eventful month in terms of extreme weather.  
  3. The city was struck by a ferocious super typhoon during the first two days of the month, followed by a prolonged record-breaking rainstorm in the subsequent week.
  4. The aftermath was severe, with flooding in many parts of the city, widespread traffic disruptions and extensive road damage. Notwithstanding the excellent infrastructure we have and the speedy recovery response, for a while the city was brought to a standstill.
  5. Severe weather events have also left their marks on other parts of the region. Last year, Southeast Asia was engulfed by the “once-in-200 years” heatwave.  According to news reports, temperatures in Myanmar climbed to highs of 45 degrees Celsius, with Thailand and Laos breaking their all-time high temperature records.  
  6. All this reminds us of the need for resolute action to mitigate the environmental challenges we face, and with a sense of urgency.
  7. A report released last year by the UN Intergovernmental Panel on Climate Change found that climate finance will need to increase between three and six times by 2030 to achieve mitigation goals and hold warming levels below 2 degrees Celsius.
  8. The investment gap is at the widest in developing countries. For example, mitigation investments need to increase by at least six times in Southeast Asia and developing countries in the Pacific.  
  9. To scale up climate financing, collaboration and collective efforts from the region across different sectors are essential. We need solutions – solutions in mitigation and adaptation, solutions in new technology, and solutions in effectively raising and channelling capital. 
  10. The Climate Business Forum provides a platform to harness the power of cross-sector collaboration in driving sustainable solutions.  On day one of the Forum, we delved into pressing issues such as the just energy transition, circular economy, decarbonisation of heavy industries, and green retrofit building transformation.  
  11. Building on these discussions, today’s focus will shift to financing solutions and technology, which are the “dual engines” that fuel and accelerate green transformation.
  12. On technology, there are actually series of green tech events now taking place as part of the Green Week running until this Saturday, and I encourage you to also take part in those events to get a sense of the Hong Kong green tech development.
  13. As an international financial centre and Asia Pacific’s sustainable finance hub, Hong Kong has been channelling international investments to sustainable projects in Asia to support the region’s green transition.
  14. More than one-third of Asia’s green and sustainable bond issuances are arranged in Hong Kong. Over 200 ESG funds with a combined size of US$160 billion were authorised, representing a more than tenfold increase from five years ago.  
  15. We have also been promoting innovation and the adoption of new technologies in green finance. Earlier this month, the Government issued its second tokenised green bond, marking the world’s first multi-currency digital bond offering with a number of other new breakthroughs.  
  16. During the discussions yesterday, speakers talked about the importance of policy support to deal with climate change. As a banking supervisor, the HKMA is doing our part through various initiatives. 
  17. We have embedded climate considerations in the supervisory process by setting our supervisory expectations and sharing best practices on banks’ management of climate risk and transition planning.
  18. We conduct climate stress tests to help the industry and individual banks assess their climate risk exposure and readiness.
  19. On standards, we developed a prototype of the Hong Kong taxonomy, drawing largely from the China-EU Common Ground Taxonomy with focus on areas and activities that are more directly relevant to Hong Kong’s transition path.
  20. On disclosure, we are working with other agencies to provide a clear roadmap for Hong Kong to implement the ISSB standards. Meanwhile, we are providing incentives for borrowers to engage eligible, independent green reviewers to ensure the robustness of their green framework and compliance. 
  21. Our role should not be limited to setting the supervisory frameworks and rules. We are keenly aware that we need to create an enabling environment for the financial sector to manage climate risk and, equally important, seize the opportunities of climate financing.
  22. For example, on green retrofit building transformation, availability of data related to physical risk assessment is one of the biggest challenges. To this end, we will soon be launching a cloud-based platform for physical risk assessment which will enable banks to assess the impact of physical hazards on real estate under different climate scenarios.
  23. Relatedly, we have co-developed with CDP a standardised sustainability reporting questionnaire that helps banks to collect information from their non-listed company clients.  
  24. We have also been rolling out concrete measures with financial institutions and capacity building organisations to deepen our pool of sustainable finance talent.
  25. On the other hand, we lead by example as a responsible investor. As the manager of Hong Kong’s official reserves, the HKMA has spearheaded investments in green and sustainable assets since 2015 and has been growing the portfolio of ESG and green assets across both public and private markets.     
  26. I have talked quite a bit about how we promote green and sustainable finance in Hong Kong. But my point is, it is not about Hong Kong or the HKMA.
  27. Rather, these are examples of what the official sector can and should do to provide the necessary policy support, build multi-stakeholder platforms, and find ways to promote collaboration across the public and private sectors to meet the region’s climate financing challenges. All of us have a role to make this happen.
  28. With that, I very much look forward to today’s programme and the insightful discussions ahead. I am sure you will benefit from the Climate Business Forum and more broadly the Green Week to connect with one another, exchange ideas, share knowledge, and, most importantly, take decisive action.  
  29. Last but certainly not least, on behalf of the HKMA I would like to thank the IFC, BloombergNEF, and all our event partners for bringing together this Forum and the various special sessions with dedicated themes.
  30. Thank you all, and have a great day ahead.
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Last revision date : 28 February 2024