HK likely to be a green financing hub: HKGFA

It compared HK's sustainable infrastructure financing with Australia and Singapore.

The Hong Kong Green Finance Association (HKGFA) published the Developing Hong Kong as a Leading Investment Fund Hub for Green and Sustainable Infrastructure Financing report, which outlined recommendations for the government on enhancing its legal, tax, and regulatory environment to facilitate or attract the setting up of green and sustainable investment funds in Hong Kong.

To further strengthen Hong Kong's position as a regional asset and wealth management centre and develop the city as a leading investment fund hub for green and sustainable infrastructure financing covering both private and public funds, the report proposes four key recommendations to the Hong Kong Government: 

1. Prioritise reviewing and revising the relevant tax policies and incentives in Hong Kong to cater for varied scopes of infrastructures such as "new infrastructure", "green infrastructure", "sustainable infrastructure" and encourage funds' investments in such projects;
2. Recommend the Mandatory Provident Fund Authority (MPFA) to promote investments with green and sustainable impacts by mandating MPF fund managers to allocate a certain percentage of their portfolios to ESG or climate-related products, and considering infrastructure as an eligible asset class on the MPF platform; 
3. Recommend the Financial Services and the Treasury Bureau (FSTB) to propose in the 2022-23 Hong Kong Budget to include the set-up of limited partnership funds (LPFs) in Hong Kong or the re-domiciliation of offshore limited partnership funds to LPFs in Hong Kong in the subsidy scheme; 
4. Recommend introducing policies that further facilitate cross-border green and sustainable infrastructure (G & S Infra) investments; for example, with the REITs market becoming more robust in both Hong Kong and Mainland China, investment products such as green and sustainable infrastructure REITs listed in Hong Kong may be made accessible to Mainland investors and vice versa.

HKFGA Vice President Stephen Wong said, "Infrastructure plays a crucial role in the operation of the global economy. Emission-intensive industries such as energy, transportation and communication can serve as key enablers for the transition to a low-carbon economy if it is supported by the right infrastructure and investment. As an international financial centre with a well-established financial platform, Hong Kong can help to channel funding from the capital market towards investments in sustainable infrastructure in order to promote sustainability and achieve a ‘greener’ economy."

In addition to the four key recommendations, the report also outlined further recommendations for the Hong Kong Government on encouraging best practices in sustainability to be applied to G & S Infra projects. It also compared the development of capital markets for green and sustainable infrastructure financing with Australia and Singapore.